wholesale deal???

[erichoward07]

hi i have a possible wholesale deal and i wanted to run the numbers by you guys the house is under contract for 1000.00 its a 1 bedroom 1 bath house the repairs will be 25,000 to 30,000 depending on the contractor the arv from zillow is 70,000 and i think this is a deal please advise thanks as always for your input 

[Brian(MD)]

Is the ARV from Zillow from the Zestimate or are you getting comparable sales in the same area. Zestimate is not always accurate thats why I'm asking.

[erichoward07]

thats the zestimate i did some other comps and they are running 30,000 which sounds more realistic for this area

[Mr Investor]

thats the zestimate i did some other comps and they are running 30,000 which sounds more realistic for this area

Even so I wouldn't rely on Zillows comps either get an appraisal or realtor comps for a more accurate ARV.

[erichoward07]

say the numbers are accurate as i stated would this be a good deal thanks

[rgchamb]

The bottom line is that you need to get comps from a Realtor.  Why?  Because your prospective buyers will get comps from a Realtor.

Let's say Zillow says $70K, but your buyers get Realtor comps from the last 3 months that say $30K.  Then you're stuck.  No one will want to buy the house.

Just my 2 cents.

[rgchamb]

Be aware that even accurate comps can be hard to figure out in this current declining market.  Here's what I mean:  Something that sold in October for $30K might only sell today for $20K - at least in your buyer's minds.  So depending where the house is located, whatever the comparables are, you might have to assume a 10% price drop.

[donrock]

Is the price on the house $1,000.00 or is there a type o?
Did you get your estimates in writing or are they just ball park? For that much work on that small value of a house the estimate could be still low. Be careful unless you really know how to estimate rehab work or a contractor has done a thorough inspection.
As an ex-appraiser I have to agree with the other posters on not relying on zillow. I've seen their estimate off as much as 25% on a $400,000 property. Think about that before trusting them. As far as real estate agents go they are somewhat better but be careful of them also. Ask them for a property profile and make you own determination is the best course.
I'm in the process of writing a free report on how to do your own appraisal and will offer it here when complete.
Good luck,
donrock     

[erichoward07]

no that wasnt a typo i have it under contract for 1000.00 and im trying to get 2000.00 for it i have an extensive construction backround and the reha estimates are on the high end and the 30,000 comp is not from zillow is this a deal thanks

[Brian(MD)]

no that wasnt a typo i have it under contract for 1000.00 and im trying to get 2000.00 for it i have an extensive construction backround and the reha estimates are on the high end and the 30,000 comp is not from zillow is this a deal thanks

If the comps are 30k and the rehab estimate is 25k-30k there is no way this is a deal. If you assigned the contract for 2k and the end buyer put 25k into the property the buyer would lose a lot of $$$$ and waste a lot of his time rehabing a property to get negative equity.

[rgchamb]

Perhaps this is a good deal from a landlord's perspective...if $30K is sunk into it and rents are at least $500/month.

[erichoward07]

i think it will rent for more i thought it would be a good deal for an investor who likes to buy and hold

[Brian(MD)]

Eric,
      I'm not trying to bring you down but put yourself in the landlords shoes. Why buy a property and sink all that time and $$$$ rehabbing the house for no equity at all. Wouldn't you rather buy the same type of property for 30K that is already in move in condition and save yourself a boatload of time and $$$ and be able to put a tenant in there right away? No successful landlord is gonna look at this as a deal!

[erichoward07]

i understand what your saying but i think that if you buy a property for 2k and put 20k into it and the comps run the property at the mids 30's then it's a deal and if i had the money i would do it myself but i dont