Beach front property....Should I touch it???

Question

I got a call from a lady who filled out a form on my website. She's located in my area but she wants to sell her property in NC on a beach. This house is a block away from the beach in a desirable area (from what people are telling me). After talking to her she told me that she recently just had a brain stroke and she really wants to get her life together and she needs the money.

Deep down inside I would feel bad wholesaling this property to make a profit, I know that I would be helping this lady out but it just doesn't feel right. But here are the numbers, the ARV on two recently sold properties one on the beach 275k and one away from the beach 225k these are all within 90 days. She told me that the house was recently renovated and that it has a tenant in the down stairs apt renting it out for $676 month.

I threw out a cash offer at her for 100k and she accepted it but we haven't filled out the contract yet. My question is, what would you guys do in this situation?

Will Barnard · Answer

Keep your emotions bottled up, this is business, it is not personal.
With that said, do your self and any potential buyers a favor and complete your proper due diligence first. Sounds to me like you made an offer without even seeing the property, so you need to verify 3 things: 1. What condition is it in and how much is the actual and real cost of any repairs (do not pitch to others with deflated rehab costs - that makes you look bad)  2. What is the real ARV of this subject property? 2 comps (one of which is not a true comp from your description) is not enough to evaluate the exit value. and finally #3. Get the lease contract with the current tenants, find out if they are willing to move out or if it is better for you to have them stay, do your due diligence on the tenants - they can cause havoc for yourr deal.

One other item that concerns me - desperate seller or not, it appears that your low offer got immediately accepted which brings up a red flag to me. The numbers may not be as good as how they were represented in your post.

Jake Kucheck · Answer

Attention all people purporting to be wholesalers:

This is exactly the kind of thing you need to do (assuming the numbers are correct and minus the part about the feelings).

When do you plan to see the inside of it, and how much is expected in repairs?

Also- there is a BIG difference between "on the sand" and "a block away from the sand".

Example: My duplex is one block away from the sand and is 3/2 and a 2/1, worth about $1.7 M.  That same property ON the sand is worth about $3.5 M.  Big difference.  You want your comps to be valid, and very little sways comps like proximity to the beach.

Shanequa J. · Answer

I say go for it. She needs the money. What city is the house in?

Greg P. · Answer

Wow.. this sounds like a home run.  Yes, I understand your feeling about her having a brain stroke, but what can you do?  Try to give her the best customer service you can and then flip it and make as much as you can.  Good luck!

Jeff B. · Answer

Someone is going to make money off the deal, why not you??  If you don't feel the 100k was truely enough (though I'd inspect the property before going further), you can always simply tell her that you do indeed feel uncomfortable at that price and that you'd like to increase your offer.