I was approached recently by a local wholesaler who had a “Deal” for me to look over. The numbers he presented me with were great – who wouldn’t want a house valued at $120k that only needs $10k rehab and purchase price is $65k? I assumed the numbers were slightly inflated and exaggerated, but I wanted to do some homework to see if there was some meat left on the deal. He wanted me to move quickly on the deal or his other buyers were going to take it. It was only a matter of minutes to realize that the deal was no good. The neighborhood where the property was located has only had two properties sell over $100k in the last 6 months and they were much nicer properties. Looking at the comparisons, the house was valued at about $85k for a quick sale and it needed closer to $20k in rehab. Not even a chance of making a penny on this deal.
I don’t call myself a wholesaler, but my company has wholesaled several properties and I can assure you that when we wholesale a property, the investor who buys the property has an investment that is going to make them money. Getting good comparisons on the property and accurately estimating repairs is key to showing the real value of a deal. Wholesaling a property such as the one mentioned above will destroy your credibility in the Real Estate community and is a very short sided approach to wholesaling. As a favor, I provided the gentleman with accurate comparisons, and a repair estimate that showed the real value of the deal in hopes that he would not try to pass it on to another investor. I gave him some advice if he were to ever present a deal to me in the future. I haven’t heard from him anymore. If you are a wholesaler and have a property you want to sell, or just have a question about, please feel free to contact us. We are constantly looking at wholesale deals to rehab.