All Forum Posts by: Samantha M.

Lets assume the wholesaler in this case did their due diligence, provided solid ARV comps and brought a contractor along thats investor friendly to produce estimated repair costs.

The wholesaler provided all the information possible, and believed in the property themselves and put it under contract. Not trying to mislead or be negligent by not doing their due diligence. However what happens when it goes bad for the for the end investor? If you call back in a few months and find out the investor incurred additional costs out of the ordinary, perhaps several leaks under slab or other hidden issues that the contractor didn't even pick up, and greatly reduced the profit margin or now the investor is now breaking even.

How would you try and maintain the relationship from there?

Jon Holdman Wow, thanks for the informative reply! I really appreciate how you structured it as well, from strongest to weakest.

Is owner finance/ seller finance synonymous with lease option? The two seem similar to me

Lease option - allows the tenant the option to purchase the home

Owner finance- owner is the bank, sells home to the buyer

There are numerous factors that go into what makes a subject property better as a flip or rent.

What are some of the factors you use to evaluate the subject property to reach a conclusion?

Some things I look for
-If the comps show the property rents for $1 per sq ft or better, definite rental
-If DOM is greater than 90 not good for a flip, probably better as rent

To find a great property it requires two things: accurate ARV and precise ERC. When learning to estimate ERC correctly I was thinking the best way to go about it is to find active rehabbers at REI clubs, see if you can tag along to a few of their properties if you get to know them.

Or call around and find general contractors/ contractors familiar with working with investors. See if they would allow you to visit properties they are working on, perhaps in exchange for future business if your wholesaling or even just offering them lunch.

Curious what others here would suggest.

As the topic states, sometimes when I speak with individuals new to real estate they will often site Trulia and or zillow to pull comps.

Thats not for a general estimate mind you, but for actual comps for the subject property.

How do you explain that such sources are less reliable than the MLS? To my knowledge, trulia/zillow use some sort of algorithm that aggregates prices. In other words, its decent for a "ball park estimate" but for specific comps its no good.

Thanks for stopping by, I understand where you are coming from, but I think the numbers in this case might be different? Everyone of those comps is a house being delivered in retail condition to the market.

I removed any sort of "as is" sales, foreclosures, REO's, HUDs and from the MLS search. Wouldnt that make them apples to apples? The whole point of dropping the low and the high is to get a better representation of comp sold price range. It removes the highest value sold and the lowest. Its great that a house in that neighborhood sold for $119,000 but that was the highest, and it may not be likely for an investor, thats why I dropped it to get a more conservative estimate.

Thanks again for the indepth reply Bill, will definitely mediate on that information.

With that being said I had an additional question. When I pull sold comps for determining ARV I typically drop the lowest and the highest to get a better range is that something that you agree with?

For instance in the image below: $106,500 is the low and $119,000 is the high. For the final comp report I would remove these two because they are the high and low in the range

This again may be variable by area, but here in DFW TX I was under the impression HUD would go no lower than around 88% listing price. Anything below that and they will counter you.

If you can indeed get a HUD at 1/3 value after being re-listed thats great news.

When you are looking to wholesale an REO property, you first look at listings on MLS. Once you have found one and submitted a low ball offer that hopefully gets accepted, and you have an option period. If the option period expires and you were unable to find a end buyer for the property you just burned the relationship with that specific asset manager/reo agent. In the future, they are less likely to accept your offers or reject them outright

With a HUD home, to my knowledge there is not a traditional asset manager. When a property goes open bid, I know an asset manager collects the bids, but beyond that I am not certain. If you get the HUD under option, and you fail to find an end buyer, are you going to burn a relationship with a HUD asset manager somewhere out there, who will be less likely to accept future offers? Or is HUD blind to houses that go under option and are not sold.

Thanks for the clarification everyone