I decided to write this post due to what I have seen in the markets I have been in this month. I have been in Calgary, AB, London,ON, Honolulu, HI, and Vancouver, BC. These markets are still appreciating, fast moving markets (90 days or less), and high price point areas. Most of my clients in these markets were skeptical if wholesaling could still work in their market.
Here is what we did. We kept the same criteria that we use in any real estate market to find distressed proeprties. Therefore we were looking for entry level homes, with at least 3 bedrooms, with a price reduction, sitting on the market for longer than average days on market, needing repairs, and seller must be motivated to sell. We looked in areas where investors were buying and able to resell for a profit of $30k -$40k, due to higher price point of homes.
We found some investor friendly real estate agents who brought us some great pocket listings that met our investment criteria exactly. These investment properties were in either distressed condition or had a seller with a distressed situation. They were priced aggressively in the current market and had plenty of room in there for a fix and resell for After Repair Value.
Here are some examples from these markets of what these investor friendly real estate agents found for us.
- Honolulu, HI: Property was listed for $479,000 with $25,000 in repairs needed and ARV of $600,000.
- Calgary, AB: Property was listed for $469,000 with $30,000 in repairs needed and an ARV of $750,000
- Vancouver, BC: Property was listed at $489,000 with $40,000 in repairs needed and an ARV of $700,000 now and potential to be up to $900,000 when train station nearby is finished.
Do we really care what an investment property is listed for? The correct answer is no, we really don’t care except to determine the sellers level of motivation to sell. Each of these properties had a motivated seller who priced the properties aggressively in the market to sell it quickly. The property in Calgary, AB was recently reduced with a seller wanting to close in 2 weeks. It had sat vacant, but full of stuff for over 4 months. The seller had moved to a diferent country and needed to sell fast. The house needed updates and higher end finishes to sell it for the $750,000 ARV price. The house in Honolulu, HI was an estate sale with a squatter that needed to be evicted. It had sat on the market for a few months with a recent price reduction. The property needed updates and freshning up. It also had 2 units that could be rented out or one occupied and the other rented out. The Vancouver, BC property was an estate sale as well. The property needed to be cleaned out of personal effects (mostly shoes), updated, and cleaned up. It was around he corner frrom a new commuter line for the train into downtown Vancouver, which made it a very desireable location. Each of these investment properties had plenty of room in the deal for costs to close & hold, to cover repairs, and provide ample profit for a cash buyer in that area.
It was fun when we ran the numbers and my fellow newbie investors saw that they could wholesale properties to cash buyers in their area. It was a great eye opening expereince for them and proved that you can really wholesale properties in any real market as long as you have cash buyers and you find motivated sellers.