Wholesale Multi-unit Housing Question

[Tanya Brown]

I'm learning to wholesale and currently taking a wholesaling class, and I have sent out my first postcards. I received a call from a rehabber who wants to unload a property that he said he just doesn't want to rehab anymore. It's in an up-and-coming area that hasn't come up in the 10 years that everyone has been saying it's up-and-coming. Its an area where there are a lot of rentals and Section 8. There are some boarded up homes, but rehabs are happening on some of the blocks and there are new building and expansions from the nearby university happening in the area. This is a 4000 square foot multiunit that the rehabber said could hold 5 or 6, 1 or 2 br units. I have not gone inside the property yet. He is asking for $70k because he wants to break even on what he put into it already. He paid $28k and put in 42k, which he said was some framing (which is a lot of framing), but he said nothing else has been done and it's a full gut, according to him. Comps in the area are no higher than $35, most of them being buys for a rehab. There were 2 recent sales that were rehabbed that priced at 105K and 80k, but they were not multifamily. My question is how do I work this as a multifamily? I see this as a buy and hold due to the area and rents at $900 and higher for 1-2 br and even $1100-$1300 for Section 8. Can I calculate the ARV based on rents only. I guess the better question is should I calculate the ARV based on possible rents? What's the best way to do this?

Thanks for the help?