A house is going up for sale need help Wholesaling/house finder
Member since 2022 · 1 post · 0 votes
Hey BP community! I have listened to a few podcasts and still extremely new at this. I am in college and have a friend whose parents own a house and want to sell it because my friend is graduating. I don’t know much about wholesaling (and I can’t but it right now ) apart from wanting to double close ( as I heard it’s the best) the deal and make a profit. Just managed to stumble on this deal and the my friends parents said they would let me know a price before reaching out to the realtor and listing the house. Any advice on what to do and how I should approach this. How do I get to make money in this and still deliver the house to the buyer with knowing what to do and what’s going on.
Thank you in advance. Look forward to hearing from you all!
I would recommend start by going to local REIA meetings and talking to experienced local wholesalers. You can easily find someone local that is actively moving properties to team up with you, provide a local contract, and split the profits with.
Next, you need to know if you are getting a deal. Just because it is off-market, doesn't mean it is a good deal. If the house is worth $100,000 and doesn't need any work, you are generally going to want to contract it between $50,000-$75,000 depending on the market. So you are literally buying for 50% of the value. As a wholesaler you would then go try to sell the contract for $55,000-$80,000, making the spread.
If the parents are giving you a deal for $90,000 on that house, you need to realize two things. First you are never going ot wholesale it. That might be decent if you were going to buy and hold and could get $1,200 a month in rent, but it will be difficult to wholesale it. You may be able to find an investor that will buy it for that and give you some equity, but realize most still want to be all-in around 75-80% of value, not 90%+. Second thing, understand the national average for selling cost is 11%. On that same "deal" - the seller would actually make $1,000 more by selling to you than through a Realtor! I had this happen recently when someone had tried to sell a house for 2 years at $185,000 which it eventually went off the market. I approached willing to buy at it cash for $156,000 and cover closing costs. He wouldn't take less than the $185,000 he had it listed for. There is only an $8,000 difference between what he would have walked away with and what I was offering, but he wouldn't even come down to that number. And the house had been vacant over 6 months to boot.
Finally, while there are many ways to buy a house, if you want it and have a relationship with the seller as it sounds you do, you could broach them about seller financing so you can buy it. They probably would understand you can't go get a loan being in your last year of college. It could be a short term ballon note (not recommended) or a long term fully amortized loan.
Overall I would seek someone in the market that can advise you since all real estate is hyper local, and while you can pick techniques up and move them between locations, knowing subtle differences between neighborhoods when determining value is not something you are going to pick up on BP easily.