Potential Flip To My Buyer - Please Review

Potential Flip To My Buyer - Please Review

Real Estate Investor · Huntsville, AL · Member since 2010 · 44 posts · 11 votes

The hard work and due diligence will be well worth it IF my buyer/investor is satisfied, closes on the deal, and make his money on the back end. Let me know if I'm missing something....not as nervous as I thought I would be and that's mainly due to feeling like I'm close to getting it right - meaning the location, property criteria and numbers are about where he wants them. Here's it is:

Situation - Family moved closer to the city (husband works in the city, in-laws are there and have been helping babysit so wife can locate a job - cuts down their daycare and travel expenses). They have been paying two mortgages for about 6 months. Had it listed, but had issues w/ agent and pulled it. Wants balance of mortgage and moving cost paid. Nice, established subdivision, comps $145 - $150k....they saw my bandit sign two months ago, but did not call until now. Been working with them for the past two weeks.

ARV - $145k
PP - $80k (also includes DP, CC, Insp., LF, RE Comm., and Appr.)
Repairs - $17k (this includes a 15% markup and addition of SS kitchen appliances - my recommendation)
HC - $2800 ($468mo x 3[Avg. DOM], Taxes, Insurance, Utilities)
Selling Costs - $8300 (RE Comm., CC, Warranty)
Wholesale Fee - $5k

Total Cost - $113k
Sell below market @ $135k
Potential Profit - $28k

Of course, the above numbers are more detailed in my analysis spreadsheet. Please chime in, though....I have a small buyers list right now, but w/ a few good profitable deals for them, it'll grow. Their references will be the best testimony of my work. It's exhausting...all the due diligence and everything else, but that's my strength and that's what I love to do. Good thing, I have some possible retail buyers/rent-to-owners lined up due to my marketing activities a few weeks ago. Just trying to make things as easy for him as possible.....

0Reply
21 views

Most Popular Reply

Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
15y
Originally posted by Dave Gibson:
...

Total Cost - $113k
Sell below market @ $135k
Potential Profit - $28k

.....


I see problems with simple math here. Sell price (135K) minus total costs (113K) equals 22K in the math I learned in school.

I'd say you're missing basic math skills, based on the numbers you posted and that are captured in the quoted snippet.

See this reply in the discussion

5 Replies

Jump to latestLatest
  • Altus, OK · Member since 2008 · 2k+ posts · 690 votes
    15y

    If you're trying to wholesale this at $80K that's about 76% of the ARV if your calculations are right. A lot of rehabbers won't touch it at that in this current housing market.

    Even at 70% of the ARV you're looking at $71.2K with all of the costs and fees added in. That's if your buyers are buying even at that percentage.

  • Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    15y
    Originally posted by Dave Gibson:
    ...

    Total Cost - $113k
    Sell below market @ $135k
    Potential Profit - $28k

    .....


    I see problems with simple math here. Sell price (135K) minus total costs (113K) equals 22K in the math I learned in school.

    I'd say you're missing basic math skills, based on the numbers you posted and that are captured in the quoted snippet.

  • Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
    15y

    76% on the dollar = no dice most likely.

    Will the owner consider Subject2? That might make some sense if the rents are okay.

  • Real Estate Investor · Huntsville, AL · Member since 2010 · 44 posts · 11 votes
    15y

    Thanks for the responses, guys. How did I miss basic subtraction? I do agree that the % is high for this market...before I send him my analysis, I'll brief him on it. Sub2 w/ owner finance may be work instead if the family is open to it. Let me check and I'll post this evening or tomorrow morning. Again, thanks for the responses and I'll post an update later.

    P.S. I did meet w/ a friend of mine who happens to be an REO agent for Rise Realty here in Huntsville - from what I've been told, he's one of the top two REO agents in town. I remember a few years ago he tried to get me into buying some REOs, but I laughed him off (I had the "mind" of a boy not thinking about doing the job of a man, I guess). Yes, I regret it and told him so, but recognize that this is a good second chance opportunity. He did show me some properties that are $.50 - $.60 on the dollar - that only means so much to me as I need to research the area and do my due diligence. I'm having lunch w/ him again this afternoon. We'll see what comes of it.....thanks again for the responses....I appreciate it.

  • Real Estate Investor · Huntsville, AL · Member since 2010 · 44 posts · 11 votes
    15y

    Better yet....I'm not going to waste his time if a Sub2 w/ owner finance wrap cannot be done.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.