A Decent Wholesale Deal
Ok, say you have a deal you're considering. "Subject to" appraisal is $72k, the seller is motivated 1st price brought up was $38k, you talk him down to $33k, and let's say it needs 8k in repairs.....(This is all in my imagination).
Now would this be something worth persuing as a wholesaler? In turn, what would you need to wholesale the property to your buyer for, in order to make a decent $3,000 to $5,000 profit?
I haven't done any deals, yet. I'm just trying to see a deal happen in my head. If you have a better example or an actual deal you've done, and a few mins to write it up and post it, I know I would appreciate it, and a few others I'm sure.
I don't really understand how closing costs work yet either. If someone could break it down for me, that'd be great.
JB
Ok, you need to take into consideration the after repair value. Is it 72 after repairs, or 72 the current condition. So lets say the ARV is oh i dunno...85-90. If you can get it for 33, Id try and flip it to a rehabber or an investor for 45. You need to understand, when wholesaling, your not going to make a killing. The rehabber is going to make the majority of the mo ney on the deals. So 15k is a good deal for you.
Here is a real life example: A man bought a house from a HUD auction for $36,0000. Comps in area were 70's. he called me up and said "Rick I want to make $10,000 flipping it to you as is. I looked it and decided it was right for me even though it had holes in walls and other problems. I bought it for $46,000 cash (some from credit line). I spent 6,000 rehabing and making it look like new. Had it appraised for 75,000. I borrowed 56,000 on it and put the money back in my pocket. Rented it right away for 795.00 month. 1st last and 500 sec for around $2,000 for them to move in. Sweet deal I think. Everybody wins too. [ Edited by Ricker on Date 03/04/2004 ]
Buyer and seller pay closing costs when title to the property is conveyed. If you're wholesaling (meaning you don't take title to the property but assign your purchase contract to someone else), you're not paying closing costs.
In any event, buyer's closing costs typically consist of transfer tax, prorations for property taxes and utilities, title insurance, lender fees, and misc. Seller's costs include transfer tax, prorations for property taxes and utilities and real estate commissions, if any. These are the basics. Don't know if FL differs. If the property is in a homeowners' assn or condo assn, there would be additional prorations for the association fees.
Thnaks, I have been wondering about the whole closing cost thing for a bit.
With Scott Rister's wholesaling course, on the "Agreement for Sale" contract, there is a line that says "Seller aggrees to pay the following closing costs" and "Buyer agrees to pay the following closing costs"
So if I were contract with a "seller", would I put "N/A" in the buyer line? Or would I put the closings costs that the actual buyer of the property will be paying?
Sorry if that sounds confusing.
JB
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