How to make the best decision on a possible deal

[Nicholas Jackson]

Hello!

I recently had a conversation with a homeowner in my local area. They own a property around the corner from me that is vacant, and they are willing to sell. The seller made it clear that he does not want to go below 100k as he has made it clear he has come down quite a bit with other people and he doesn't want his time wasted. I would love to take on this deal, but it would be the first deal that I would not use a traditional loan on. It is a fairly large home at about 4.5k sq ft. It has a main floor, basement, and upstairs area with each floor having its own kitchen 2 bedrooms and a bathroom with the top floor having 3 bedrooms. Entrances are pretty awkward, but it could easily be made into a triplex. My concern is that some of the renovations will be more expensive than I expect. The comps in the area I estimate to be around 240,000 to 280,000 from my analysis. Rental comps would be about 1100 to 1200 per unit within this area.

 I believe with my financial situation that wholesaling this property would be what's best for me as I really would like to have more capital on hand. I estimate that renovations would range from 50k to 150k depending on what work someone would want to have done. I am hesitant to get it under contract because I am unsure if this would be a good deal with these numbers. I have not done a wholesale deal before, so I am nervous to jump in and find out the numbers won't work. I do not have pictures as I only have description of the property and the inside from the seller. With the seller out of town I am not sure I would be able to get access or pictures to potential cash buyers. My question is, would it be best to still try to get it under contract and look for a cash buyer, or possibly look to partner with a private lender and take the deal on myself, or is this just a bad deal at this price that I should avoid.

Thanks for all your guidance and assistance! 

[Nicholas Jackson]

Quote from @Devin James:

Hey Nicholas Jackson,

I recommend that you get in touch with a local contractor and walk the property. They will be able to give you a good estimate on the rehab budget. At that point you will have a clearer answer on if you have the finances for the project or if you should wholesale it.

You can get the property under contract and try to find another buyer during your inspection period. If you cant find a buyer and you are still within the inspection period, then you can back out of the contract free & clear (at least here in FL, may be different in your state, make sure you check what your contract says for the due diligence/inspection period).

Look up your local real estate investment meetup and bring the contracted deal to that event, you'll know pretty fast if its a good deal or not.

Thank you for the advice! I managed to do a walkthrough and take pictures that I will send to a local contractor to get a more precise estimate. If the numbers work with the contractor I will look to get it under contract from there.