Can I wholetail this deal and how?

Question

the house is worth $180k. The seller may let it go for $140k. It's tenant occupied and paying on time. So the question is once I put it under contract how do I market it to retail buyers? Do I have to get an agent to list it on mls? Which will cut in to profits. Can I advertise it as a turnkey property? And should I only look for cash buyers?

Tom S. · Answer

I'd start by analyzing if it's really a deal. At the standard formula of $180 x 70% = $126k most you would pay. So at $140k it's not a deal. Then you also have to factor in any repair and your profit, which would make it even further below $126k.

- Tom

Jeet Sangha · Answer

@Brad Smith

I thought that was whole concept of wholetailing right?

Selling the property at retail price. It doesn't need any repairs, maybe new paint and some landscaping.

DaNia Allen · Answer

@Ryan Lockstein how do you find the owner occupied buyers? Aren't those buyers usually FHA loan buyers? I've read that buyers with FHA loans are usually hard to wholetail too. I'm just trying to get a better understanding of wholetailing.

Duane Ortega · Answer

@Jeet Sangha

The more meat you leave on the bone, the higher the probability of an investor buying it.  SFH can be wholetailed easier than multi-family as those end buyers are mostly buying on emotion/home and not calculating their returns.

Brad Smith · Answer

@Jeet Sangha

Hi Jeet,

You also have to get inside the head of the potential investor.  Say the property rents for $1500/mo.  The Investor is going to apply at least a 5% vacancy and 10% repair/management cost factor to gross rents. That $1500 gross rent is now $1275.  If the PITI for the Investor on his mortgage is $1000, that's only $3300 net cash flow per year on their out of pocket expense.  Just a hypothetical example to be sure, but still another reason why Investors never pay market value on rentals.

Tom S. · Answer

@Jeet Sangha  Most investors of rental properties aren't looking to pay retail or near retail.  That said, certainly you can still market it and see if you get any bites.  Be sure to include info like the rental income. number of bedrooms, tenant history, expenses, etc.

Good luck!

Jeet Sangha · Answer

@Tom S. I was thinking the same.

I wanted to know if I can find a retail buyer who is looking for a rental property and willing to pay the market price for the house. And I can just double close on it so put it under contract for 140 wholetail it to an end buyer for let's 170. 10k below market value just to move it quick and still make 30k minus any fees.

Unless I'm missing something.

Can I wholetail this deal and how?

Most Popular Reply