First Wholesale Deal, Need Some Help!!!!
Hello everybody,
I need a little guidance on my first wholesale deal.
I have a junker worth $ 700K, ARV could be anywhere between 850M and 1.3M depends on how you want to rehab it or tear down it and build something new.
My offer is $620K + closing costs.
Question: Should I assign a contract to a rehabber for say 40-60K, or do the simultaneous closing.
Another question that I have is if I decided to do a double close. Do I still need to get a hard money loan, even if we close on the same date?
I greatly appreciate all the answers.
Alexander
Hello Alexander,
In answer to your question about getting a hard money loan to close a double escrow it's my understanding that the person that you assigned your contract to would be the person supplying the loan/money to close the deal. You need to talk to your escrow officer and let her know that you are planning a double closing and that your buyer will be bringing in the funds to close the deal with your seller. Your escrow officer should know how to do a double closing if not you may need to find another escrow company that does. Happy investing.
I'm a newbie also. I have my first junker in escrow out here in San Bernardino. Congratulations for finding your first deal
Steve
You only do the simoltaneous close if you do not want the end buyer to know what you paid. Otherwise you assign the contract. This lets you pay no closing costs. 100% of the assignment fee is yours. Double close you will have buying and closing costs which could be significant. I always budget about 3% to buy and sell. Yours would probably be less. But say 2% to buy and 2% to sell - about 25k.
Brenda
Steve and Brenda, thanks a lot guys.
Just make sure you investor can close. You contract with your owner, needs to give you plenty of time to close, plenty of time for inspection (or other out clauses), and access to the property. Get a key. Is the house vacant? It is harder to work with occupied houses.
With you investor buyer, get proof of funds, and only give in as little time as possible to close and get a deposit. Do not give him the full time of the contract to close. If he bails, you want time to find another buyer. I personally do not let them assign the assignment. Otherwise you lose control. Could also ask for references and proof of funds. It should be a cash sell.
Brenda
Brenda,
This house is not vacant and is being sold in As Is condition. I really don't know how to ask for the key.
Any suggestions?
Thanks
Occupied houses are very difficult to assign.
Nobody is going to sign a contract for a house that they have not had fully inspected, especially for 700+.
This deal will be tight. If it was a 700k house in perfect shape that you were wholesaling for 400k, then no problem. But with significant repairs, many people will need access to the house to inspect.
HOw did you present yourself to the owners? Do they know that you are a reseller? If not, then it gets tougher. You will have to present your potential buyers as business partners or your own inspectors. You bring people through and say they are your money partner, your rehab partner, or one of your many inspectors.
Bottom line - occupied houses are tough unless the deal is really good.
Brenda