Quote from @Don Konipol:
Quote from @Laura Mateya:
I have a family member willing to allow me to wholesale a property. It is situated on 10 acres with potential for many different uses. The main house is a Georgian estate style 5600sf home (6BR 7BA) that needs water damage repair as well as some updating. The outbuildings include a guest house with a wraparound porch that needs to be replaced, a 6-stall horse barn with an apartment on the top floor, which is in decent shape inside but needs some cosmetic repair outside, a storage barn with 8 garage bays on the lower level and open storage on the top floor, and a historic gristmill (with a water wheel) built in 1820. It is located right on a river and has 2 dams that are currently in pace making a gorgeous pond in the backyard. It has amazing views from the back of the house. There is SO much potential here. I would like to price it somewhere in the middle of the potential range, meaning that the minimal amount of work is probably $300-400K in repairs in the main house, with an ARV of around $2-2.5M or someone could put $800K-1M into it and really go all out to where it has about a $3.5-4M potential ARV. Any input would be greatly appreciated.
It was previously a wedding venue and could potentially be one again. It could make an amazing airbnb. It could be a wonderful horse property, or a retreat center... the grounds are absolutely
First question is WHY would the owners want to accept a lower WHOLESALE price when they could just as easily obtain a higher RETAIL price? In other words, what is their motivation for accepting LESS money? Quick sale needed? Confidentiality? Had it listed previously and didn’t sell?
Second question is are the sellers willing to accept a WHOLESALE price? Not the price you agree to pay them (if you are dealing on that basis), but a REAL, MARKET wholesale price? Now, it may be that the price you agree to pay IS a real wholesale price, which is fine. The thing to guard against is accepting a higher than realistic wholesale price (less the "markup" you hope to earn) just to secure the deal. Often sellers, especially of unique properties, think in terms of 10% differential between wholesale and retail. For SFR it's more like 30%, for unique properties like this it could be 40% +. So if the retail, MLS, exposed to market price/value is say $2million, as is, wholesale may be $1.2 million, as is. If they expect in our example $1.8 million, you're not looking for a wholesale buyer, you're looking for a retail buyer willing to close quickly for cash, and getting a "small" discount for it.
Don,
Thanks for the questions...I will do my best to answer. For the record, I am a newish agent (only 2 transactions under my belt) in another state, and I am new to wholesaling but have been studying it for about 4 months now. I see the income potential as so much higher in wholesaling!
First of all, they gave me the number they are willing to accept, but I would like to get them more, while making a good profit for myself. And yes, it IS a wholesale price... they are willing to let me try to wholesale it for my benefit. (They are my immediate family.) When they decided on the price, they used the '70% minus repairs' formula on the lowest ARV after basic repairs. I told them the property has so much more potential and I would love to get them and myself a bit more if possible. It was part of a recent acquisition and they are subdividing it off, selling the main house and some of the other buildings.
