Advice needed! BRRRR, Wholesale, Fix/Flip ?

Question

Good afternoon BP family,

For my first deal, I would like to open a discussion and get some experienced advice on what I should do in my current situation:

I recently connected with an attorney who place bids at property tax sales each year in Maryland. Long story short, I will be purchasing a distressed home the attorney was able to foreclose on, taking possession as the home owner never responded. I’m stuck with 4 options to decide from.

* The property is very small with no room for adding rooms/baths. Smallest in the neighborhood

Option 1: Wholesale the home “as is” and net profit 102% , to walk away without touching anything.

Option 2: hold for 6months, BRRRR the property to keep as rental, and net profit 50% return by doing a cash out refinance at 75% LTV as an investment property with 15 year term.

Option 3: Post “As IS” on the MLS market and try to create a bidding war due to this hot current market and possibly  make an even higher return instead of using the wholesale option.

Option 4: Fix and Flip while getting my feet wet in the process and net profit 105% return. thank you so much for the feedback !!

Young Park · Answer

@William Harris Hey William! Sounds like you got good problems, my man haha. I honestly think you'll get different answers from different people because we all have our own opinions.

The real question is - what is important to YOU? What's your current situation (financial, life, etc)? What's your long-term goal? Does one option align with that goal over the others?

Best of luck!

Santiago Marquez · Answer

Hey William, I agree w/both Young & Darius. All options are good ones.

Wholesaling it & Putting it out on the MLS are both going to net similar outcomes for you.

Although options #2 & #4 become more interesting bc as everyone can see the market is hot almost everywhere.

Taking the options of BRRRing the property & cashing out is definitely a great one just as well as FIX-n-FLIP.

Here is where knowledge of that particular market would help. Bc if you studied that market & have always seen it appreciate effectively you may decide to keep & build that portfolio. You’d get that monthly cashflow building & appreciation in that market.

So @Young Park was right. You have to think about your end goal here aka your exit strategy.

What do you see yourself wanting to get out of it?

Whatever that is congratulations to you & we hope to hear your results 😁💪💯

William Harris · Answer

@Eric James yessir! Yeah I would never recommend to purchase a home from a tax owner unless the process is completed and title is free and clear

Steven Goldman · Answer

What's wrong with it that the attorney is not going to keep the profit? Or is he just a generous egalitarian attorney? If you want to be a landlord than buy and hold. If you get a good return on the cash out so be it. Be aware that their are seasoning rules regarding properties purchased at sheriff sales. Also investigateate the title carefully especially if the foreclosure was by default. Make sure it is insurable.  We regularly do cash out refinancing for BRRR investors. Good luck!

Darius Ogloza · Answer

Alternatives 1 and 3 aren't really alternatives: you can do both and see what happens.  Why waste time and energy and undertake risk for 105% return when you can get 102% by essentially doing nothing?  Whether your projected numbers are real or not, I am not qualified to judge.  Good luck.

Tucker Cummings · Answer

Definitely not enough information to make a real determination, but at first glance it sounds like #1 is the best way to go.

If you're wholesaling, you are taking on zero to low risk to double your money. You can't beat that risk/reward ratio. Get the money from the wholesale opportunity and plow it into a rental.

Eric James · Answer

Here in TX it isn't just the redemption period. There is around a year during which the previous owner could contest the tax foreclosure as having being improper. No title insurance during that entire period.

William Harris · Answer

@Eric Jameshahahah that’s funny. Yeah you can’t do anything with the property until you’ve completed the redemption process and get issued the judgment to take ownership. In this case, the attorney got to the finish line and presented the deed to the county for approval. That’s when I stepped in to purchase from him.

Eric James · Answer

You want to be well versed in all the nuances of tax sale properties.  This past summer I saw a guy purchase a house at the tax sale. Then, within a couple weeks he had it listed for sale. Even his realtor didn't know you can't get title insurance for these for an extended period of time.  Tax sales are a whole other ball of wax, different than retail properties.

William Harris · Answer

@Eric James I will definitely look into this. The tax sale was in 2018. Took the attorney 3 years of sending out notice to owners with no response before getting rights of redemption, which happened 2021.

Advice needed! BRRRR, Wholesale, Fix/Flip ?

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