Wholesaling question (new member)

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Wholesaling question (new member)

Doniece Williams
San Antonio, TX · Member since 2014 · 3 posts · 1 vote

Hey I'm 21, I live in Texas and I'm new to real estate investing. I've been researching a lot on the subject for two months now and I've become really interested in wholesaling primarily because I don't have much cash right now and no credit. Today I started to take action and I went driving around looking for distressed properties that are for sale and I found three of them but they are all owned by real estate companies. (I don't know if that a bad thing or not) I've read in some books that's it's harder to wholesale a property if it is already on the market and it's MSL certified. Anyways I started researching on one of the properties and found out it was 45000 and a short sale. I researched properties around it and found out they were going for 60-80,000 so I'm guessing the market value of this house is around that price..i called the owner and found out it needs like $5000 worth in repairs and he's taking a 10,000 down payment. I asked him who the lender was but he said he didn't kno that information..do I need that information? It seems like a good deal to flip? I was going to use transactional funding to fund it. What do y'all think? Is it a good deal?

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    12y

    @Doniece Williams welcome to the site.

    0Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    12y

    Has the short sale price been agreed to or not? It can often take months if it comes to negotiating that price and there's no way to know if the bank will accept it. Furthermore, be wary of what the seller thinks the repairs will be, unfortunately, it's usually more. If the repair figure is true and the price has already been agreed upon, than it does sound like it has potential. But you'll need to figure those things out first.

    Podcast Guest on Show #121
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  • Doniece Williams
    OP
    San Antonio, TX · Member since 2014 · 3 posts · 1 vote
    12y

    we haven't negotiated a price but when I called him and asked him what he was selling it for he said 45000 and I thought that was good because when I looked up similar homes around it they were priced at 60-80,000. I just told him that I would call him back with an offer. I went and saw the property and it did look like it needed work but not too much. Do I need to know who the lender is for the house? I asked him and he told me he didn't have that info

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  • Brandon TurnerPro Member
    Investor · Maui, HI · Member since 2009 · 13k+ posts · 3k+ votes
    12y

    Hey @Doniece Williams Thanks for jumping in and introducing yourself! If you haven't yet- be sure to setup some "Keyword Alerts."

    Also - be sure to check out the post "House Flipping: The Best of BiggerPockets." It's a collection of the best flipping info from the site.

    See you around the site!

    Podcast Guest on Show #92
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  • Doniece Williams
    OP
    San Antonio, TX · Member since 2014 · 3 posts · 1 vote
    12y

    thanks @Brandon Turner I will do that!

    0Reply
  • Barbara Riley
    Columbus, OH · Member since 2014 · 61 posts · 19 votes
    12y

    Hi, Doniece! Welcome to BP!

    I admire your spunk. That said, i feel the need to raise a caution. I, too, am new to REI, so keep that in mind as you read my comments. I am concerned about the number of seeming unknowns here. I assume your research on comps reflects actual sold prices, not listed prices, that they are true comparables (sq. ft., number of bedrooms/ baths, garages, etc.), and that the lender (why does seller not know who that is?) has already agreed to accept $45,000.

    Wholesaling short sales, pre foreclosures, and REOs, from all I've read, is rife with potential pitfalls, financial and legal. I believe, just as an example, that banks (and we don't even know that the lender is a bank) will not allow an assignment of contract. That leaves out wholesaling unless you can afford a double closing. Even if you can manage that, I think there are minimum resale time frames, so you would have to be able to hold the property the required length of time, all the while paying holding costs. If the ARV is $60,000 conservatively, there is only a $15,000 spread which, if the seller is not estimating repair costs correctly (and they don't) could virtually eliminate any profit.

    As I said, I admire your effort to take action, I just think you need more information before going further. I'm sure there will be far more educated responses than mine, and that if I'm wrong, they will teach me as well. I'll keep watching this post.

    Good luck, and let BP guide you. There are some awesome resources here!

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