Possible First wholesale deal??

21 Replies

Hello BP community, I’m relatively new to real estate wholesaling. I’m in the philadelphia area and finally through some VERY hard work I was able to track down an interesting lead. I found a motivated seller in west oak lane area near 66th ave. The ARV in that specific area is between 160-180k. The kicker here is that the property has significant fire damage. The entire second floor has fire damage . He owes 17k In taxes and 10 k for water bill. He told me that he only wanted to make 1000 dollars in his pocket . So that means he would sell to me for 28k , I would charge 7k for wholesale fee. Would 35 k makes sense for an investor who wants to buy? Or is that price too high. I’m estimating between 65k -85k in repairs need to be done. Houses are selling very fast in that area after repairs usually no less that 150k. You’re input would be greatly appreciated, this would be my first deal!

@Account Closed I see it is your first post so welcome to BP.

I think that is probably a deal. Depending on exact rehab costs you might have to cut your fee to make it happen but I think it is a safe deal.

Originally posted by @Account Closed :
Hello BP community, I’m relatively new to real estate wholesaling. I’m in the philadelphia area and finally through some VERY hard work I was able to track down an interesting lead. I found a motivated seller in west oak lane area near 66th ave. The ARV in that specific area is between 160-180k. The kicker here is that the property has significant fire damage. The entire second floor has fire damage . He owes 17k In taxes and 10 k for water bill. He told me that he only wanted to make 1000 dollars in his pocket . So that means he would sell to me for 28k , I would charge 7k for wholesale fee. Would 35 k makes sense for an investor who wants to buy? Or is that price too high. I’m estimating between 65k -85k in repairs need to be done. Houses are selling very fast in that area after repairs usually no less that 150k. You’re input would be greatly appreciated, this would be my first deal!

 Try to put the deal together. The experience alone will make it worthwhile for you. Someone will want it, eventually.

@Ruben St. Paul alright to be conservative with numbers since wholesalers tend to be overly optimistic. (Not saying you’re wrong just in general). Let’s say 35k purchase plus 85k rehab and 160k ARV. That leaves me with 40k margin minus say 10 percent selling costs. For net 24. This assume no carrying costs. Let’s say I got hard or private money loan at 10 percent, it’s interest only. They lend 70 percent of ARV. Which is 112k, at 10 percent is 933 a month, say it takes 6 months (optimistic), so that’s 5600. So before taxes I make 20k. Wholesaler makes 7. I say probably make your wholesale fee 5k and if your numbers truly are accurate (I’m being conservative), this is probably a deal.
Originally posted by @Account Closed :
@Caleb Heimsoth

Quick question, what do you mean by 10 percent seller costs?

Assuming you wholesale it to a flipper and they use a real estate agent to sell, you’ll have 8-10 percent costs for all of that and taxes etc 

@Ruben St. Paul if the whole top floor of this row home is torched I think it would be closer to $100K to rebuild everything and also update the rest of the home. New building costs are roughly $150/sqft in philly depending on finishes but that’s new construction.

Have you seen the house and determined a semi accurate rehab estimate, or is it just a guess? Fire damage can be nothing or it can mean rebuilding the entire second floor, roof, etc. Best to get eyes on it and try and get a good understanding of whether it is a $60k renovation or $100k like another poster noted.

@Ruben St. Paul Hello Ruben, I'm from the West oak Lane area. 75th and ogontz. but I currently live in Illinois. I've been keeping eyes on the market over there. Comps have been running higher lately,Pushing 185-195. My cousin just rehabbed a property in that area and got top dollar in a week . ($194,000). I would say just make your sure your buyer will be the best ARV so you can find a buyer quickly.

@Mark Gallagher

 Am I able to split the transfer tax between buyer and seller? Does the transfer tax get taken out of our proceeds or do we have to come up the transfer tax upfront before closing. Also If I am assigning the contract to an end buyer wouldn't the end buyer have to pay the tax?