I need an advice on how to buy a property from a wholesaler.
Let's say I got an email with a property description, price, repairs, ARV, etc.
I can estimate ARV rather quickly by looking at comps. Other numbers except for the asking price are up in the air at that point though.
Let's say I like the property as described and want to proceed to the next step - that is to get the repairs estimate and inspect the property. I also need to arrange financing.
However, there is a problem - I need to make sure I am the only potential buyer.
If this was a retail purchase, I would put all my contingencies in the contract and proceeded with property inspection, etc.
But with wholesalers - I heard - it is different. I would have to sign a contract right away and there is no way out without losing earnest money.
How do I get around this and add contingencies to a contract with a wholesaler?
If you don't have financing don't put it under contract. Ask the wholesaler does he have a weasel clause in his contract and if he does tell him you want the same weasel clause.
And if I have financing? Financing is a least of my concern. I more worry about property conditions and repairs.
You are going to have to learn how to estimate repairs. You will miss on your first ones, so go for small repairs and small profits, to avoid major F ups.
If the property has a real big problem that is hard to estimate, lets say, foundation for example, everybody will have to drag a contractor out to estimate the repair.
Just don't trust the repair values from the wholesalers, their motivation do not align with yours.
If you see something you are interested, take a contractor with you and have him quote you how much it would cost to fix it up. At the worst case you will learn how to estimate a little better from him.
maybe have an inspector out to the property ASAP so you can identify any major issues. Very few issues will have wildly variable costs associated with them. Foundation issues are one... plumbing is another.
I guess it all comes down to how to reserve a property for myself to look at and evaluate while keeping everyone out and being able to get out of a contract if I don't like something.
A "weasel clause" may work with an individual but how to insert it in a contract with a company that requires a non-contingent contract and a hefty $5K deposit to secure a property?
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