Great Deal in Manteca CA or Not??

Question

2bd/2bt. Built in 1922. House size:950 sq ft

Lot size:3500

Comps show around 180k ARV

Owner owns home free and clear, bought it Cash for $70k 5 years ago and TOTALLY Destroyed every bit of that house in everyway and equity it could have gained.

She wants 90k. And owes 4k in back taxes. I'm new so im not an expert at evaluating cost to fix it.

I invited a local experienced  investor to look at the deal so i can possibly wholesale it to him. He says it needs like 60-70k to fix and their are 2 huge energy transmitters 2 houses down which he thinks the ARV is more around 165k. We offered them 65k and they said they need 90k.

What should i do??

I dont have that type of capital im New Help me!!!

Thanks in advance

Kellee Dankiewicz · Answer

Hi Fernando.  I am a real estate broker in Manteca.  If your ARV is accurate, which is possible for a 2/2 depending on the neighborhood, $90 is too high.  Run the numbers.  Say you wanted $5,000 and wholesale to an investor for $95.  Inventor then puts  $70,000 into the rehad.  That only leaves $15,000.  Out of the $15,000, the investor has to pay closing costs to purchase the property, holding costs and then again closing costs to resell.  They will also need a cushion for any unexpected costs.    The investor will not make a profit, they will most likely be in the negative.  You will find a lot of sellers are not realistic in the beginning.  Leave her your contact info, put her on some kind of drip system and move on.

Tom S. · Answer

@Fernando Ruiz  Using the standard ARV * 70 % less repairs formula, I get 165k * 70% - 70k = $45k max offer.  So your offer needs to be more in the $40k range if you're figuring in some profit for yourself.

Start with that $40k offer, and if they don't accept, say the offer stands if they change their mind.  Then move on.

Good luck!