Do you think this will sell???

Question

We have a 3 bedroom, 2 bath house under contract for 83K, we will offer to investors at our REIA meeting, put add in local paper, on craig's list and send e-mail to a few rehabbers.  We have never attempted to wholesale before, are we missing something?

Here's the information:
ARV-160K
nice neighborhood
estimate 35K in rehab, although you could live in it now.
asking price 88K.
Gross investor profit 37K

What do you think, is it a good enough deal to make a 5k profit?  Any other suggestions you have would be appreciated.  This was FSBO.  I have to admit, we wouldn't buy this ourselves, not enough of a discount but I'm sure there are people out there who think this is cheap.  What is the average gross investor profit with a wholesale deal anyway?

Thanks,
Heather

Jon Holdman · Answer

Assuming the $160K and the $35K are solid numbers, my max price as a fix and flip would be $77K.  I'd rather be lower than that.

$88K + $35K is 77% of ARV.  The right buyer might turn a profit on that.  But with hard money and slow sales, you'd be doing good to get a $12K profit out of it.

Heather Pelletier · Answer

Thanks Jon,
 
I agree with you 100% that's why we decided to try and wholesale it and not keep it for ourselves.  We've never attempted a wholesale deal before.  Who knows what will come of it.  It's encouraging to have feedback I agree with, it shows I really am learning something through all of this.  I'll let you know if we manage to close on this deal.

Thanks again for your replies,
Heather

Heather Pelletier · Answer

Thanks for your reply.  We figured we'd try and wholesale it, we have nothing to lose.  I assumed it was a long shot, that's why I created this post.  Should we lower our fee to 2-3K, it probably wouldn't make much difference.  Regardless, I'm thinking it might attract a homeowner rather than an investor.  Considering it is habitable it might work.  I'm just impressed we were able to negotiate her down from her 120K asking price, that within itself was a small victory:)

James Hiddle · Answer

In order for you to make your $5K fee your MAO needs to be $72K and that's using the 70% rule if your market isn't strong your MAO would be lower.