First Wholesale Deal, Ottawa IL

[Chad Otsuji]

Investment Info:

Single-family residence wholesale investment in Ottawa IL.

Purchase price: $105,000

First Wholesale Contract. This deal completely fell apart. I got the deal under contract for $105k, tried selling it at various price points, from $115k all the way down to $107k. ARV was $135k. Needed a max of $8k worth of work to bring it up to to market standards. Brand new Roof, HVAC, flooring, & half bath.

What made you interested in investing in this type of deal?

The house needed slight cosmetic work, and extremely motivated seller.

How did you find this deal and how did you negotiate it?

Facebook Ad and my AQ manager locked the deal up.

How did you finance this deal?

N/A

How did you add value to the deal?

N/A

What was the outcome?

Deal fell apart, because I locked it up too high.
I did not use the 70% rule, which was a huge mistake. If I used the 70% rule, it should have been ($140k) x (70%) - ($8k) = $90k
My MAO is $90k. So my initial offer should've been around $80-85k.
I tried to renegotiate with the owner, but the owner could only come down to $100k

Lessons learned? Challenges?

Use the 70% rule,
Get boots on the ground much faster, so that I can renegotiate the deal quicker
Get the owner to send as many photos as possible, even of the HVAC, Roof, etc
Communicate more often with seller
When finding cash buyers, contact from propstream, RE agents, other Wholesalers

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I tried working with other wholesalers in the area, and they were unresponsive, and some were just flat out rude.