Wholesale Strategy in California
We recently put a deal together in a very interesting way to get around a few wholesaling blocks. Of course as most people know most agents don't like the and/or assignee verbiage and I believe the new CAR contract doesn't allow you to assign. We typically use our own contract when we buy without an agent but for this deal it was an off market listing and we had a buyers agent and a sellers agent involved. We got the property into contract with the intentions of rehabbing, raising rents, re-renting, and selling. Of course when we inspected the property there were too many issues and the price was too high for us to take on that risk, so we started on our buyers list to see if we could get this off to someone else who may be interested. Sure enough we found someone and wanted to close this deal quick and easy with no one feeling uneasy or questioning what is going on.
We had just heard of this idea to add the buyer to the contract and close with them rather than assigning it. So we added the new buyers name on the contract and we both closed on the deal with us taking a stake in the property equal to our wholesale fee and deposit. As we added the new buyers name on the contract we also wrote up a new contract to sell our share to the buyer immediately once the sale closed and we would be bought out.
It worked seamlessly, but I know there may have been some things we didn't think about or other workarounds that may have been better. Please if you have any other creative ways to do this or tips for this type of transaction please let us know.