Wholesale opportunity? or flip

[Paul Magda]

Hello all,

I am a solar sales rep by trade but have been fond of real estate investing for years.

I recently went out prospecting and found a VERY dilapidated home that needs a complete gut/remodel. It is a 3/2 1290sqft starter home. The owner is ready to sell and would like to sell in the next few weeks of we can come to an agreement.

When I saw the house I went back to her and made a verbal offer that was about 110k lower than what she wants. She refused the offer but I opened up the negotiation with this. 

My question is: what would be the best play here? Do I attempt to wholesale the deal (if this option, what is the most I can offer her?) OR do I do a hard money loan and sell OR refi and long term keep? 

Any advice would be greatly appreciated. 

[Charley Gates]

Quote from @Paul Magda:

Quote from @Charley Gates:

Hi Paul,

Wholesaling the deal seems like the safest option and offers the opportunity to learn a lot when you present the deal to other investors.  Their feedback and analysis may be very insightful. 

Generally speaking, an investor doing a fix-and-flip is looking for at least a 30% profit margin in order to account for all of the risks that are being taken.  This may not be a deal at all depending on the expense of the rehab that is needed.   If the deal is viable, you could potentially charge as much of a wholesale fee as the deal can afford keeping in mind two things:

1)  some investors cap how much of a wholesale fee they will pay

2)  Seller may be upset if the wholesale fee is too large and she finds out

It's hard to make any more specific recommendations without more details. 

Good luck. 

 Thank you for the reply, Charley. I appreciate the feedback.

 I did not post in the original post but would this deal be a good seller finance option also?

 Seller financing is a great way to exit a property.  Make sure that you use an RMLO (residential mortgage loan officer) to qualify the Buyer.  After you execute the seller financing, you can either hold the note for cash flow or sell the note on the secondary market.  Using an RMLO to 'paper up' the seller financing process will maximize the value of the note on the secondary market. 

In this case, there are other steps that must come first prior to seller financing.  You would need to acquire the property and then execute the full rehab or at least a lot of the rehab (leaving the last bit to the future owner occupant).