Reo wholesale help

[Cordaryl Green]

So this how the deal is structure currently getting 3/1 883 sq ft under contract for 29400...it has a arv of 80,000 repairs cost I can't say exact roughly around 15-20,000.Really don't know how much work goes into rehab but I do know it needs exterior work done.I'm thinking of asking price 50,000.Is there a potential profit in this deal or even if it's a good deal.,and how would I go by flipping it to my end buyers....Much help is appreciated for any kind of advice.

[Will Barnard]

This is where many wholesalers go wrong. If you don't know what the rehab amount is, how can you possibly know if you have a good deal or not and how much to offer?

You need to know two figures, one is the exit value which should only be determined by using actual sold comps and not guessing. The second is the rehab amount. Once you have both figures dialed in, you can make an appropriate offer.

Lets use your figures for an example. If the ARV is $80,000 and lets say the rehab is in fact $20,000, a rehabber will want to pay no more than $36,000 which is 70% of ARV less $20k repairs. However, since the arv is below 4100k, the rehabber may in fact need to get this a tad cheaper for it to make sense, and he/she may likely use the 65% rule which would be $80k X .65 - $20k repairs = $32,000 max.

Since you have it locked up at $29,400, you do have a spread of $2,600 up to a spread of $6,600.

Structure is your next hurdle since this is an REO, the contract is not assignable so you will have to either double close, have locked this up in a trust or entity of which you can sell to your buyer, or add your buyer to the contract and then quit claim off (not the best avenue at all).

Your comment of placing this for sale at $50,000 will likely yield you ZERO response from any legitimate rehab buyer. Since it will cost them $20k in repairs, they would be paying $70k for a home only worth $80k and it would take more than $10k just to sell it and hold it, leaving negative profits.