Took first appointment today! Do I have a deal?

Question

So I went on my first appointment today which came from a post card off my pre-foreclosure list. Still not sure exactly what I’m doing, but I’m comitted to taking imperfect action as I learn the ropes. Here are the details. Would appreciate any feedback or thoughts on your analysis. Deal or no deal?

Property details: 4 bedroom, 2 bath, 1,440 square foot, SFR on a 6,700 sqft lot in Madera, Ca. Built in 2004. Home still has all builder grade materials from original build. Needs cosmetics updates only.

Rehab budget: 20K

Amount owed (including foreclosure fees/penalties) : 165 K

ARV: $220K

Homeowners are looking to cash out as mush as possible to help them get back on their feet.

Thank you for your feedback, I truly appreciate it.

Best regards - A grateful wholesaling rookie!

Jeanine P. · Answer

@Ralph Garcia I'll pm you. You may have to structure the deal differently.

Ricky Knack · Answer

@Ralph Garcia here’s how I’ve been told to eval a wholesale deal.

ARV- costs (approx 10% of ARV) - rehab/repairs - profit for flipper - your wholesale fee (or however you’re terming it) = offer

Get the property under contract and present it to your buyers. You’ll get an education either way. Have outs just in case.

Good luck!

p.s. feel free to tell me that my estimation/evaluation method isn’t right BP’ers but please share how you do yours

Charlie MacPherson · Answer

@Ralph Garcia  That deal sounds thin.  Are you certain of your rehab numbers?

Also, don't forget to include carry costs and a safety margin for things you missed in your walk-through.

Carry costs are another line item you need to account for - lending costs, taxes, insurance and utilities.

Normally pre-foreclosures don't have enough equity to make a deal out of.  If they did, they'd list it on MLS and maximize their sale price.

Ralph Garcia · Answer

@Charlie MacPherson thank you sir for the quick reply. I agree, while I was crunching the numbers I quickly realized the deal would be thin;  if able to made at all. Thank you for pointing out the carrying costs, that is not something I considered, but will be sure to add going forward.

As far as the rehab budget, I feel pretty good about it. The house was a new build in 2004 and has been well taken care of. Just needs a few updates (fresh paint, carpet, etc.)

Of course we would encourage our cash buyers to conduct a walk thru/inspection to verify/confirm our estimates. I’m really hoping we could find a way to help this couple, my heart really goes out to their situation.

Took first appointment today! Do I have a deal?

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