Description

The house was a three bedroom, one-bath craftsman fixer-upper, with about 950sqft of living area. The mechanical and structural systems were all in good shape, but every square inch of carpet, vinyl, wall and ceiling needed to be redone; in addition, the kitchen counters needed replacing, an electrical upgrade was required, and some updating work in the bath was needed—about 10,000 in repair costs is what I estimated.

I had established a good business relationship and track record with a local hard money lender. He had been a good source for locating rehab investors who purchase wholesale deals. On this deal, I obtained a 43,000 loan to close the deal and walked away from the closing with 1,400 in my pocket! A classic nothing down, cash at closing deal. The terms of the loan were 3 points (very good) at 10.5 percent for one year, interest only.

Within a day of closing on this deal, I unexpectedly received a $60,000 all cash offer from one of my wholesale clients (rehab investor). My investor could close very quickly and was anxious to do so.

Wow, What to do? I could go ahead and wholesale it and walk away with a quick 17,000 profit, or could go forward with the rehab and sell it retail for a net profit of about 25,000.

I decided to accept the 60,000 offer, take profits and move on to the next deal.