Wholesaling a turn-key property?

Question

Hi everyone! I'm very new to real estate investing, I have two properties and just put in an offer on a 3rd. It's a 4 bedroom, 2 bathroom with updated kitchen with granite countertops and new appliances, new roof, new windows, finished basement, generally very good condition close to turn-key. It's the only 4 bedroom house in our area in CT that is listed for below $200k. The current homeowner had it listed for $220k and gradually took it down to $185k. I offered $155k and the owner accepted it (she needed to move to Puerto Rico and was in a rush to get rid of the property and owned the house outright). I'm happy to keep this property as a buy and hold rental property. At the same time though, since it's being sold at such a distressed value, I want to look into potentially doing a wholesale deal. I'm behind the 8 ball on this since I don't have a buyer list... But in any case, here's my question: I believe I can find an investor to buy this home for $195,000 based on comps in the area and based on the rental income this property can generate. Is it a potential wholesale deal? Can you wholesale a property with the end buyer using a conventional mortgage or does it need to be a cash/private investor funded deal? Thanks for your help!

Account Closed · Answer

An investor is looking for a property at 70% of arv and then will try to add value thru repairs to make leat a 15% and up profit There is no room for someone to buy it at $195 other then yourself .I would buy the property do a light rehab and try selling if for the $195-225 market price If you were going to whole sale it you would probably be looking in the $160-165 range If that doesnt work out you still have a good cash flowing property. Use craigslist ,post-lets,etc to advertise to build a buyers list and take it from there

Chris T. · Answer

@Daniel KohanAgreed with Account ClosedIn regards to your 2nd question, how bad of a condition is the property? If it's decent, then someone can buy it using conventional mortgage. Therefore you can list it on the MLS - as-is for cheap. If it's in bad shape, then you are only dealing with investors that can buy using only cash or HML. That limits your options. This house sounds like a good BRRRR property if the rental and rehab costs justify the numbers.

Daniel Kohan · Answer

Andrew S. we can close as early as late November or as late as late December. So if I was going to try to do some sort of wholesale deal, I would try to delay as long as possible to give myself more time. Brent Coombs though I think is giving good advice in that I should just close on the house and then list it in the traditional way.

Andrew S. · Answer

I'm confused now - you said you got a great deal at 155k because the seller needed the cash and has to move abroad. How does that line up with closing on the property by the end of December?Or are you saying you are closing NOW for cash with the seller and want to close by the end of December with a potential buyer?

Brent Coombs · Answer

Seeing as you don't have a list of end buyers, and because it's in suitable condition for selling through the MLS, I still reckon - have it listed (IF you still want to sell, after it's fully yours)...

Brent Coombs · Answer

Exactly! Which is the very reason I suggested: if selling, why NOT list it for retail owner-occupiers?Sometimes Wholesalers need to step back to see the bigger picture! Agents can be useful!...

Shawn Ackerman · Answer

@Brent Coombs we are talking about apples and trying to compare it to Oranges. It is understood that when selling to an owner-occupant you can get, or close to full asking. I think we were thinking about two separate scenarios. In @Daniel Hyman original post he mentioned " I can sell to investor" not an owner occ.

Daniel Kohan · Answer

Brent Coombs good point for sure. I think the value here is either sell to a buy and hold investor looking to generate income for retail, or keeping it and renting it out myself. It seems like there will be a decent amount of built-in equity day 1, so maybe a potential to even pull some or all of my buyin out of the property? To my original question... if I go with the first option- sell it to a "buy and hold" investor looking to buy a turn key investment property- and I find that buyer today and he/she is willing to pay $195k with a conventional loan and my closing is late December, what would be the best route to take to get the property to the end buyer?

Brent Coombs · Answer

@Shawn Ackerman and @Chris T., I thought by now you would have understood what I was getting at. ie. Why sell it to an investor? This one has owner-occupier buyer written all over it! ie. Sell it for FULL value ie. Listing it with an Agent for offers will find out its actual retail value!

Chris T. · Answer

@Brent CoombsJust like what @Shawn Ackerman says, we all don't know what the actual ARV is. "cheap" doesn't mean he will lose money. Since he technically bought it right, he will still make money selling $165K. Assuming it's worth $195K or more. Not bad making $10K in a 1 deal without having to deal with tenants or potential issues.