5 Reasons Why I Said No To A Property Today

I find a lot of deals that wholesalers send me. Properties you see on the MLS are retail priced properties. Wholesalers are a different bag. They usually offer properties that have big discounts but also come with higher deferred maintenance costs. Normally, these have to be cash deals.  In my experience, the sellers come with baggage too. I've dealt with two prior angry wholesale property owners.

The Wholesale agent strikes an agreement with their client. They pocket any money above and beyond what they've agreed to give the seller.  They have no incentive to take a deal below the seller's strike price, or even near the strike price.

Today was another strange wholesale day....the owner had an angry dog... and we couldn't see the whole property.  Ultimately, the cost to bring the property up to speed was almost as much as the cost of the home.

I am going to share the letter I sent today (taking names out, of course). I am not obligated to give feedback, but felt it was a nice thing to do. I also want to build the relationship with this wholesaler. Maybe the next property will work....

Here's the email...I will share the spreadsheet in future post.

XXYY,

I hope you are well. I wanted to give you a heads-up on Calumet. I am not going to move forward.  When AABC and I put together the costs associated with this project, we didn't see enough upside. I would have need to come in a price closer to $60k to $70k to make it work. I don't think there's any way your seller would accept that price.

I get the sense that this seller might be difficult, and wanted to give you one investors's take on why we are turning it down. AABC did the general inspection, and I put everything into a spreadsheet.

Some general notes:

• David wasn't able to get into the main unit, as the owner wouldn't allow access due to what he called his vicious dog.  He also wouldn't allow access to the basement.  This makes it really hard to assess the property. I know you don't have any control of what your owner says or does, but this isn't going to help sell the property.
• Some input from us...the house needs about $100k of work to get it in good shape, there's likely a lot of masonry work that needs to be done.
• The flooring will be a big cost for anyone who takes over the property, as the carpet is old.
• Each unit will need an average of $20-$25k per unit to update
• Common areas also need some work

Warm Regards,

Nick