Is this a good Turn-Key Deal?

Question

Friend of mine is a flipper and has this house listed on the MLS in Evansville, Indiana but is not liking the Realtor he has on the property, so I offered to wholesale it for him. Here's the deal we are discussing:

Address: 1012 N Fairlawn E Circle - Evansville, IN 47711

Purchase price: $81,500

Listed price on MLS: $89,900

Appraisal Value: $91,500 to $94,000

It's a turn-key property recently flipped and updated. The deal would leave a good $10K or so to the new owner.

Is this something I should move forward with?

Thanks in advance for your advice and insight.

Steve Vaughan · Answer

What will it rent for, William?If it won't sell on the MLS for 89, it's obviously not worth 91-94 in the real world.

Curt Davis · Answer

william, your wasting your time trying to wholesale a property that is turnkey and almost full market value.

James Wise · Answer

The MLS is the best source to sell a house. With the MLS you have the listing agents entire sphere of influence being exposed to the property as well as the sphere of influence of every other realtor in the area.What is it that your friend dislikes about the listing agent?Communication issues?Property not selling fast enough?

William Higdon · Answer

Good to know fellas. Thanks for your input! It is greatly appreciated!

Steve Vaughan · Answer

I would buy a 1%er in my area all day. I can self-manage and our taxes are a lot lower here.In IN (for the most part) I would expect higher, like 1.3%/mo. For out of state, I would need to be closer to 1.7% to account for the undoubtedly crappy PM and risk.Is this in a good area I would imagine? Selling, I would target LLs as well. State estimated rents. Most agents probably don't do that.Don't worry about the 1 trick pony 65% guys with no money to buy. What a joke.

Edward Rhoads · Answer

Again, who is your target buyer? Is it a flipper, a retail buyer, or some out of state guy with money burning a hole in their pocket wanting 10% a year profit? If I bought a house for 90% of retail and then sold it for retail I would loose money. You can rule out flippers.You cannot wholesale to retail buyers, that is what MLS and real estate agents are for.Also you have left out how much it rents for. All I see is ARV so I am valuing based on a flip.Even if renting, if I buy a house I want more than 10% because if I change my mind and sell it I loose money, in this case about 5-10k.The key word was that you were trying to wholesale it for him, not retail it.Now as a rental, is this a property that is going to cash flow 800 a month if you have no mortgage on it or will it be closer to $500? Furthermore, do you have a buyers list for that? Or are you going to sell it to an investor that would sell it to the out of state buyer. If that is the case, they need more meat on the bone than 10% unless you have someone that rips out of state buyers by selling to them at 10-20k over market price.

William Higdon · Answer

@James WiseBoth to my understanding. Mainly he doesn't think that they are doing enough to sell the property other than just listing it. That and communication issues. Un-returned phone calls, text, etc.@Jason McKinleyGood to know. I was under the understanding that any property that did NOT need rehab or repairs was considered turn-key. That makes more sense that it needs to be cash flowing already.Thanks fellas

Jason McKinley · Answer

To qualify as a turnkey, from my understanding of the term, the property needs to be rented and managed. You will be hard pressed to find an out of state investor without those two things in place.

William Higdon · Answer

Yeah not flippers or retail buyers. My thought was to market to buy and hold landlords looking for a turn-key property that would cash flow for them without any needed repairs. I used wholesaling terms and points of view because that is where my experience ls. Sorry for the confusion. And yes, 800 without a mortgage and somewhere around 400-500 a month with one. How do I know in advance if a potential buy would have to take one out until I find an interested party? And I am not looking at ripping anyone off. I just wanted to help solve a problem and make a buck in the process where the end buyer was able to make money too. This is my first assessment of a turn key option to move to an end buyer. Most likely a buy and hold because like you, I dont see the benefit for a flipper or retail buyer in this situation.

William Higdon · Answer

@Edward RhoadsIt's turn key, no repairs needed. Why would you want 60-70% of retail for a turn key if you are looking for a rental property? Am I missing something?I thought that 10-15% of retail was a good a margin for an Income Deal? That is what most people have said on here to my knowledge. I'm new to the Turn-Key property area of all this, so I'm still learning, hence posting on this forum.Thanks for your input and feedback!