Recently, I bought a house for 100k direct from homeowners.
The place was an absolutely mess. Hoarder mentality going on. Along with animal pee, feces and even snakes in the basement. No not the kind you see Mitch from Road Trip eating. Wild snakes living in their "stuff".
I wholesaled the property to another investor for 132k and made that for about 15 hours work. He then cleaned up the hoarding junk left behind, had the place professionally cleaned, took professional pictures and put it right back on the MLS. Classic whole-tail deal. He then sold it as-is as well to a guy who "flips houses" for 182k. Now that guy is fixing and renovating and hoping to sell at 340k.
I fulfilled all of my promises to the homeowner and made sure they were in good hands. They were elderly and their health was more important to them at the time of sale. I even paid for a professional moving company to pack up what they wanted to take with them to the new house! I wanted to help them in a turn key way. Every time I saw the sellers, he shook my hand firmly with a smile and seemed greatly appreciated. She gave me a hug after closing and said "You have been so good to us!"
I felt very good about the whole process. I really did help this couple sell their house and live the rest of their remaining years where they wanted to be and not worrying about how to clean up the mess at their house!
But, there were huge profits made on this deal. I made a 32k wholesale fee. My buyer wholetailed it for a 50k gross profit. And now some guy is fixing it up finally.
I wonder what the homeowners think as they see how this transistioned, How would you feel?
I think I need you to bring me deals if you can find $100k homes that will flip for 340k.
Really though, I've had the same moral dilemma. But I think as long as everyone is clear on their intentions, and the seller's are satisfied with the deal, there's not much else you can do to keep a clear conscience.
@Charlie John , the homeowners didn't sell you a house worth $340 for $100. They sold you a house worth $100 for $100.
A house is only worth what someone is willing to pay for it.
The house that sells for $340, isn't the same house you bought.
And yeah, if you can find a deal like that in my neck of the woods, I'd buy it in a heartbeat.
If the house was worth 340k when you first saw it and you got the sellers to agree to sell it to you for 100k, then you would have something to feel bad about. I don't see in anyway where you took an unfair advantage of these folks. You solved their problem and took good care of them to do it. You profited from your efforts, as did your buyer and as will his buyer. Nothing wrong here.
I am a very religious man and have to come to terms with this exact senerio. What I have learn throughout the years is:
- I help people sell their home when 99.99% of people would or could not.
- there is nothing preventing these types of people from ordering a dumpster and make an extra $60,000. They choose to live that way.
- I am never high pressure, I don't put a gun to anyone's head. They have multiple options and sometimes choose mine
Even if the house was worth $1,000,000 and I paid $100,000, I never force anyone to do anything. They are adults and make the choices of their own volition.