What are considered “good” deals

Question

As i’m browsing through and reading the different topics. I keep seeing PROS mention if the deal is “good” enough, new wholesalers should have no problem with getting good cash buyers on their lists.

What exactly is a “good deal”? Obviously it has to be fair for the seller, and reasonable for the buyer. But what components makes a deal “good”.

Stephen J Davis · Answer

As a wholesaler, you build your buyers list before you start finding deals. Talk to each person on your buyers list and ask them what a "good deal" is. Then go find what they are looking for. For me I want to pick up 10% or more equity and 15% cash on cash or more. I stay in the $150,000 to $220,000 range in Greater Houston. I find deals like these every week.

Barry Pekin · Answer

@Bella Gilbert,

Definitely work on your education with this.  I suggest reading the book, "If you can't wholesale after this... I've got nothing for you."

Some of your buyers will want to buy and hold for a rental, while others will want to rehab and sell it.  They often have slightly different criteria as to what a "good" number is.

There is a standard formula, which can vary depending on location and other factors.  It is that you want to be able to sell to your buyers for 70% of ARV less repairs.  So if the property is worth $300,000, and there are $50,000 in repairs, the buyer should be able to get it for ($300,000 * .7) - $50,000, or $160,000.  Then, of course, you want to buy it for less than that so you can get your fee.

Brian Pulaski · Answer

As a cash buyer, a good deal to me only matters what my numbers say. If you have a house worth $250k (ARV) needing $50k in work (my numbers) and you want $180k... that’s not a deal. If you want $120k... that’s probably a deal.

As much as the end buyer will run their own numbers, you as the wholesaler need to know a deal is a deal to put it under contract and not string a seller along with a “dud” deal no one will buy.

Pete Barrow · Answer

You will need to do a lot of reading to get an understanding of this topic. Basically it means that the amount of rent you will get is worthwhile compared to what you spend.

One very crude measurement is the "1% Rule". If the monthly rent is at least 1% of the price of the house, it's worth considering. Say, a $50,000 house that rents for >$500.

Of course there's a lot more to it. For me, a junked-up house that I can get cheap and rehab is ideal. For someone else, a fully-rehabbed house that costs more but is ready to rent, is better.

The main thing you need to know about good deals, is that there don't seem to be any right now.

Jerryll Noorden · Answer

Here is my version about how to evaluate a good deal.

A good deal is about what area the house is in, what location, is it next to a high way, is it next to a cemetery with half naked goals roaming around. Is it next to a loud bar...

on the other hand, is it in a college town, easy access to a high way. In a nice neighbourhood yet not too far from mayor cities.... (depending on what your ideal buyer finds desirable)

Then,... other than the desirability and the numbers, what is the risk involved.

How likely is it that there is a foundation issue,  if you open up a wall, will the town have you redo the entire damn plumbing an electrical.

Is it a flip, or is it a buy and hold,

If it is a flip what is the ARV, and how long will it take to fix the house up and how risky is the scope of work?

A deal being a good deal, has a lot of interconnected items.

Also no matter how much education you will go after, most of this you learn doing it.

Get in touch with an awesome investor and shadow him. I see you are in CT, sadly, there is only one awesome Investor there, and he is Godlike... the only way to reach him is to get on the knees and pray, He listens to most prayers.

Good luck!

What are considered “good” deals

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