I have leads... now what?

Question

Through various marketing strategies I have a few people willing to sell their homes and are open to offers... here's the rub. The homes are in great shape, they are free and clear, and the sellers aren't crazy about holding a note. So my question is this: should I even bother trying to get these deals under contract? and at what % of ARV would buyers be interested if no rehab needs to be done? I know this is probably a buyer-specific questions. I just hate throwing away someone willing to sell that has nothing but equity only because I can't get it at 50% of ARV...

any thoughts would be appreciated.

Eric Gard · Answer

I havent sold a rental, but I have researched a lot on buying rentals. If it does not have a rent history, then its worth the same as buying any other house.

Dan Golden · Answer

I know the ballpark formula for what an investor will pay for a rehab property. Is there a similar formula based on annual rents to determine what a rental investor might be willing to pay?

J Scott · Answer

If they don't need any rehab, then they likely won't make good candidates to resell to investors looking to rehab.  At that point, you either want to focus on resale to owner occupants (which can be difficult since you'll have to deal with FHA and conventional lenders) or investors who are looking to hold rentals.

My suggestion is to approach the property as if it will be a rental.  Figure out the value based on market rents, (and talking to your end-buyers) and then offer the appropriate value minus your wholesale fee.

Dale Osborn · Answer

Dan: You really need to consider how motivated the individuals are to sell. To get a good deal, they have to be highly motivated. People with free and clear properties who get a letter of interest to buy their home - they are thinking you are the motivated one and will be willing to pay through the nose for the property. You contacted them not the other way around. Send out a few low ball offers to some of these individuals and see what their response is. If they feel slapped in the face, you may not hear from them again.