Need advice on a potential deal buying at $180k then wholesale @ $220k

[Marcus Mccray]

I would like some opinions on whether or not I should go through with the following deal or if I have this figured out right...

The property: A 2 story, 11 bed 2 bath sober living/mini church type building. (REO)

Pros: may get offer accepted at $180K, appraised for $350k as a single family home.

Cons: needs to be converted into a single family home (including code violations needing to be corrected), bank wants to sell property as-is tenant occupied

My plan is to package the info including construction costs with plans on converting property into a single family dwelling and wholesaling the property for $220K.

I have yet to get a contractor to look at the place but the Realtor has had a city inspector walk through and knows what code violations need to be addressed.

Any thoughts would be appreciated...

[Jon Holdman]

Very thin deal for your buyer at $220K. Rule of thumb is 70% of ARV less repairs. 70% of $350K is $245K. That leaves $25K to fix the code issues, convert back to a SFR and get rid of the current tenants. 11 bedrooms is crazy for a SFR, so some of those must be cut up living spaces.

Certainly you can try to take as much of the profit as you can. If the $350K number is correct and it can be converted for $25K, the rehabber stand to make $35-50K. You're taking $40K, less your costs. A lower price for you buyer might make it more attractive.