I have an owner that called me from my letters I sent out last fall. I checked out their property a couple of weeks ago and I determined there wasn't enough room to wholesale and I didn't personally want it because the area. Here where the numbers.
They where firm at $94,000
My ARV $115,000 to $125,000
Rehab needed paint carpet some fascia and drywall repairs, refinish bath tubs. I'd say about 5 to 7k for rent ready.
I would need to be closer to 80,000 and they where firm so I said I would follow up in a week or two. They said if I could find a buyer at 94 they are ok if I have a fee on top. I didn't put it under contract because of the numbers and they didn't want to sign a contract unless I would buy it.
A week later there is a fsbo on postlets/Zillow for the house. But it's listed by another local real estate investor / wholesaler (who is actually on this forum and a realtor). He has it listed at $125,000 and it's a little more fixed up. The owners said they where going to do a few things themselves...paint and clean.
I don't think it will sell for 125 but he might get 110,000 in this market from an end user.
Did I drop the ball not getting this property under contract? Good for him. I'm trying to think what I would do next time with these slim margins.
@Mike Landry sometimes it's best to let other people speculate. You were right. That number was too high. The only thing you could've maybe done is owner financed deal or a wrapped mortgage. But those are the people who end up with their pants down when the market corrects
There is always somebody willing to over pay. Trust your numbers and keep doing your thing. I fall into the trap of watching a property after I pass, but in the end it never does me any good. Especially lately. People are paying WAY over what they should. (at least around here)
Sometimes the best deal you make, is the one you don't make.
If the numbers don't work for you, they don't work.
Don't worry about the risk or business decisions some one else might make. Although I would follow up to see what it sells for and see if your estimates are correct. All of these transactions are a learning experience.
Listen to yourself. You say your gut feeling is that it will not sell for over $110K. That should have been your ARV in the first place not between $115K and $125K. So if it did not make sense at between $115K and $125K then for sure it would not make sense or worth the risks at $110K which you now say is the real ARV number to use on this deal.
You make your decision based on your numbers and you need to trust them because that is part of your risk management. Do not make deals without risk management in place.
You will find that risk management plays a roll in every single real estate deal. Banks take less risks and may charge anywhere from 3.5% to 7 % and hard money lenders take bigger risks and may charge anywhere from 9% to 12%.
I always ask myself this. If someone were to offer me and another person $10K to jump off of a second story building would I do it? Seeing another person jump off of the second story building and coming out of it completely unharmed I see he collects the $10K. Then the same person makes the same offer to me if I will also jump after seeing someone do it and come out of completely unharmed would I then jump? My answer would still be no. I will just not take that risk.
thanks for the responses. I'm not trying to wholesale for a living so I was fine letting it go. I just wonder if I should have played it differently and tried to sell it fsbo to an end user with no intention of buying it myself. Looking at it now I could see a 5 to 10k spread that could have been earned pretty easily. But would that be practicing real estate without a license?
Originally posted by @Mike Landry :
"...would that be practicing real estate without a license?"
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing