Wholesaling a Tear Down House

[Belinda D.]

Hi BP family,

I am currently looking @ a single family house to wholesale. I have not spoken to the owner yet re: asking price etc. I just know he is a senior and cannot do any repairs to the property. House and property are in major major disrepair and will have to be torn down

The current tax assessment value is $344,500. It is 10,640 sqf, with 95 sqf frontage and 112sqf depth. I got this info fr the tax office.

This house is in a growing neighborhood with houses worth $600K to 1 million dollars, a few blocks away

Should my evaluation (offer price) be based on the comps ($418,000), the tax assessment value ($344,500) or the lot price ($???)

A new custom home was built, just 5 houses away. I was planning on contacting the builder to see if they want to buy the property (after I put it under contract) or I would wholesale the property to a "major" rehab investor.

Since the owner is a senior, I want to give him as much profit as possible and have my own profit too (20K)

Please provide your advice.

[Brandon Turner]

I definitely wouldn't use the assessment price - that could be waaaay off. I would do careful analysis of exactly what the house is worth. 600k - 1,000,000 is a HUGE range, but you'll need to get more specific. If you can't get within 10k or so, you'll need to get more appraising training (listen to tomorrow's Podcast here on BP - it will help with that!)

Once you have the final price, then I would multiply it by 70%, then subtract out repairs, then subtract out your profit.

For example = if the after-repair value was $1,000,000 - I would take 70% of that, or $700,000 and subtract out the repairs - let's say $50,000 - and then subtract out your profit - let's say $20,000. So I'd offer $630,000. Then, you have a deal to take to a house flipper, which he could sell for $1,000,000 and pay just $650k for it.

Hope that helps Belinda Duhaney