Stuck on a Deal!

[Edgar Aguillon]

Been on the site for a little while now and have asked a few questions on a few things but wholesaling really caught my eye so I started doing some research and educating myself more on it. Went out for my first driving for dollars and found a great deal the owner is asking 25k but is pretty motivated to sell So will consider offers, house is a 989 sq ft 2 bdrm 1bath with 1car garage comps in the area are 45-55k, it's assessed at 37k just the way it is. Contractor estimated repairs at about 15k..my question is does this sound like a great deal? Kinda nervous on trying to start my buyers list since it's my first time doing this..any advice on how to move forward?

[J Scott]

So, you're confident that with $15K in repairs, the house is worth $45-55K. Assuming so, let's be conservative and run the numbers...

For a rehabber, the max purchase price (MPP) would be:

MPP = ARV - Rehab Costs - Fixed Costs - Profit

Let's say ARV is $45K (again, conservative), Rehab Costs are $15K, Fixed Costs are $6K (15% of resale is reasonable for a small deal paying cash), and Profit is $10K (the minimum I'd ever consider for a rehab, even a very low priced one). So, MPP is:

MPP = $45K - $15K - $6K - $10K = $14K

So, a rehabber might pay up to $14K for this property. But, if you want to make money on the deal, you'll have to buy it for less than $14K.

You'd probably want to pick it up for at most $10K to ensure it's a deal.