I reached out to a real estate broker and asked for properties they are having trouble selling i.e. rough shape or other challenges.
The realtor mentioned a property and I am looking for some conventional direction on how to work with the agent on a wholesale lease option.
Property is in rough shape. Needs $195k in repairs. It is a legal 2 family however the meters and living space are not separate yet.
The owner inherited the property and the property is free and clear. Owner is asking for full comp market value $650k.
I could do the marketing and find a rehab buyer or wholesale lease option the property to someone who wants to work on the repairs for 2 years while living in the property.
What's the best way to approach and is this really a good deal?
If I want to wholesale flip, the agent doesn't believe the owner would take MAO of $291k.
The agent is open to a WLO but I am not sure how to structure the deal with the agent involved...i.e. how would either of us get paid?
70% after repaired Value minus repairs doesn't work for the seller but what might work is a joint venture with a seller
Sometimes it's better to talk to the seller directly with the agent and tell them exactly how the real estate investor world works
Pencil out a possible solution 70% of ARV minus repairs
If that number is terrible then tell them you would consider doing a joint venture where you would bring in your own money to repair the house and then resell it with the realtor getting a commission
I would bring in a rehabber GC where they could guarantee the repairs on a certain budget and you get private money for that amount of repairs
I would charge a fee of 5 to 7% of value for joint venture fee
650- 65 costs to sell with commissions and closing costs - 200 in repairs - 32 jv fee
Say 350k net to seller
Beats the 291 MAO
1 buy w private mortgage no payments for 6 mo
2 own it and repair it with private money
3 resell it w agent
4 pay off note to seller and private money loan
Go Red Sox Nation!
Why does the opinion of the broker matter? Is this your partner? An offer is better than no offer because at least you asked! Besides let's say your offer is rejected at that point you will learn a little bit more about the sellers needs especially if you asked for him to counter the offer as opposed to just saying no. Then if he counters shut that down by adding an addendum listing all the work that needs to be done basically canceling out what he thinks his property is worth.
Besides you received this list from the broker right? Why are you concerned with how he gets paid since the seller and listing agent are compensated by the seller unless there is some fine print somewhere...
I just think you should try the offer first. Then here's another thing you re not obligated to work with this broker (unless you committed to him in writing) especially if he's worried about his pocket and he's influencing how you want to structure your offers!
Just food for thought!
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