What Should I Sell This For??? Can I Get a Pro Answer?

[Account Closed]

Hi guys and girls,

So I have a pretty great deal. It's in a very desirable town and neighborhood. It's a 3 Br 2 ba and the lowest comp in the area is $335K and everything is averaging about 350ish. It needs new plumbing throughout, a new roof, kitchen update, 2 baths updated, floors and paint. The floor in one of the rooms is also slightly slanted. I don't know repairs but I estimated and hope 80K would cover that work and anything else necessary. It doesn't need to be gutted to the studs. I just want to know what I should sell this deal for. I could go with the 70% minus repairs formula and sell it for about $150K (that's also using the lowest comp and not considering that everything in this house will be brand new, a rehabber could probably pull the higher 350K) but at that number I'm making an insane amount of money for a wholesale, although I've heard of people making these profits on wholesale deals before. I just would like to know because even at the 150K mark, the rehabber is still going to have about a $105K spread before he pays everyone, I would think on a worst case he would pocket $60K after the transaction is done. Any advice is appreciated everyone. Thanks.

[J Scott]

I'm confused. On Dec 28, you said:

"I have the property contracted for $150K with the rehabber."

Then on January 4, you said you called the rehabber and told him you'd have to raise the price to $165K and then on January 5 you said you told the rehabber you'd have to raise the price again or sell to someone else.

If you "had the property contracted" with the rehabber back in December, how did you up the price on him twice in January? You had a contract...I can't imagine any experienced rehabber would sign a contract saying you could just raise the purchase price on your whim. So, how did you raise the price if you had a contract?

Regardless, just some friendly advice as a rehabber -- you're only as good as your word in this business. Even if you didn't have a contract with the rehabber (like you said you did), you at least had a verbal agreement with the rehabber to sell at $150K. And once you had a verbal agreement, to go back and raise the price twice (because you didn't do proper due diligence to begin with) is just flat-out unethical.

You said in other threads that you're only willing to work with serious, experienced rehabbers. I hate to tell you, but any truly serious, experienced rehabbers who read that you jacked up the price after coming to agreement aren't going to want to work with you.

Sorry, but you had an agreement that would have given you $50K and then got greedy after you realized you screwed up your due diligence and broke that agreement. In my opinion, that's not a great way to be starting out in this business...

Personally, I'd rather lose money on a deal than go back on my word, throw my integrity out the door and ruin my reputation. FWIW, I had this happen to me twice last month where I had verbal agreements with other investors to sell a property and got a higher offer before any contract was signed -- I kept my word in both cases and gave up about $20K doing it. I have no regrets.