All Forum Posts by: Ken B

I am dealing with a possible wholesale deal that I am working on right now. The house has been vacant for over 5 years, and it is a 3 bed/1 bath house, with an unfinished basement. The square footage is around 900-1000 sq ft, but the lot size is decent at around 6900 sq ft.

The ARV of the house comes in around the low to mid $400's. There are a few houses within half a mile listed around $430-$440K.

I estimate the house will need about $50K to get it to a sellable, presentable condition. I originally made an offer of $220K which got rejected, but about a week and and a half later, I get a call back and the seller says that he would like to sell and would take $265K. I countered with an offer of $235.

I figured for me to wholesale the house, I took the ARV of $430 took the wholesale price of $301 (70%), minus $50K estimate repairs, minus $10K (assignment fee) and originally offered $220K with the intent of giving me some negotiation room. I think $240K is the maximum I can offer that would make the deal worthwhile, but I'm just wondering if my numbers make sense to anyone else. At $265K, with an ARV of $430, I'm still getting the property at 63 cents to the dollar which doesn't seem that bad. From your experience doing wholesale deals, does anyone here agree with me, or is this just a bad deal for me to be putting my time into?

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Hi guys and gals. I'm wondering if someone can help with some input on these numers here.

The ARV of the house comes in around the low to mid $400's. There are a few houses within half a mile listed around $430-$440K.

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Originally posted by nationwidepi:

Seller motivation is key. If the seller is motivated enough (desperate enough) they may accept a very low offer. If not, slim chance. The other factor that comes to mind is your "guess work" on the repair costs. You need to get some bids first. Then plug in the actual costs to arrive at your highest offer price. Information is key and guesswork could get you under by $20k or more and then, say good bye to your assignment fee.

What do you think is the best way to find a more accurate cost? Is phone estimates good enough?

Sorry for all the questions, but I'm learning as I go along. Thanks in advance!

Kenny

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Originally posted by Mr_Investor:

Getting the owner who is asking 350K to come down to 200K is going to be very difficult to do.

You can try it but don't be surprised if he doesn't accept it even though it's a buyers market that's a whopping 150K difference in price.

Worst case scenario I would find a retail investor(one who buys just on equity alone and retails it out to OOB's)and assign it to that investor.

Thanks for your input. I am going to speak with the seller tomorrow and post here how that goes! The retail investor looking for equity is an interesting exit strategy, and I may end up giving that a try marketing wise to see if I can find someone in this market. BTW, what does "OOB" mean?

Kenny

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According to the info from the owner and neighbors, the owner moved to out of state about 5 years ago, and the house has been vacant ever since. The house is located in NY, about 20 minutes from NYC. I took a look at the house and it needs landscaping work, TLC on the outside and inside and the basement is unfinished. It is a 3 bedroom/1 bath, with kitchen and eat in area, living room, and attic. Lot area comes in around 6850 square feet, and the house is about 1000-1100 square feet. The owner said he is asking $350K.

The ARV comes in around $415K - $450K.

I plan to wholesale this house.

Based on a 65% wholesale formula,

Here is my offer:

$415K * .65 = $ 269,750

$269,750 - $50,000 for updating, repairs etc(does this figure sound reasonable?) = $219,750.

$219,750 - $19,750 for my assignment fee = $200,000.

So $200,000 will be the final figure.

Any productive input would be greatly appreciated!

Thanks, Kenny

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HAPPY NEW YEAR!!!

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Welcome to BP Bernie. I'm on the same boat here. A new guy looking to contribute and learn!

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I just want to first say thanks to Joseph for this post. You and me are on the same boat, and I appreciate your post. Second, I want to thank Augie, Russell, Douglas, Curt, Jorge and Corey for their input, info, and inspiration. After reading what you guys had to say, I am ready to hit the phones again, and start calling some FSBOs.

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TTT! Looking to see more experienced out of state wholesalers add to the info!

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Originally posted by Mike C:

Ms. Smith,

If you need motivation, just think about all those autoworkers praying they have a job in a few months. Think of the risk of being employed by someone else. My employed friends say I could never do what you do, not knowing when money is coming in or afraid of disaster striking. I say you are the one who is taking the risks. You could go to work tomorrow and they could say, thanks, but your services are no longer needed. They have one income source, their job. As an investor, you have multiple streams of income. If you have a vacant rental or investment property, you still receive income from all your other investments. So you can argue that an investor is much more secure than they are. Of course they donâ€™t believe it and that is why they work for someone else. I have friends who make very good money for companies like IBM, as I am sure many here do. They lay off people it seems like every six months. Now that is risky.

Also think about some of the more successful people here on the board. Think about someone like MikeOH who has stated he works an average of 12-16 hours a WEEK. How many of your employed friends can say that? By keeping a job you are choosing security over opportunity and freedom. Ironically enough, by choosing security you lose your chance at freedom and opportunity. I am reminded of something said in T Harvâ€™s book (which I do not own and read from the library I might add) about saying it is fine to work but donâ€™t let a job interfere with your ability to make what youâ€™re worth and that is the rub, it usually does.

Think, do I want to sit in my cubicle for 40 + hours a week for life OR work the 12-16 hours a week a successful investor does. Which do you choose? Everyone makes the choice whether they know it or not. Will it take more than that in the beginning? Yes. But I know few investors who work anywhere near 40 hours a week (actually none, now that I think about it) who have been at it a while. Oh, and I have taken 7 vacations this year, not counting my travel coming up around Christmas. That is tough to do on two weeks vacation a year.

This should provide all the motivation you need. I agree that the most successful have their own motivation as others have said. They just "know" they will succeed not matter what it takes and they usually do, eventually.

As far as not getting enough action, spend less time reading about investing and more time TALKING to sellers and making offers. Everyone I have seen who says investing doesnâ€™t work are usually fearful of making offers or talking with strangers. The worst they can do is reject your offer. Yes, it is work and worth the effort I promise you. Be happy most canâ€™t or more realistically, wonâ€™t do the work. Paralysis of analysis and wanting to know more or read one more book stops more from investing than anything else.

Good luck. We will be rooting for you.

Mike

Wow Mike. Powerful and inspirational. The funny thing is it isn't anything I haven't heard before, but reading what you just wrote gives me inspiration to keep things moving till I can find my first "deal" and get my business off the floor!

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All Forum Posts by: Ken B

Ken B has started 8 posts and replied 27 times.

Post: Need some input on these numbers from seasoned REI

Post: Need some input

Post: How does this offer sound?

Post: How does this offer sound?

Post: How does this offer sound?

Post: Happy New Years

Post: I just joined Bigger Pockets tonight

Post: Hi all! Newbie would like to know, once and for all...

Post: Wholesaling out of state?

Post: I need motivation