wholesale to buy and hold or flipper

8 Replies

Hello Biggerpockets!

I recently got a property under contract, when I blasted it out to my vip buyers list every single one of my buyers passed on the deal. Here are the numbers ARV: 375k repairs: 32k acquisition: $280k. I was receiving the same feedback; the spread was too tight. I am looking to market this property to landlords now as a buy and hold deal. Any suggestions as to what steps I should take next?

Originally posted by @Umair Baig:

Hello Biggerpockets!

I recently got a property under contract, when I blasted it out to my vip buyers list every single one of my buyers passed on the deal. Here are the numbers ARV: 375k repairs: 32k acquisition: $280k. I was receiving the same feedback; the spread was too tight. I am looking to market this property to landlords now as a buy and hold deal. Any suggestions as to what steps I should take next?

 also does the property need to be in a location where there are other rentals as well? or does that matter? 

As a buy and holder, I need to know what the property will rent for to do an analysis.  I like property that doesn't have rentals all up and down the block, but it is rare that a home this nice will pencil.  I would've gone broke long ago buying $280k rental houses that need work.  How much will the house rent for?  If less than $2500 it probably won't work for someone needing to at least break even every month.  Are all those repair costs necessities or just making it nicer @Umair Baig ?

Originally posted by @Steve Vaughan :

As a buy and holder, I need to know what the property will rent for to do an analysis.  I like property that doesn't have rentals all up and down the block, but it is rare that a home this nice will pencil.  I would've gone broke long ago buying $280k rental houses that need work.  How much will the house rent for?  If less than $2500 it probably won't work for someone needing to at least break even every month.  Are all those repair costs necessities or just making it nicer @Umair Baig?

 I am still researching as to how much the rents are going for in that area, plus there are not many rentals up and and down the block. All the repair costs mentioned are to make it retail ready for a first time buyer home. The property is in good condition, but to make it rental ready it would need substantially less work than 30k.  

Good to know about the repair estimate being for a retail buyer.  A class tenants in A class neighborhoods like things to be nice, of course.  Not sure if this is a blue-collar neighborhood or something nicer?  Here it would be a nicer house is a nice area at that price point.  Overall is this a fancier place or just average @Umair Baig ?

Originally posted by @Steve Vaughan :

Good to know about the repair estimate being for a retail buyer.  A class tenants in A class neighborhoods like things to be nice, of course.  Not sure if this is a blue-collar neighborhood or something nicer?  Here it would be a nicer house is a nice area at that price point.  Overall is this a fancier place or just average @Umair Baig?

 its in Verona, NJ the city is a bit more upscale but nothing too fancy, close to many schools and businesses. In order for me to go ahead and market this property to landlords what information would I need to gather? 

thanks,

Originally posted by @Umair Baig :

Hello Biggerpockets!

I recently got a property under contract, when I blasted it out to my vip buyers list every single one of my buyers passed on the deal. Here are the numbers ARV: 375k repairs: 32k acquisition: $280k. I was receiving the same feedback; the spread was too tight. I am looking to market this property to landlords now as a buy and hold deal. Any suggestions as to what steps I should take next?

 I agreee with Steve, without knowing what the rents are you have no way of knowing if it's a deal or not. check out rentometer.com to get rental comps for the property. 

also, if experienced buyers have passed on it, then it's probably not a deal at that price.

just running the numbers quickly, it doesn't look good. if your buyer used hard money, they'd need to bring at least 40k to the table to make this deal work. how solid are the comps?

Originally posted by @Brendan D. :
Originally posted by @Umair Baig:

Hello Biggerpockets!

I recently got a property under contract, when I blasted it out to my vip buyers list every single one of my buyers passed on the deal. Here are the numbers ARV: 375k repairs: 32k acquisition: $280k. I was receiving the same feedback; the spread was too tight. I am looking to market this property to landlords now as a buy and hold deal. Any suggestions as to what steps I should take next?

 I agreee with Steve, without knowing what the rents are you have no way of knowing if it's a deal or not. check out rentometer.com to get rental comps for the property. 

also, if experienced buyers have passed on it, then it's probably not a deal at that price.

just running the numbers quickly, it doesn't look good. if your buyer used hard money, they'd need to bring at least 40k to the table to make this deal work. how solid are the comps?

 ok just did some quick numbers here and got an average of $2,500 rent. the comps on this deal is solid I used recently sold comparable properties and adjusted them based on how many beds/baths they were missing so a arv of 375k is solid. I did some research and found out you dont need to get such a deep discount when you wholesale to landlords compared to when you wholesale to flippers? I am assuming if the numbers work then why not try and market this deal out to buy and hold investors? 

"I did some research and found out you dont need to get such a deep discount when you wholesale to landlords compared to when you wholesale to flippers?"

That's correct.  If I waited for 70% - repairs I'd still be sitting with nothing.  We need things to work, but don't need such a homerun value play.

If $2500 is avg rent, it may pencil. I would take it to a REIA meetup and let some local PM co's know I have a place for any of their owners to look at that are looking to expand. The PMs want to expand as well usually so they shouldn't try to list it on you.