Seeking Advice on Wholesaling or Fix-and-Flip Options for Bank-Owned Property

[Michael Belz]

I’ve been working with a bank’s agent over the past three months on a single-family home listing in my area. The property is a full rehab, possibly more, and originally had restrictions from Freddie Mac requiring buyers to live in the home for at least a year, so I initially passed on it. However, about a week ago, I followed up, and the agent mentioned the price had dropped with no activity, and that the occupancy restriction would be lifted after 30 days on the market.

I made a low offer, and after some back and forth, they declined but then listed the property on the MLS for less than their lowest counteroffer to me. This price drop attracted attention, with three offers at asking price and six showings in just three days. However, since I was already negotiating with them, they allowed me to accept the newly posted price within 24 hours, which I did.

Now, I have two options: I could fix and flip it with an estimated $200K rehab for an ARV (After Repair Value) of $825K, having purchased it for $465K. But since I'm not an experienced fix-and-flipper, this would require hard money, additional out-of-pocket expenses, and a 3-6 month turnaround before selling. Alternatively, I'm considering wholesaling it for a quick $20K, but I'm not sure how to find local investors who can move quickly and close within the bank's timeframe.

I’d appreciate any tips or guidance on whether I’m approaching this the right way, ways I could improve, or how to effectively connect with local investors who could allow me to wholesale this property and make some immediate cash. Your advice and insights would be invaluable. Thank you!

[Jonathan Greene]

It sounds like there is some scale in the deal for a fix and flip, but you would surely be way out ahead of your skis to do that based on what you said. Are you sure it was the best idea to beat out the other offers to be in this predicament?

Wholesaling wouldn't make much sense since all of the investors in your area have seen it on the market and could have offered on it in that quick offer process after the 30 days elapsed. If they know you won and got it for less than their bid, I am not sure they will turn around and buy it from you for a 20k spread. They might want you to stew in it if you can't do the rehab.

Your best scenario would be to bring in a partner on the flip who is experienced and share the deal with them to get the experience if you can.