Another Wholesale Deal Closed
Ok, so I have been updating the BP community here and there on the status of my first direct mail campaign, and though this deal didn't even come from my marketing I still wanted to share some details of it. I am still very new in my investing career (still in my first year), so I know this will be beneficial to some newbies, maybe even more experienced individuals, who are focusing on the wholesaling strategy of REI.
I try to always let people know that I invest in real estate whether it be through my FB, Instagram, leaving business cards everywhere I visit, telling everyone I meet, etc., and I knew that it would one day pay off. I let people know that my company will pay a referral fee of $500 and up on closed deals that I close on as well. One day a friend that I went to grammar school with over 20+ yrs ago, and have not seen for over 15yrs, sent me a message on FB telling me about her mother who was trying to sell her home. The property was in a area that I was very familiar with because I grew up around there and it was one of the areas that I still focus my investing in. Fast forward a bit, we discussed why they wanted to sell (husband passed away years ago and just didn't want to deal with the property any longer), we discussed what they wanted to get for the property, and after that I went to work. The ARV for similar properties in the area are between $120-130k, and they were looking somewhere around $60k. After going over the condition of the property and the repairs that it would need, I made an offer of $50k. They spoke of other properties in the area that sold or were listed for higher amounts, but I explained and showed them why they were able to do so. I showed them the overall conditions of the other properties and they understood where I was coming from. We signed a option contract for $50k, I put a lock box on the property and got to work.
I listed the property on CL, sent it out to my buyers, posted it here on BP, FB, Instagram, and put it in the hands of anyone I felt could follow through on this deal. I had received several calls on the property, a lot of tire kickers, and as time was going by I wasn't getting any serious leads. I felt personally responsible for getting this property sold because I gave the owner and her daughter my word that I was able to do so, and I just could not see myself letting them down. Even though I had the option contract and wouldn't have to close on the deal myself had I not found a buyer, I still felt obligated to get this property sold. I have a landscaping company as well, and earlier in the year an investor started renovating a property across from one of my clients to flip. I watched from start to finish, my company even cut the grass once for them, and as I always do when I come across this scenario I got the contact info for the person in charge of this project. I guess thats a benefit of me doing the landscaping, I travel around many communities and get to network with other investors, learn crucial info on off market properties, and I get to cross market my real estate business to my existing landscaping clients. Anyway, I called up the investor and asked if he was interested in another property in the same area since the flip he just sold was only a few blocks away. He let me know that he was very interested and that he wanted to check out the property. After seeing the property he let me know that he wanted the property, but he could only pay $40k for it. There was a settling of the foundation on one side of the property and a lot of the sidewalks needed to be replaced. In my rehab analysis I did not account for replacing all of the concrete but only patching it and replacing the worst areas. He informed me that he could do that but would rather pour all new concrete and that way it wouldn't be an issue when he decided to resale it which made sense. Now to make this deal work, I needed to go back to the seller and let them know what was going on.
I contacted the seller and told her about the rehab costs being slightly higher than I anticipated due to the concrete situation. I let her know that I had a buyer who was very interested, but I would have to lower my asking price if we were going to make this work and she told me that she understood. I offered $35k and she countered back with $40k; we settled on $36,500. We signed another option and I was able to offer it to my buyer at $40k. From this point until we finally got to the closing table was kind of hectic. The seller was working with an attorney that was very disorganized and he wasn't very punctual at all, so that made the process take much longer than it needed to. I got the first contract signed in Aug, and we just closed a couple of days ago. To keep the deal together I constantly stayed in contact with both the buyer and seller to make sure things stayed on course. The seller at one point was ready to walk away from the deal because they needed to get started on the concrete work before the weather changed, so I really had to be persistent with the buyer. At this point they were even dissatisfied with the attorney and was ready to terminate his services.
To summarize it all, we finally closed on the property last Fri. and that chapter is closed. I got a check for $3,500, and I stayed true to my word and gave my old friend that $500 for the referral. After everything was over with we all went our separate directions I received a call later that evening from the mother (owner of the property) and she said she just wanted to express her gratitude with me and the professional manner in which I conducted myself. She mentioned she was approached by another wholesaler before, and he was only concerned with beating the lowest price out of them, not in helping them with their situation. She thanked me and we said our goodbyes. Not long after that I received a text from the daughter (you can tell the age difference in the way in which they communicated lol) and she also wanted to thank me not only for the money, but for helping her mom out of that situation. She mentioned that it was very stressful for her and she was glad that I came along and worked with them. I asked her if she would mind giving a testimonial for their experience in dealing with me and my company and she told me that it was already done. She went on FB and Instagram and gave me the greatest thanks that I could ever think of, and I was not only grateful for it, but I can honestly say that it really touched me to be able to help someone. I mean, I knew that I was helping them out by getting rid of the property for them, but it meant so much more to them and they let me know that.
I tell this story to not only share my successes with the BP Community, but to also show that being honest and forthcoming goes a long way in not only this business, but also in any business where you are dealing with people. People don't want to do business with people they don't like as a person, so take your time and establish rapport with people when you meet them and don't make it all about business everytime. I know this made going back and renegotiating with the seller go that much smoother because they actually like me as a person, and the rapport was there. Another tip before I end this is to always be persistent. You must stay in contact with both sides of the transaction because everyone moves at a different pace and they have their own ways of doing things. Your job as a wholesaler is to keep everything together and make sure each side is doing what they are supposed to in a timely fashion. Thanks for taking the time to read this, and I hope it helps someone in their business out there. This is my first year and I have multiple deals that I have closed, and just made two new acquisitions this month. Its a process, but I know there are much brighter days in not only my future, buy yours as well. Until next time, good luck in your business, and may God bless you. Happy Holidays