Wholesale comparables question

[Peter Fuentes]

New investor with a question.

Are comparables really needed when structuring a wholesale deal?

What if you want to build a much more expensive home?

Do you have to compare your future rehab to the other houses?

Is it illegal to not?

[Barry Pekin]

@Peter Fuentes,

When you present the contract for sale to your buyers, you can also present options that you see to them as possibilities for what they will do with the property, but ultimately, it's up to them as to what they want to do.

If you see multiple options for the house, then you can present multiple options to your buyers.  If you have one/some who prefer tear-downs, you can present that option to them.  If you have others that prefer light rehabs, then present that option to them.  For each, you would need to calculate your estimates for ARV and rehab costs.

So, yes, comps are critical, but can vary based on the potential exit strategies.  You and your buyer need to have a good idea of what the property will be worth in the end, and they only way you're going to know that is with comps.