No clue how to move forward on this one??? Gentleman called and he is working with his uncle to sell the Uncles 26 rental properties. The package is $1.7mil and cash flows $235k year in Richmond they want my buyers but they want 10% earnest money at contract signing. I don't have 10% but I want this deal. What can I do? What would you do?
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Awesome wholesale package! Any luck with getting it under contract yet?
@Mark Freeman no they want 10% deposit to contract it non-refundable!!
When you say "cash flows" what exactly do you mean by that? Have you verified any expenses, utilities?
@Wayne Brooks I literally just talked to him yesterday and I did clarify cash flow as rental income - expenses (mortgages, management, repairs, property tax). This is word of mouth I have appointment Saturday with actual owner and will get more info then.
Find a Mentor tony....this is over your head and it sounds like you missed a few steps.
Inspect each property
Prove the cash flow.
Get values on each property with any repairs needed.
THEN pony up 170k non-refundable if the deal looks solid.
@Leigh C thanks!
Maybe I wasn't specific enough! I don't have 170k nonrefundable for a portfolio I plan to wholesale, if it's a deal! 7 of the properties I know because their in the neighborhood I grew up in and they have been kept well 3 of the 7 have been rented to the same people since I left the neighborhood in 03!
So the real question I guess would be; should I really consider this on a wholesale deal, with 120k I will have to borrow?
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Here is a different take.
That 10% non-refundable is killing it! It seems crippling to me, even if you had the money. I wonder about upping the purchase price to say $1.8 mil or higher if necessary and the numbers work, and getting the deposit reduced to something manageable. (Maybe when you meet with him you can talk him into reducing it without changing the purchase price). Then get an inspection period, say 10 days, allowing a refundable deposit during that time. If you find out that you came in too high initially to get it under contract and your buyers don't like the numbers, then you renegotiate the purchase price during the inspection period. You have to convince them you can close fast and they won't get any more from anyone else due to x y z substantial reasons. (If you work the numbers really closely on each unit you can probably make it work without the inspection period if you can get the deposit down and have a buyer).
I'm not sure if this would work but I have used it negotiating with banks , while in escrow, on reo's and it works sometimes. (I got $35,000 off of $134,000 purchase price on a recent one, with a good reason for the reduction). If you have exhausted other options it might be worth trying. I'm not a wholesaler and am just throwing out ideas.
Good luck on the appointment tomorrow Tony! Let us know how it goes.
Any updates? Just wondering what happened on this one? I think the 10% non refundable probably killed it? Putting up $170k non refundable to try and make say $25k to $50k+ doesn't make a lot of sense. Seems like way to much risk compared to the reward. I am still interested though, and if it didn't work out, did you learn anything for next time? Thanks,
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