Investor · Punta Gorda, FL · Member since 2010 · 151 posts · 128 votes
Hi all,
I have the opportunity to buy a vacant SFR from a wholesaler that I would fix and flip. I've known this person for about a year from our local REI group and I trust him. This property is less than a mile from my house and is mostly in need of cosmetics. I just don't know what the proper steps are when buying the contract.
Should I be asking to have an inspection or is this something that is not done for a wholesale deal. Ideally I would like to bring my handyman over to walk the inside of the property and get his thoughts since he would be better at estimating repair/reno costs than I.
I will be getting a HM loan and would like some input on what you think good terms/rates would be for someone who is new to HM lending. Thank you all in advance for your input!
Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
6y
No idea on the loan. As far as looking over the property, yes 100% see it with whoever you need to look with you. Don’t trust anyone telling you to make offers without seeing it.
The second thing is to double/triple/quadruple check the contract you are signing. Not just the assignment one, the original P&S document that you are taking their position in.
The last wholesale deal I bought took 3-4 attempts for the wholesaler/their attorney to send a correct contract. They continued to send over contracts where the math was simply incorrect and had me overpaying. Luckily I’ve seen enough contracts to not sign until it was correct.
Another thing I’ve seen is wholesalers requiring you to use “their” title company. The reason is the title search/insurance is ready to go. On that same deal above the title company charged 3-4 times the standard rate (thousands of dollars when I’m used to spending hundreds). They also had something like 30 pages of exclusions... they were actually a good title company from what my attorney said, but again it took us reviewing multiple times for them to get things correct. I still paid a “rip off” amount of money to their company. From now on, I’m not sure I would agree to use a wholesalers title company again.