Buying from wholesaler in Ohio

[Alison Mercer]

Hi,  

We have almost completed our due diligence purchasing a property from an off market wholesaler in Ohio.

Sale price is $52,000 and we know there will be around $15,000 worth of repairs including foundation repairs. The ARV is conservatively $80,000 but likely $90-100,000.

We are going to hold this property as a rental as we know this property will cash flow and provide us with some equity in the next year. 

Our due diligence checks out- our independent contractors, building inspectors and assessors have all come back ok or as expected. 

The main concern I have is that this deal looks too good to be true. 

Who would sell their house for so much under market value? 

Also, we heard about the deal though a Real Estate Agent we trust. This deal is happening very quickly and although we've done our homework,  I just wonder if it is always like this? 

Just after some thoughts. I am normally quite passive on Bigger Pockets but buying off market from a wholesaler and closing quickly is all new to me, so why not ask an experienced crowd? 

Alison

[Brent Coombs]

@Alison Mercer, a lot depends on your cash-flow / risk parameters. In the mid-west, investors can find properties that will gross 2% return on their outlay - per month! Of which, they will allow half towards their ongoing expenses, therefore netting 1% per month. Extrapolating those figures to your scenario, this property should gross about $1,400 per month - but does it?

Frederick was right to ask you which area of Ohio you are looking at; but it's not just which town. Within each post code, there are usually A, B, C, D and F neighborhoods which can be quite close to each other - which require LOCAL KNOWLEDGE to determine.

Your Real Estate Agent believes (by definition) that $52,000 is the highest price available from the market at this time, which therefore means that $52,000 IS its market value. Most Flippers will want more of a cushion than an ARV of only $10k more than they have to put into it - so if you were to NOT buy it, the next highest Offer might be significantly lower!

There are obviously other factors go into determining good investment decisions. Hopefully your research will have realistically covered those factors. All the best...