Updated almost 7 years ago on . Most recent reply
Yes, this really happened.
Investment Info:
Large multi-family (5+ units) wholesale investment in New Smyrna Beach.
Purchase price: $1,900,000
Cash invested: $10,000
Sale price: $2,100,000
A 2-month multi-family wholesale deal that allowed me to take $10,000 (of refundable money) and turn into nearly $200,000 in two months.
What made you interested in investing in this type of deal?
I knew that the demand for apartment and large multi-family deals was white hot, insane, hotter-than-the-sun and a small markup would go a lot further than wholesaling a SFH.
How did you find this deal and how did you negotiate it?
This seller contacted another wholesaler who refused multiple times to put the property under contract. He didn't believe the acquisition price was good enough "per door" (he was comparing it to SFH ratios) to make a profit.
After multiple attempts to get him to partner on the deal, because I knew I could find a buyer, he refused. So I decided to raise the deposit money and place my own contract on it.
How did you finance this deal?
Wholesaling doesn't require finance, but because it was a multi-million property, the deposit was sizable and I was able to raise the money by guaranteeing a low-risk investment. The raised money was 100% refundable to the investor.
How did you add value to the deal?
Two things:
1. Getting the word out. The main issue was that this property was far away from a metropolitan center and therefore flew under the radar. It was close enough to Orlando and the beach to get interest from investors, but not something that would normally stick out.
2. The property had some issues with the city and there were several city council meetings during the contract period. Attending council meetings to prolong the life of the contract was key.
What was the outcome?
Pretty great.
$200,000 gross profit before commissions were paid to assisting realtors who helped source high-profile cash investors.
Lessons learned? Challenges?
Too many to list, but the big two lessons were..
1. Sourcing my own buyers - Profit was cut into significantly by realtors who brought high-profile investors. I could've done this had I been ready.
2. Why the hell didn't I double close? - This was a costly mistake. Several buyers were willing to pay $2.2M-$2.4M, however, because this was an assignment, the revealing acquisition cost caused them to renegotiate. This cost me $100k-$300k in profit.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Yes I did. If you partner with the RIGHT realtor who is well connected to high-profile cash buyers, this can expedite the time it takes to source a buyer. These guys worked hard with me knowing they were getting a cut of the profit, but I don't recommend it if you can build your own list of high net-worth people looking to pay cash for properties like this.