Need some advice...

[Richard Rodriguez]

Hey everyone,

I have a lead, and I am not sure if it is a very good one. I am trying to wholesale this house, and usually a nice rehab project is what a wholesaler might look for, easier to negotiate wholesale prices and they usually sell faster, but I am not sure about this one.

The guy's house is vacant which is great, and according to zillow it is worth about 134,000. However I am not sure if I should always stick to zillows estimates. But here is the thing...the house is so run down that I am not sure what can be done with it. The town wants to condemn the property. Parts of the floors are rotting out, the basement is completely rotted out and there is a large hole in the side of the house. It just gets worse from there.

In order to go on with this deal I need to make the guy an offer, but I am not sure what to offer him. Usually what I would do is make on offer based on a certain formula (ARV x .70 - 30,000 = My offer).

So I guess my question is this...should I make an offer based on the value of the land and approximate tear down costs or should I make it based on repairs needed? I just don't know what to do with this?

The guy wanted somewhere in the range of 40 -45,000...which if the house wasn't a piece of junk probably would have been okay, but I have a feeling that is too high.

I did my research on the locaal market and here are some things I noticed:

Houses in tip Top shape in the area go for an average of 300,000.00

It is a nice area

On the other end of that...a house just down the street sold for 70,000 a year ago and it has 4.6 acres, more bedrooms and is in good shape.

This guy has 1,440 sq ft, 4 bedrooms and 2 bathrooms and his house was built in 1880.

Sorry for the long post, but I tried to put in a lot of detail. I am not sure how to make an offer on this?