OfflineIs there a formula to use for wholesaling a cashflow rental property? Single Family up to a Sixplex? I know it's different when you wholesale a vacant home.
__________________
Wholesaling Rental Property ?
Posted on: Thu, 07/03/2014 - 05:54
Basically you need to first apply your local capitalization rate to the cash flow to determine market value and then apply the standard wholesaler's discount. Rental properties are valued highly on the income stream and less on the comparable sales basis or cost to rebuild. Figure out the worth of the property based on an accurate income stream and then discount. Simple as that.
Thanks for your advice, Simon!
Do you have a good example of what a wholesale rental deal would look like? I have an idea how to figure the cap rate. I know as long as a property cash flows at the end of the month pretty good, & the location is good, that's all that matters minus all the expense reports, schedule e's, etc.
I've done one... since then, I buy them all
Right now I have a cash-flow wholesale deal that I'd be willing to wholesale, all-in it's an 8-plex for $115, with NOI of $18,852/yr. Wholesale price is $134,000 for a 14% Cap Rate... which is AWESOME!
It all depends on your buyers list and what they're looking for, as always... if you have buyers who want 20% Caps, tell them to jump in a lake. If you have reasonable buyers who want 12-15%, then you can work within what they want to get them solid numbers.
Feel free to send me cashflow deals, I'm a buyer