My $52,996.25 wholesale deal complete!

My $52,996.25 wholesale deal complete!

Wholesaler · Atlanta, GA · Member since 2012 · 243 posts · 103 votes

Hello all,

I finally have my own success story. 

I guess this year alone has been a bit of a success story but Ill spare you and only discuss my most recent success, a 50k wholesale deal. 

I have been working on this deal for about 3 months (mainly waiting on probate to finish). My attorney, who is awesome, had to find 12 people to sign off on the probate documents. We actually got this sone pretty quickly to my surprise, especially since none of them were receiving any of the proceeds form the sale. 

Probate finally finished and my buyer was already prepared to close. 

We ended up pushing the closing back 1 week because the current owners had not found a new home yet. Eventually I convinced the owners that it would be best to go ahead and close so that taxes wouldn't continue to eat away their profits. 

Once they agreed, I tried to make the process a very smooth transition. I paid for professional packers to help pack the house, I paid for movers to transport the items to storage, and I even paid for 1 month of storage. Oh and not to mention $250 so that their disabled brother could live with a friend for the month until they found a new home. 

I thought this was worth getting the deal done since they had no money and I was ready to get this deal done. 

The day before closing, which is when the movers came to pick up the items of the house, the owner calls me at 6pm, several hours after the movers have left and delivered the stuff to storage, and says the movers didn't get everything so they were in the house trying to pack all of these big items in to a car smh. 

I got really frustrated and decided to get off the phone and call my buyer, who I have a really solid relationship with. She said she would help with whatever I needed and immediately got a contractor out there to turn the gas off and unhook the gas line from the heater (one of the things the owner failed to mention she wanted until the last minute). Th contractor came the next morning on time and got it done quickly. 

Now for the next problem. I decided the best way to handle all of the large items that were left in the house was to call another moving company. I decided to go to the property myself and place tape on all items that would need to be placed on the truck, at this point there was no room for mistakes. 

Luckily for me, the week prior to this happening, I attended a commercial RE networking event and just so happened to meet the owner of a small moving company. I decided to call him at around 8pm. Surprisingly he answered and said he would be able to have a crew out to the house in the morning. This was really a life saver on such short notice. 

Fast forward to the next day (closing day) everything is going as planned, but the rain is slowing traffic down which made the movers a bit late. No worries, still keeping a cool head. They finally arrived and got the items out of the house pretty quickly. This time I made sure that I checked the entire house before the truck was cleared to head to storage. The owner confirmed that everything that was tagged had been taken. 

Sounds like its over right? Nope lol. 

We get to the storage unit and when I opened the unit, it was backed very unprofessionally by the movers from the day before, it was a huge until and the movers did not use the space to its highest capacity. 

The movers quickly let me know that rearranging was not in their job description. I agreed and ask them how much would they charge to rearrange the storage just enough to fit the new items in there. They answered $25/piece for the two of them. I replied "hows $50/piece" they said that will work and immediately got to work. They finished pretty quickly which I was happy about. The only thing I wasn't happy about was the fact that the guy tried to play me by asking for $75 a pice instead of $50. I immediately said no because 50 was more than fair. He agreed and that was the end of that. 

Without boring you with details, we successfully closed on the deal and I got my largest wholesale check to date for $52,996.25.

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Rental Property Investor · Arlington, TX · Member since 2012 · 788 posts · 640 votes
10y

@James Wise Why so negative?  Sellers always have a choice.  I don't think a gun was held to their head telling them to sign docs.  They could have easily called a Realtor but for some reason did not or maybe they did and did not want to go that route.  I applaude @Fitzgerald Hall for solving these folks real estate problem.

FYI - This is coming for a Realtor/Investor/Landlord 

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  • Belleville, NJ · Member since 2015 · 88 posts · 33 votes
    10y

    Congrats man. I am new to real estate, but I am not new to putting pessimists in their place. Ironically that guy is called Wise, should be called Mr. Hater. I usually punch those people in the face. Hit first, ask questions later....or not at all...anyway, I hope you make a ton more on your next deal...

  • Cleveland, OH · Member since 2011 · 400 posts · 223 votes
    10y
    Originally posted by @Account Closed:

    The state has decided that residents are particularly at risk of predatory activities when buying and selling real estate, which is why the licensing statutes exist. It's similar to law licensing--people who practice law without a license are subject to punishment. I'm sure we all have given and received legal advice every now and then without law licenses, between friends. Contrast this--if someone who didn't pass the bar hangs a shingle and starts representing people in court (and believe me, it happens!), you bet the state will have a problem with it. It won't matter one bit if s/he makes every last client execute an affidavit swearing that they're aware of the risks of hiring a nonlawyer for legal services -- they crossed the line. There's a similar line when it comes to real estate brokering.

  • Fairfield, AL · Member since 2015 · 1 post · 1 vote
    10y

    Congrats!  I would love to know transaction facts: cost of property, estimated  cost of repairs.  Just more on how the deal was put together.

    However, do it again!

    Barbara

  • Investor · Chicago, IL · Member since 2013 · 2k+ posts · 1k+ votes
    10y

    Awesome Fitz. Congratulations! My biggest wholesale profit is $66K but I split that with another wholesaler who found the deal and I found a buyer. Seller is losing house in a tax foreclosure. We saved the day for the seller and seller walked away with $50K in her pocket.

    I have not wholesaled a property in a while since I've been closing the deals myself. Rent to own is more profitable but profit does not come as quickly as wholesaling. During the winter months we'll kick up our wholesaling efforts. Thanks for posting your awesome experience - it inspires me to go wholesale properties again.

  • Investor · Toronto, Ontario · Member since 2015 · 38 posts · 7 votes
    10y

    Wow! This thread got intense! @Fitzgerald Hall it definitely sounds like you helped these people out, and created a win-win for everybody. With the ARV so high, the numbers could have fluctuated up or down by several thousand dollars, but at the end of the day, the sellers got out with cash in hand, instead of 0, and the buyer got a great deal.

    @James Wise I see what you're saying, but you can't argue the fact that Fitz did something good, for some people in a tough spot, and walked away making money for himself. That's kind of the point of being in business. It sounds to me like you think he has no ethical conscious because he didn't take RE training and become licensed, like you did. People come from different backgrounds and have varying levels of experience that separate them from the herd. But I applaud you for caring about your compatriots and providing your 2 cents. Everyone's opinion should be heard. 

    @Christian Carson you made some very good points, and I think in this case, Fitz is free and clear! *no pun intended. 

  • Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    10y
    Originally posted by @Account Closed:

    The deal was such a good deal for the end buyer that they snatched it up. Don't see why an agent would need to pay out of their pocket to sell the property. The actual buyer could have done all the probate work that Fitz did.

    That didn't answer my question about how you would do it.  If you, as an agent, had this listing and brought this deal to one of your buyers.....what kind of discount would your buyer require to front the tax sale money and go into contract with heirs that don't have title.  The OP's buyer didn't save the property from tax sale, get the property through probate and move the heirs and their junk.

    Your original thread was loud and clear that the OP ripped off the sellers.  If your buyers would have paid the same amount as the OP, are they ripping off the sellers? Or is the fact that you are a licensee somehow make it okay for your buyer to pay the same amount as the wholesaler?

    If I listed this for the seller the yes I would explain to them that their home was worth a lot more than 174k I believe this thread has made it pretty obvious the home is worth more than 174k. Sounds like a buyer would have paid a lot more than what the OP paid. The OP also said he left money on the table when he sold the paper for a 50k profi

    Lets just use the popular 70% rule really quickly. I believe we can agree that a home purchased for 70% of ARV less repair costs is a great deal that has lots of demand.

    70% of 850k is 595k. OP's estimated rebuild cost is 300k That leaves us with a very aggressively priced home if we sell at 295k. 295k is 121k more than what the seller got. Are we to assume it would not be feasible to quickly find a buyer who is willing to do the probate work for a price point much higher then what the seller got? I don't think buyers would be demanding a 121k discount for that work.

  • Kansas City, MO · Member since 2014 · 4 posts · 0 votes
    10y

    Congrats, Fitzgerald!  Great story!

  • Wholesaler · Atlanta, GA · Member since 2012 · 243 posts · 103 votes
    10y

    @James Wise so you would have found all 12 heirs to sign the listing agreement before the tax sale occurred? The situation was not typical. Also, since when did builders use the 70% rule? Have you ever built a house before? 

    If you are going to repeat something, repeat it correctly. I said that the construction cost EXCEEDS 300k. The deal was for the land, not the house. 

    I appreciate your input, but for someone with so much experience you are really showing the same type of false dreams and hope that some realtors feed sellers until its actually time to sell. If your goal was to get a listing agreement signed by all of the heirs before the tax sale and find a buyer willing to pay the taxes before the tax sale (5 days), you would have placed this family's entire estate at risk. 

  • Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    10y

    Totally agree with Christian, this thread is totally about professionals vs uneducated, greedy wheeler dealers who know nothing about business, the difference between real property and personal property. Children wanting to be big shots, know nothings who just cant refrain from posting, wanabe gurus with no basic knowledge of business or real estate.  I have another name for this bunch who taint honest business dealings and deal in the degradation of the industry. I won't say it, but it rhymes with crap heads. 

    Much like Mosses said, you are not worthy of the word, I just tell it like it is. If you have no desire to be professional, stay in touch with regulatory matters, or understand ethical conduct in this industry, I have nothing for you. Go your own way and have a nice day. :)     

  • Flipper/Rehabber · Chicago, IL · Member since 2012 · 45 posts · 24 votes
    10y

    Congratulations, and I admired how you helped to rent the house for the brother.  I was inspired to read this story, and thank you for taking the time to share your success story.

  • Knoxville, TN · Member since 2014 · 116 posts · 57 votes
    10y
    I've got a story to add here. There was a house that was built in 2012 but not completed. Mostly finished except floors, countertops, sinks, faucets and landscaping. About 65k of work to complete the house. I'm not sure what happened to the owner but he moved away and never finished. He put the house on the market for 350k as is which is about what's it's worth when complete. It didn't sell. Several months later he lowered price to 270k no bites. He hired realtor and listed for 215k. Sat for 49 days or so when I found it. I offered 145k he declined. I followed up with realtor and told her that I was still interested. She told me there was another offer so I raised mine to 160k cash. He accepted. He had other deals fall through that had finance contingencies. We had a cash contract close in 5 days. Well another realtor came along and said their buyer loved the house and wanted to live in it. They put it under contract to buy from me for 225k as is. So the seller was fed up with this house and wanted out. Did I screw him over? Did the realtor save the day and get the seller the most possible for his home? Sometimes people have different perspectives and see opportunity to add value or make money on a deal. James Wise I'm not even sure how you can be a real estate investor unless you do exactly what the OP stated and buy at a discount. I've got lots of properties I can sell you for 100% of what they are worth.(worth in my eyes)
  • Wholesaler · Waldorf, MD · Member since 2015 · 459 posts · 245 votes
    10y

    Jim you sound like a bad politician.  You don't want to be distracted with the facts of the situation so you hold on to your tenuous argument. 

    Sure Mr. Seller your house is "worth" xxx, but you need  30k to bring it up to retail value, you need to pay some back taxes, and I need 3% + 2-3 months to market it, ....in between my other listings. Call me when you are done with the repairs. I can refer you to a great contractor that can start immediately.  They do work on "all my properties." 

    If the seller would of listed their property with an agent they would of lost the house!! How many houses on any states MLS gets sold for top dollar, with repairs needed that the buyer would be responsible for,...in a few weeks?!?!

    I'm not hating on agents/brokers, but  look up the word wholesale. The consumers at Whole Foods don't complain about the expensive food. I'm sure the Mercedes dealership is not selling their cars for what they manufacture them for.

    You started your argument off wrong by assuming the OP stole the property from the seller. An agent wouldn't of done what he did for 3-6% commission. Sure he had an incentive, but so what.

    Most cash buyer's don't care what the wholesaler makes, as long as they can buy at a good deal for them.

    There are a TON of agents in my market that are also wholesalers and the ones I personally know do it ethically. I have agents on my cash buyers list. They tell me what their cash buyers are looking for.

  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y
    Originally posted by @James Wise:

    This story is EXACTLY why there is a regulated real estate industry. It is to protect sellers from people stealing $50,000+ from them because they don't know any better.

     No not exactly. A very large part is why real estate is a regulated industry is the self interest of the Realtor lobby. 

    I love your rhetoric James. He helps them get $175K instead of nothing, but what you see is that he "stole" $50K . This was a distressed non arms length transaction. All distressed sales, in all industries, are done at significant discounts.

    Give me a break James. This guy did substantially more than the typical agent would, or even had the skills to do, to make a deal happen.

    What bothers me James is you jump to the conclusion that the OP somehow took advantage of the seller. You made this jump without knowing the facts, when as it turns out this was a true win-win situation. 

     Even though it was a win-win situation you still feel somehow something wrong was done.

    @Fitzgerald Hall Congratulations, ignore the naysayers and hypocrites. You did a good thing here.

  • Wholesaler · Atlanta, GA · Member since 2012 · 243 posts · 103 votes
    10y

    @Ned Carey Thanks!

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    10y
    Originally posted by @James Wise:

    Here's some assumptions.  Correct me if I'm wrong.  I think we can now assume that in your years as an agent thus far you've never done an estate/probate deal like the one the OP did.  Never worked with a property held in the name of the decedent with 12 heirs that didn't have title and were heading towards tax sale, heirs that had no cash to save the property or hire an attorney.  You don't really know how to make sure the heirs don't lose the property before tax sale nor would you be willing to front the cash.  Nor do you understand the costs and risks of the probate situation in order to properly advise any of your investor buyers. You don't actually know if the buyer needs a $50K OR $121K discount to make this deal work and mitigate risk. So I think we can assume that you wouldn't be a good agent match for the sellers or your investor buyer client in this situation.  Hence, maybe the benefit of this thread to you is stop, listen and think.  In that order.  Maybe there's something you could learn that you didn't know or understand before.

  • Investor · Central Valley, CA · Member since 2012 · 6k+ posts · 3k+ votes
    10y
    Originally posted by @Christian Carson:
    Originally posted by @Account Closed:

    The state has decided that residents are particularly at risk of predatory activities when buying and selling real estate, which is why the licensing statutes exist. It's similar to law licensing--people who practice law without a license are subject to punishment. I'm sure we all have given and received legal advice every now and then without law licenses, between frienquess. Contrast this--if someone who didn't pass the bar hangs a shingle and starts representing people in court (and believe me, it happens!), you bet the state will have a problem with it. It won't matter one bit if s/he makes every last client execute an affidavit swearing that they're aware of the risks of hiring a nonlawyer for legal services -- they crossed the line. There's a similar line when it comes to real estate brokering.

    The brokering question is an entirely separate matter for a separate thread.  We are not privy to the purchase agreements, assignment agreements and security instruments used to buy and sell this deal. It may have been illegally brokered per OH law or it may not have.  Assuming the OP was a bonafide principal, there is already plenty of disagreement about profit and ethics without the brokering without a license question.

  • Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    10y

    Sellers will trade equity for peace of mind. 

    Wholesalers who have the ability to close on a property are of great value in many situations. However, that model is not of an investor, nor even a speculator, but of an intermediary.

    Time will tell whether all parties associated with the seller side were satisfied, however my guess is that the money was well earned. 

    There are crappy licensees and worthless, anti-education lead generators who call themselves wholesalers or investors when their efforts only cause more chaos. And there are some great agents, brokers, investors and very savvy wholesalers who really add to the mix. Let the parties dictate the compensation.

    A problem solver is not compensated on a per hour or per unit basis but rather based on the "perceived added value" part of the bargain. That little concept has made me countless dollars (and a lifestyle that only my friends know how well I get to live).

  • Contractor · Atlanta, GA · Member since 2012 · 176 posts · 103 votes
    10y

    Congratulations @Fitzgerald Hall.  This is a perfect example of why the most popular answer to the last of the Famous Four questions ("What do you think sets apart...") is perseverance.  How many people would have just walked away given all the hurdles that were thrown up in your path and the timeframe?

    And the idea that an investor is under some obligation to try and maximize a seller's amount of profit, while reducing their own profit, is just comical.  I'd be curious just who gets to decide how much profit the investor is allowed in that scenario.  Bernie Sanders?

  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y

    @Rick H.

    Very well written. I sure don't want some bureaucrat or agent telling me how to deal with my problems.

  • Developer · Los Angeles, CA · Member since 2015 · 48 posts · 12 votes
    10y

    Can't understand why there is hate going on in here. Great post, please continue to share. It's a good story with good details. I agree, you helped them out. Making money is as much about being savvy and smart as anything else - which you are. 

  • Wholesaler · Chicago, IL · Member since 2015 · 245 posts · 102 votes
    10y

    Great thread, this is why I love Bigger Pockets. We can sit down and learn both sides of the spectrum and be humbled each others knowledge and experience.

  • Mortgage Lending Company · Member since 2015 · 20 posts · 1 vote
    10y
    Congratulations man! I'm looking to start my wholesale advertising.
  • Flipper/Rehabber · Conyers, GA · Member since 2015 · 182 posts · 26 votes
    10y

    Well, I hope that's enough said.

    For what it's worth, I'd like to congratulate you @Fitzgerald Hall I'm working with a seller who just wants OUT!!!!!!! AND at almost any cost, so I PERSONALLY have to decide what my TIME, KNOWLEDGE, ENERGY, SERVICE and ETC., ETC., ETC., is worth, to help her OUT. Can anyone really give me a SPECIFIC answer? Don't worry, that's my responsibility, I will be back another day for advice, and from the looks of this tread, I'll get several answers. LOL Happy Investing Everyone..........

  • Lender · Atlanta, GA · Member since 2009 · 79 posts · 1 vote
    10y

    Consistent and persistent paid off big, good job!! 

  • Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    @Fitzgerald Hall great deal and great work!  I think you should be very proud of what you were able to do for this family.  You seem to have great skills, urgency, and determination.  They were put to good use on this one.  

    Did you sell this property or do you still own some of it?  You know the other side of this story is that you sold the property for $50k+ less than retail value.  Were you a victim?  Of course not.  You too needed to get it done.  

    Well done!  

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