So how do you flip real estate property ….
- Without paying more than lunch money on a property
- Without speaking to sellers
- Without speaking to buyers
- Without even visiting
- And still collecting a LARGE check
You can begin to wholesale real estate property rather quickly with this simple two part answer:
- Identify property that can be purchased for 40% or greater below the Market Value
- Max Value (in good condition) x 60% (accounts for repairs, profit splits, closing costs) = Wholesale Offer Price
- Max Value (in good condition) x 60% (accounts for repairs, profit splits, closing costs) = Wholesale Offer Price
- Network with Rehabbers, Contractors, Investor-Buyers and Hard Money Lenders for your real estate investing
Let run through a Wholesale Flip Real Estate deal example:
7109 Laura Koppe Rd Houston, TX 77028
Listed Price: $21,000
Beds:3 Bed
Baths:2 Bath
House Size:1,148 Sq Ft
Lot Size:9,148 Sq Ft Lot
Year Built:1986
Area:Northeast Houston
Average Listing Price:$54,000
Average Sold Price:$40,000 – $64, 000
Agent/Seller Comments: GREAT RENTAL! Residence showcases PLENTY of potential & space; EXTREMELY open: and a HUGE yard w/ back porch.CALL NOW! Will rent for $825 per month, TAKE ADVANTAGE! Needs some TLC, such as trash hauling, cleaning, painting, flooring, appliances, and front landscaping. Quiant neighborhood.
So you find this real estate deal on craigslist, zillow, trulia, realtor.com – it does not matter. From here on out it’s all about numbers – no emotions.Your deal offer scrap sheet should look something like this.
Average Sales Price in Good Condition: $54,000
Multiplied by Max Offer Percentage: $54,000 x .65% = $35,100
(Now this is your ceiling and you only go DOWN from here)
Deal Listed Price: $21,000 ($14K below your max offer)
Discounted Repair Estimates: $6,000
(In this example Agent comments gives you an idea)
Wholesale Flip Deal Offer Price: $10,000
(Listed Price – Estimated Repairs – Wholesale Profit $5K)
Now you have your agent or sellers agent submit an offer for $10, 000. Do not put up more than $10-100 in earnest money. If your offer is accepted or countered then you are in business. Even if your seller counters with $15,000 and a quick close, don’t you think that you can find a real estate rehabber, contractor, investor-buyer who would pay $18 – $20, 000 for a property that can rent for $825 per month or retail in fixed up condition for $40 – $64, 000?
As a real estate investor reading this quick wholesale how-to article, the very next thing I would recommend is start networking with various types of investors and real estate players: rehabbers, landlords, wholesalers, hard money lenders, property managers, contractors. So when you have a real estate deal that takes you 45mins to 2 hours to identify and put a contract in the works - you can quickly off load for a profit.