Wholesaling Exit Strategies

[Keegan Beck]

I'm starting my adventure in real estate investing by wholesaling residential properties.  My question is what are the best exit strategies if I get a property under contract but can't find a buyer?  Am I able to back out at any time during my due diligence period?  Thanks!

[Russ Scheider]

Nobody likes to back out of a contract.  A deal is a deal, right?  Nevertheless, I have a couple of specific contingencies in my Sales and Purchase Agreement that allow me to exit at will.  "This agreement is contingent upon business partner approval" and/or "This agreement is contingent upon purchaser's ability to find a suitable funding partner within 60 business days" or whatever.  That being said.  We (my wife and I) have put over 100 properties under contract and have only exited the contract 5-6 times.  Only one of those times was because I agreed to pay too much for the property.  AND in that case, I told the seller from the beginning that I was not going to close on the sale and that I was not confident that my partners would be interested in his rural property.   There were no hard feelings when we exited the contract 90 days later.  The other 4-5 times were because the owner was deceptive and that deception came out in due diligence OR the owner was ignorant of some major title issue that we could not work through.  The other 90+ times, we closed on the purchase or assigned the contract to a partner (end buyer) who closed on it.  There are those who disagree with me, but I believe It is CRITICAL to get properties under contract a deep discounts, so we can offer them at wholesale prices or close on them ourselves.  I don't like breaking a contract.  Feels like breaking a promise.  If you need help determining correct wholesale pricing.  Feel free to contact me.   I know the SC market and can help you.  I also recommend that you check out Kent Clothier's "Reverse Wholesaling" instruction.  A mentor recommended it to me and it helped me build the wholesale side of our business the right way.   I bought the course in 2012, but I think most of it is available on YouTube now.   Good Luck!