Updated almost 17 years ago on . Most recent reply
Help! Novice here trying to figure out if this is a possible first deal for me!
I have some specifics on this one particular seller that Im working with right now. This might actually be the first house that I actually buy. The ARV is coming in around $720-$730. Its a SFR, 4bed/3 full bath. 1 car garage, unfinished basement, sunroom, storage room, living room with fireplace, kitchen, dining room. The house was built in 1953. The house seems to be in fine condition, but everything in the house is all original equipment and needs updating.
The house is vacant and has been on the market for a few months at the least. The seller says that he is the executive for the estate, and that the house was owned by his uncle who passed away. He was asking $599, but now lowered it to $579. I'm thinking an all cash wholesale deal. I did ask the seller if he was willing to carry financing, but he said that since he has to answer to everyone else in the estate he would rather either do all cash, or the only way he would consider a carry back is if the amount financed was around $125 with the rest all cash up front.
If I took an ARV of $720, and went into contract with him for an all cash deal of $579 I am getting equity of about $140K, but that is at about 19% discount. If the seller doesn't budge from his selling price, is this wholesale deal worth the time? Or am I not getting it at the right price considering it needs major updating?
I know some people use the MAO formula, and calculate the 65%-80% of ARV, minus repairs. Im stumped. Should I be? Or does this deal sound reasonable?