May be a first deal

3 Replies

I have a house that I’m looking at the seller wants 33,500. This house needs new counters, cabinets, electricity ran, and has no insulation and needs a front wall replaced. I’m trying to get it under contract for 20k. Does this sound appealing to a cash buyer? The comps in the area are 90K’ish or am I doing it all wrong?? 

Sounds like it could work depending on total rehab costs: as long as you are within the 70% ARV - repairs- wholesale fee.

You also have to be careful with the ARV. I have heard some flippers wont do anything that's under 20k profit for them. This means following the typical 70% formula is hard. You need to know the flippers and what profit they're looking to make, otherwise you may not be able to move it. 15%-20% on say 75k-90k isnt as appealing to some flippers. Make sure you understand comps and how to evaluate them really good as well. Best to you!

Are all these things guesses? You need to create a solid spreadsheet before you just make an offer. Follow the 70% rule of renovations and start shopping what your repairs would actually cost before offering the $20k. How confidently are you sure you will get the $90k ARV? Did you account for holding costs and agent fees? Whats the average Days on Market in that area? Absorption Rate?