Wholesale Deal
I have a question for the more experienced... I have a property under contract that I would like to wholesale. It's sale price is allows the end-buyer to get a great 2-flat in an up and coming neighborhood with 30K in equity after rehab. With Sect. 8 tentants living there, a landlord will be able to profit about $1,200 per month. Is that a good deal and if so, how do I secure my profit, when I sell my position? Is a double closing the best option? Can that be done in Chicago?
All info would be greatly appreciated.[ Edited by chicagokalo on Date 03/01/2004 ]
Need more info. The $30k equity would be great if the place is worth $60k, not so great if it's worth $400k.
Is the $1200 gross cash flow or net after expenses? How much are repair costs?
You can secure your profit through an assignment fee or as profit from a double close. And yes, double closing is legal in IL.
Kevin,
Thank you very much for your response.
To address your questions:
The property will be worth $205K after rehab (based on a CMA). The $1,200 is after PITI and insurance.
Cost: $130,000
Repair: $45,000
With regards to Double Closing, I would have to find either a cash buyer or a buyer that is being financed by a lender that does not care about seasoning, correct? Also, what title company and/or attorney's office can I facilitate a double close?[ Edited by chicagokalo on Date 03/02/2004 ]
As a wholesale deal it looks marginal based on your numbers. The cashflow is decent, however you're basing this on an assumption that it'll be rented Sec 8 and not on current rents, right?
If your repair number is accurate, that plus the purchase price = 85% of ARV. This will be further reduced if you add in your assignment fee or profit.
Assigning this deal would reduce your costs and allow you to maximize your gain. You can assign or double close thru most title companies.
The best and truest way to know if you have a deal is to try and resell it. Look for a buy and hold rehabber landlord and see what they'll offer. Good luck.
Kevin,
THANK YOU VERY MUCH. Actually, the $130K DOES include my assignment fee. I wondered if the best option was to assign and/or sell the property to those that rehab and hold.
I guess I will be on the phones from this point.
If I can return the favor, please feel free to PM me.
Thanks, again.