I have my first home under contract.....now what?

23 Replies

Ok, now that I have my first house under contract, I am wanting to wholesale. I know that I have to find someone who wants to buy it, a investor, but what really is my next step, how do I profit off of this property? Any advice would help thanks so much!

Is the contract assignable? If it is then your next step is finding a buyer through marketing, or finding a lender so you can buy it yourself. To make a profit you have to sell it to an investor for more than you offered to buy it for.

@Jason DiClemente Thank you so much for that! Ok, my next question how much more do I sell it for? How do I come up with those numbers?

These are probably things you should have figured out first. The answer is that It depends. As an investor, I buy properties at no more than 75% of ARV minus rehab, depending on the price point. Less if it's a lower priced home ($150k). So figure out the ARV, and the rehab and go from there.

If you can't unlicensed broker the deal then CONGRATULATIONS on your new purchase!

Most investors are looking for something similar to what Jason said:


70-75% of ARV less rehab costs. Possibly 60-65% if the house is sub-$100k ARV.

So hopefully the house you bought leaves enough spread for you to make it attractive to investors. From there, you can determine your sale price and profit opportunity.

Good luck.

@Alex Huang @Jason DiClemente

Do I have this right (using round numbers for sake of simplicity)? 

Purchase price: 50K
ARV: 100K
Rehab: 15K

In this instance, you'd look to acquire it at a price of say 60K (75-15)? 

@Alex Huang the home is $19,500 and has about $10,000 worth of repairs. I'm basically doing this with no money honestly, hoping I can make a profit so the next deal I will be able to put my own touch on it.

Originally posted by @Cosmo Iannopollo :

@Alex Huang @Jason DiClemente

Do I have this right (using round numbers for sake of simplicity)? 

Purchase price: 50K
ARV: 100K
Rehab: 15K

In this instance, you'd look to acquire it at a price of say 60K (75-15)? 

Yes $60k should be your absolute max offer, though I would advise that for properties ARV when doing the calculations. The reason is that cheaper houses have lower upside, but certain rehab costs stay fixed (eg a $600 water heater is still $600 regardless if it is going in a $300k house or a $100k house).

The 65-70% simply gives you a target profit margin and a little room for error / unexpected costs. 

How can you sign contracts to purchase without money? That is what I see with many unlicensed brokers. Maybe you should have funding so you can HONOR YOUR COMMITMENT?

Originally posted by @Amanda Finney :

@Alex Huang the home is $19,500 and has about $10,000 worth of repairs. I'm basically doing this with no money honestly, hoping I can make a profit so the next deal I will be able to put my own touch on it.

I'm not familiar with what profit expectations wholesalers seek, but I'll assume atleast a few thousand dollars. So in this case, I would be expecting the house to fetch atleast $48,000 fully renovated.

$48,000 - ARV

x .65

= $31,200

($10,000) repairs

($19,500) purchase price

= $1,700 profit

@Alex Huang Awesome. I never really thought about wholesaling but it's interesting to see how different deals are analyzed. 

I come from a small town in upstate NY where property is cheap but for the fixed costs reason, you can't really rehab and sell for profit. It's such a tease to see a price tag of 20K, only to realize that 20K worth of work will get you to a 25K valuation, haha.

@Alex Huang That's more then what I have in my pocket right now! you have to start some where. no need to bash people for what they are trying to do. Thanks though.

Originally posted by @Amanda Finney :

@Alex Huang That's more then what I have in my pocket right now! you have to start some where. no need to bash people for what they are trying to do. Thanks though.

Where did I bash you? It certainly wasn't my intention, though I am not sure where you might have misconstrued anything I said earlier as a bashing.

You asked for advice and I laid out an example (using your numbers) to illustrate what numbers you should be targeting to make a little profit.

Good luck.

After reading this thread it's obvious that you need to spend more time educating first.

There is a ton of information here on BP about wholesaling, the various strategies, legalities, etc.

Spend some time digging around the forums, listening to podcasts, watching webinars, etc.

@Amanda Finney what do you feel the ARV is on the property? What do the comparable sales tell you? I don't have houses that cheap in my market but if I did, I would probably be at 50% ARV minus rehab. Very little upside when property is so cheap. Unless it's worth $100k, then let's talk!!

@Jason DiClemente I said about $36,000. Comparable sales are about the same in that area. so I should look for a higher selling house than that? Okay thanks so much and Also as I am still new and still learning how am I able to calculate the MAO? i know its ARVx70%-myfee= MAO

i am wondering at that price does this house have wheels under it ?

@Matthew Paul No, it the neighborhood its in.  Here in Memphis, TN all the houses in that area are for sale for that same price maybe a little more. 

Sorry @Amanda Finney I didn't see where you said that. For me (everyone has their own preference) I would want pay less than $10k for that property, maybe up to $15k if it was a solid rental. At $38k ARV I would have to use my own cash so it would have to be a great return on my investment. The general formula to be safe would be 75% of ARV minus any rehab, minus your fee. That will generally get you buyers. Lower priced properties like this I would use 60% ARV, because there is less upside for the investor

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