May 14th - 3 very different deals that made me $25,000. Part 1

Getting started in real estate and as a wholesaler can be difficult when you are coming from little knowledge or little cash flow. As I have discussed challenges with investors that I meet, I decided to layout some specifics and details of some of my recent wholesale deals. Please let me know if you have questions or need some guidance to make a deal work.

Deal #1

Kearns UT - I found a "For Sale by Owner" sign in the front yard of a home on Saturday evening. I called the owner and had a short conversation with them about the home. I was able to gather these important details.

• They did not live in the home.
• Their tenant was behind on rent, and even when they did pay it was under rented for the area. Having several close by that I manage I knew that immediately, although I did not mention it.
• They had purchased this property as an investment but did not enjoy being a landlord.
• Asking price was $100,000.

I made an appointment to meet with the Sellers at the home. The following Monday at 11 am.

When Monday came I arrived at the property with a standard Utah Real Estate Purchase contract. We walked through the property with the owner and tenant. I took several pictures and a short video.

After my walk through I made an offer to purchase the home for $93,000. The seller was not able to take this price due to his loan being just under $100,000 and he was nervous that the price of $93k would not be enough to payoff the home and cover closing costs. My next try was at $97,000. This also was not enough for him to agree. Reluctantly, I agreed to his price of $100,000 on the terms that I would be able to return to the property the following Saturday with my contractor and partner for further inspection. We decided that if I could make the deal work, I would do it. But if we found unexpected repairs that we would again discuss the price. I then wrote my offer on paper and handed it to him. These sellers seemed to still have some concerns and wished to review the documents prior to signing it on the spot. I left the offer with them.

Tuesday morning they called me back, told me that they just wanted to be free of the worry about the property and that they would like to accept. They came down to my Property Management office and we met in our conference room. I recommend this if you have one available. Sellers will feel more comfortable to see a brick and mortar establishment, even if my own office is shared with a mortgage company. So within 5 days I had my contract accepted and I was Under Contract. I made my earnest money due after the 15 days due diligence, and we agreed to close the sale prior to the end of the month because they preferred to not pay another mortgage payment. This gave me roughly 24 days to close.

On Wednesday there was a meeting of the Salt Lake Real Estate Investors Association (SLREIA) and I knew that I my buddies that want rental properties would be there. I made myself a little flyer and I paid the club price of $35 for the privilege to hand them out at the door. There were several people that wanted more information, but did not make me an offer to take the project. I did get a great tip from one member of the club to contact a group that was purchasing many properties as part of a hedge fund. I got the contact information and made the call first thing on Thursday. Through email this group confirmed that the numbers looked good and pending the inspection on Saturday they were very interested.

I did not stop marketing the property though. I continued to send emails and contact the people I had previously met that I knew hold rentals and wanted to grow their portfolio. I also uploaded my short video walk through to my Youtube page and sent that link to interested parties with my email.

On Saturday I met the owner, and the contractor/project coordinator of the hedge fund group. We inspected the property for about 30 minutes and he confirmed that this property was a go. At this point I needed to deal with my contract. I had written the offer in my own name, and now I was faced with the challenge of transferring the right to purchase the property with an assignment addendum. When I had originally made the offer to the Sellers I always spoke of myself and my "partners". I did not specifically add a clause that noted the buyer "and or assigns" but I did let them know that I would decide quickly if I preferred to hold it myself or transfer the contract to my LLC, or that of one of my partners. I only wanted to talk it over with them so we could decide where was the best place to add the liability and the asset. Sellers are very willing to make the deal work if you prepare them ahead of time for what is going to happen. When I asked for their confirmation of the Assignment Addendum they asked me if they would still receive their payoff on the same day. I replied that of course they would and they agreed to the assignment immediately.

My Hedge fund Buyer happened to have an agent of their own to represent them in the deal, but they still agreed to pay their agent out of their own funds at closing, as well as to cover all the closing costs that would apply to the Seller. This was not a large amount, but it was enough that it allowed the Seller to walk away from the transaction with just over $2500 in their pocket and to not have to pay the next mortgage payment that was due.

My new Buyer also made the $1000 deposit of earnest money at this time. I made it part of the terms of the assignment and verified the deposit prior to my signature on the addendum. On the assignment addendum the new Buyer (Hedge Fund) also agreed to pay me an assignment fee, payable at closing, in the amount of $5000. That is $1000 now, and the additional $5000 at closing.

On the 28th of that month, the Buyer and Seller both settled, and the next day I received a deposit to my account in the amount of $5000. I am a Realtor, but after reviewing the deal with my Broker he agreed that I had sold my interest in the contract that I owned, and I did not have to pay a broker split on this income. Since the property was not listed on the local MLS there was no Sellers agreement to pay a listing broker. This money was mine to keep and add to my personal income.

I have tried to keep this as basic as possible and highlight the specific areas of questions I receive from new investors. What questions do you have that will help you to feel comfortable to make your next offer to a Seller?

Please email or pm me. Trevor.