Any advice for wholesaling a friends home?

Question

I would like advice on how to handle this situation. This issue may seem petty to some of you but keep in mind, Im a new wholesale investor. So, my family and friends think that my real estate business is me as a part time realtor. They often come to me for advice on homeownership, and such, because of my "real estate" business and my full time job as a mortgage analyst. Recently, a friend of mine asked my advice on her applying for a loan modification because she is in hard times right now. I gave her advice as a friend and advised that it would be a great idea and her lender should approve it since she only owes $31k. Later that evening, I'm thinking to myself this friend is a MOTIVATED seller!! Her home is a 3bed 2ba, with ARV of $120k, market rent $900, and surrounding neighborhoods ARV at $250k-$400k. There is nothing more than cosmetics needed but a rehabber could do a complete renovation at their own discretion. On top of that she recently moved in with her boyfriend with plans to rent out her place. My issue is how do you wholesale a friends house without them getting the short end of the stick. Not saying that sellers get the short end in wholesale deals but I like to get my buyers a good deal also since that's who I'm doing business with constantly.

Any advice, comments, and critiques are welcomed

Account Closed · Answer

Friends+business=bad

Qulia Brunson · Answer

@JeanBolger and @JonHoldman Thanks for the advice, you are absolutely right.  Thanks for helping me make sense of this!

Jon Holdman · Answer

If she doesn't want to sell it on the MLS she's certainly not going to want to sell it via you at the discounted price needed for a wholesale deal.

If you make a buck off wholesaling this house, that dollar comes right out of her pocket.  Stay far away.

Jean Bolger · Answer

If she doesn't want to sell it til the light rail goes through then she's hardly a motivated seller. If can rent it for $900/mo maybe that's what she should do. Surely that would cover her payment? 
	
	Really, you have to put the friendship first. Help her find the best solution for HER long term financial well-being (not yours). In the long run this will benefit you by bringing you more business and more goodwill. She'll tell everyone how great you are. (If you make a nice profit off of it and she starts felling that it was at her expense then she will be telling them something else entirely)

Qulia Brunson · Answer

@BrantRichardson I did ask her about MLS but she wants to hold onto it since the new light rail will be less than a mile from her home. Which is another reason why it would be a great wholesale deal.

@LeighChurnick I think that's what I'm apprehensive about

Brant Richardson · Answer

If it is worth 120k and she only owes 31k, why cant she just put it on the MLS?  If she is getting close to foreclosure and time is of the essence this would be the time to wholesale it.  That way you are actually doing your friend a favor, so you save her from having a foreclosure on her credit and she gets something out of the deal instead of losing it all.

I don't see what's wrong with her plan to rent it out either, $900 should be cash flow positive with a 31k loan.

Any advice for wholesaling a friends home?

Most Popular Reply