First wholesale deal analysis. Is this a good deal? Houston, TX

[Luis Avila]

Hello BP! My name is Luis and I recently began my venture into wholesaling here in Texas.

After doing all my due diligence about wholesaling in Texas (learning the rules of disclosure, assignment and using the correct contracts, along with the appropriate language) I began driving for dollars and making phone calls.

I came across a property that looks to be a killer deal after speaking with the owner, but I am not sure what the repair cost would be or if it would even be worth repairing. This is the main thing keeping me from getting the property under contract. I don't want to tie it up and then leave the seller hanging because I couldn't find a buyer.

Here are the details:

Main House 

- 2,500 sq ft 

- Flooded with about a foot of water about 6 years ago, seller was not clear exactly when.

- Home was damaged by a fire in the kitchen. 10x10 uncovered hole in the roof for about a year.

- Home is completely gutted down to the studs per seller.

I have not inspected the property on the inside. Waiting on seller's son to show me the property as seller does not live in the area. From what I gathered, the main house would probably be a demolition project. I have no idea how much that would cost in the Houston area (neighborhood has no restrictions), or if the home is repairable. Moisture and Texas heat more than likely has this home filled with mold, not to mention all the critters (termites and other bugs) that probably made this their home. 

Detached Garage with Apartment Above

- Approximately 1,000 sq ft apartment above four car garage. 

- Exterior looks to be in great shape

- Have not clarified with seller whether the apartment has a bathroom, kitchen or how many rooms.

Lot

- Lot is almost 1.5 acres

- Has an old septic system and 200 ft water well that have not been serviced for years.

- Very nice gate and fence around property.

- Small sized pool that has not been cared for.

- Has two gates and horseshoe driveway

- Beautiful landscaping

If the entire property were to be fixed up including the main house the property could be worth $350k+.

If the main house is considered a total loss, then the property could be worth $230k-$250k, just with the detached garage/apartment. Maybe more since it does have a pool and the lot is beautiful and very well positioned in a rapidly growing area.

ARV with Main Home: $350K

ARV without Main Home: $230k-$250k

Asking Price: $150K

Repair/Demolition Cost: $?

Without knowing the cost of repairs and demolition I can't come up with a good offer price. If the entire property is fixed the asking price is only 43% of ARV, which is a heck of great deal and leaves a ton of money to play with. But my gut tells me that the house is a total loss and the cost of demolition alone will kill the deal.

This is my first deal. There is still A LOT I have to learn. If anyone here is willing to help me, I will take any advice and thoughts. 

Again, what I don't want to do is leave the seller with a bad taste for wholesalers and giving our profession a bad name. Thanks for your time!