How Much to Sell the Deal

Question

After driving for dollars in Pittsburgh (finding vacant houses) and sending direct mail to the owner addresses, one of the sellers called me and said he wants $20k for his house. The ARV for the home is around $140k, Zillow estimate $143k and very strong comps in the area to support it. I have not looked at the exact cost to repair but the house is in good shape. With an estimate cost of repair at around 40k, how much would you wholesale this deal for?

My mentor told me that I should flip it myself since he thought it sounds like a home run. but I'd like to get opinions.

Thanks

My mentor told me that I should flip it myself since he thought it sounds like a home run. but I'd like to get opinions.

Thanks

Lumi Ispas · Answer

@Jacob Howell have a Realtor that knows the area very well do two CMAs for you: one for AS IS condition and one for ARV. Realtor.com, Zillow and all the other websites are never accurate and investors and flippers don't work with CMAs based on Zillow.

Stephen Nicholson · Answer

@Jacob Howell

Have you seen inside the property yet? Get over there with a contractor if possible and get an accurate estimate for the work. If it is as good a deal as it sounds then I'm sure you will find someone to finance the deal for you. Seems like you could have found a good one! Let us know what you decide to do!

Brent Coombs · Answer

@Jacob Howell, based on what you have told us, I think your mentor is right. Buy it, fix it. And then you will still have the option to rent it out, or even list it for full ARV.  Doesn't have to be a "quick" flip. Lots of options for this one.

But don't trust Zillow's Zestimates. Go with their SOLD comps. Cheers...

Chris Piper · Answer

A quick wholesale deal you could sell it for $50K and the cash buyer will still make $40K in profit, while you would make $30K. Anywhere between $40K-$50K is a very fair price, and you make $20K-$30K. Not too shabby for a few hours of work.

Jacob Howell · Answer

@Mary B.

Thank you for responding. I have used the Wholesaling calculator, which is great. I think that doing the wholesale deal is the right way to go at this point just want to make sure its at a great price for me and the investor.

Jacob Howell · Answer

@Greg Parker Thank you for the advice.

The more I think about it I would like to get a quick flip. 15k to 20k sounds like a good deal right now.

Mary B. · Answer

Use the Maximum Offer Allowed method to determine a reasonable wholesale spread. Also the zestimate has no wait. Use realtor.com, which is more viable, to secure comps for an accurate ARV.

Kudos,

Mary

Greg Parker · Answer

Hey Jacob, I don't know the "wholesaler rules" but I just bought a duplex for 10.5k and paid 3.5k in wholesaleing fees (in Pitt).  Obviously a different market but I didn't care about the wholesalers margin, just that the deal worked for me.  Repair costs for me are likely to be $40k also  and I am a buy and hold so not worried about ARV but it will rent out at $1600/month so a 34% gross yield before expenses.

Depends what you want to do, quick flip no cash in making maybe 10-20K? Or managing a flip renovation process and having to sell retail for more money but longer return period.  Winter is a great time for that type of work!

Greg