My current wholesale deal - a synopsis

[Jason Cummins]

I am up late tonight because I have been extremely busy at one of my rehabs. I was posting to my blog and didn't really have much to say on it. So I decided to write a synopsis of my most current wholesale deal. I have never written about any specific deal, but I figured it may be able to help someone understand the process a bit more.

I figured I would share here.

I received a call from an estate lawyer last week. He is the executer on a house and they are wanting to sell it. These can be great deals. Usually if they are calling you, they basically just want to liquidate the house and get as much cash from it as they can, and quickly. This week I have been very busy with my rehab projects that I did not have a lot of time to handle this lead. So I called up one of my wholesaling buddies in Houston and asked if he would want to partner 50/50 on the deal with me if he could free up time to do the "dirty work" and check out the house. He was more than willing, which was a HUGE help to me.

Here is a description of the house.

- 3,1 - 986 sq ft - Built in 1940 - Rougher Side of Houston, but NOT a warzone, in fact this street is more of an elderly neighborhood, This house is close to MANY of Houston's attractions (downtown, reliant stadium, minute maid park, the Toyota center, Texas medical center, museum district, and about 4 Universities)

After my due diligence we came up with the following numbers.

- ARV = $82,500 (which was conservative, recent comps for smaller houses came back slightly higher)

- Repairs needed = Around $10,000 for rental - (Needs central air, some rotten board on the outside, some doors/sheetrock repair, and painting)

We wanted to try to start out with a $10,000 assignment fee to split between us and work our way down depending on what they would take as an offer. When figuring out what to offer I like to start at 60% of ARV, then minus repairs and our assignment fee. If you can offer a house for 60% of ARV including the repairs and your fee, you are more than likely to sell that house pretty fast, as long as your numbers are correct.

So 60% of the ARV ($82,500) is $49,500. Subtract the $10,000 in repairs, then another $10,000 for our assignment, and you get $29,500. This is our offer price.

The offer was accepted at $30,000 and we sent the contract via fax for them to review. We should be hearing back from them in the morning as to a final decision, and hopefully we will submit the contract to our title company tommorow to open title, and we can start to market it to an end buyer.

I will keep you all informed as to how it goes. This is the first time I have written about a specific wholesale deal, maybe someone can benefit from it or possibly just lead you to questions to ask yourself. So far this deal has gone very smooth, as smooth as you could ask for. Obviously there is a lot more to come as far as clearing title, and finding an end buyer.

Hope this helps someone.