A Wholesaler SUCCESS Story

[Don Konipol]

It’s quite obvious to the experienced real estate investors on BP that almost all “newbies” posting questions about “how” to wholesale are totally lacking in the experience, knowledge and capital to even have a shot at being successful; in other words as harsh as it sounds they are “clueless”.  And by the lack of response these posts normally receive we realize they don’t know enough to even understand any answer we would provide. 

So, I'd like to relate a story about a person who decided to become a wholesaler with almost no prior experience or knowledge of real estate. She started by attending some REIA meetings, went on to read a number of real estate text books studying real estate principles and real estate law. Further she took the course curriculum for the brokers license, and and introductory course in commercial real estate.

All this took about 4 months.  During this time she also tried to identify a “niche” where she could gain a competitive advantage by accumulating extensive knowledge/experience.  She decided on  RV parks in a 3 county area of Texas. 

This woman obtained a list of RV park owners, and began contacting the owners expressing her interest in specializing in RV parks.  She informed the owners that she would not (at this point) be able to purchase the park herself, but would be interested in acting as an “intermediary” in helping an owner sell his park.  When asked how this was any different from commercial real estate brokers, her answer was that brokers didn’t specialize in RV parks and most didn’t understand the accounting, marketing and nuances particular to these properties; since this was the only property type she handled, she had made a study of them and understood the operations. 
Further, she told the owners that while most commercial brokers would run thru their list of buyers, IF they had ANY for an RV Park, they would then “list” the property on Loopnet and “hope” another broker had a buyer.  She on the other hand would work EXCLUSIVELY at putting a deal together to sell the subject property, contact any potential buyer she could, and through her previous efforts at “cold calling” RV park owners had a number of contacts who expressed an interest for acquiring additional properties. 

One of the RV Park owners she contacted was an attorney who had accepted ownership of an RV Park in lieu of legal fees, and was eager to sell. His property had been listed with a major commercial broker for a year, but no serious offers had resulted, and the listing had just expired.  He was impressed by this newbie “wholesaler” and entered into a contract providing her the option to purchase the property for $760k for 90 days, with the understanding that she would be trying to “sell” the option. 

This wholesaler was able to find and deliver a contract with a buyer willing to pay $850k for the property.  The buyer “needed” about $35k in concessions, further the buyer was not able to obtain financing within the 90 day timeframe.  The wholesaler was able to convince the buyer to put up $10k non refundable for an additional 60 days extension, and was able to convince the seller to accept $10k as option money for ‘90 day extension. 

The buyer in the meantime was able to raise a larger down payment; I and my partner made a 1st lien loan on the property, and the loan closed within the time window. The wholesaler had sold the contract for $850k minus the $35k concessions or net $$815k.  She had “paid” $760k plus $10k option extension fee or $770k so she netted $45k on her first “wholesale” deal.

As a by note this woman went on to wholesale a number of of additional RV Park transactions, and after about 3 years began syndicating RV Parks which she does to this day. 

[Ned Carey]

@Don Konipol great story.  I wonder how many caught that she used an 'Option". 

You clearly know this, but for those reading along the word "option"  is what changed this from an illegal act "acting as a broker without a license"  to a perfectly legal transaction. 

This is exactly the kind of detail the newbies miss and don't seem to care about or want to learn.