Got my first deal under contract, Now need advice and opinions!

7 Replies

Hi guys,

Thanks to all the support of bigger pockets my partners and I have been able to lock up a deal. We are about to enter escrow on our side and we are approaching a short list of investors for the property.

Now, this is our strategy for the remainder of this deal an I would love to hear you guys' opinions on our approach. Note that the property is tenant occupied.

1. Round up group of buyers

2. Take buyers to view the property together (we haven't viewed the property either)

3. Ask what the buyers are willing to pay for the property and avoid, if possible giving an offer first

At this part it gets a little fuzzy. We believe we can get above $10k as a wholesaler because we got a really good deal. IF we can get more should we open double escrow? The margin for this could potentially be half the value of the home but as a wholesaler, is it "fair' to try to get as much as we can? If necessary, we can pull funds to purchase this place but of course we don't want to take that course of action unless absolutely necessary. 

Appreciate all input guys!

Hi guys,Thanks to all the support of bigger pockets my partners and I have been able to lock up a deal. We are about to enter escrow on our side and we are approaching a short list of investors for the property.

Now, this is our strategy for the remainder of this deal an I would love to hear you guys' opinions on our approach. Note that the property is tenant occupied.

1. Round up group of buyers

2. Take buyers to view the property together (we haven't viewed the property either)

3. Ask what the buyers are willing to pay for the property and avoid, if possible giving an offer first

At this part it gets a little fuzzy. We believe we can get above $10k as a wholesaler because we got a really good deal. IF we can get more should we open double escrow? The margin for this could potentially be half the value of the home but as a wholesaler, is it "fair' to try to get as much as we can? If necessary, we can pull funds to purchase this place but of course we don't want to take that course of action unless absolutely necessary.

@Matthew Chang  Please provide the numbers so we know better how to help you!

My opinion is you need to click on the LEARN tab above and listen to the podcasts.

You should have cultivated a buyer's list BEFORE closing on a property without an idea of what your "end game" is.

You have to coordinate with the tenant as not to disturb them and maybe they don't want a bunch of strangers tramping through their "home".

To take a group of buyers to a property that you yourself haven't visited is a recipe for disaster!  First, you have no idea what needs to be done to the property as far as repairs. Second, these buyers are going to ask a ton of questions that you won't be ready to answer because you haven't seen the property!

I also don't agree with "asking" the tenants "what they want to pay"....do a round robin type showing, have apps ready for them to complete, offer refreshments and tell them you will get back to them within 47 hours...let the bidding war commence.

Happy Investing

Originally posted by @Char Prado :

Hi guys,Thanks to all the support of bigger pockets my partners and I have been able to lock up a deal. We are about to enter escrow on our side and we are approaching a short list of investors for the property.

Now, this is our strategy for the remainder of this deal an I would love to hear you guys' opinions on our approach. Note that the property is tenant occupied.

1. Round up group of buyers

2. Take buyers to view the property together (we haven't viewed the property either)

3. Ask what the buyers are willing to pay for the property and avoid, if possible giving an offer first

At this part it gets a little fuzzy. We believe we can get above $10k as a wholesaler because we got a really good deal. IF we can get more should we open double escrow? The margin for this could potentially be half the value of the home but as a wholesaler, is it "fair' to try to get as much as we can? If necessary, we can pull funds to purchase this place but of course we don't want to take that course of action unless absolutely necessary.

@Matthew Chang  Please provide the numbers so we know better how to help you!

My opinion is you need to click on the LEARN tab above and listen to the podcasts.

You should have cultivated a buyer's list BEFORE closing on a property without an idea of what your "end game" is.

You have to coordinate with the tenant as not to disturb them and maybe they don't want a bunch of strangers tramping through their "home".

To take a group of buyers to a property that you yourself haven't visited is a recipe for disaster!  First, you have no idea what needs to be done to the property as far as repairs. Second, these buyers are going to ask a ton of questions that you won't be ready to answer because you haven't seen the property!

I also don't agree with "asking" the tenants "what they want to pay"....do a round robin type showing, have apps ready for them to complete, offer refreshments and tell them you will get back to them within 47 hours...let the bidding war commence.

Happy Investing

Thank you for the response @char! 

Please excuse my vagueness on the original post, but we do already have a short list of buyers lined up. When I said "1. Round up group of buyers" I meant reach out to the buyers who are interested in this particular property. Our "end game" is pretty open ended. We have enough capital to fully purchase any of the properties we go into contract with if in case a good buy/hold scenario turns up. One of the partners in the group is also a licensed real estate agent in California if we wanted to list the property via MLS.

The property is not owner occupied. The tenant is willing to show the property but one of the caveats of the seller was to try not to bother the tenant (thats why we only want to do as few showings as possible). Although we do not FULLY know what the property has to be done in terms of repair, I believe our numbers are good enough for the buy/hold or even fix/flip investor. Our seller has disclosed that the repairs on the property are mainly cosmetic. Also, our contract gives us 60 days for inspection.

Also, this property is most likely not for someone who will be living in this home. Our cash buyers will most likely use these as investment vehicles. I feel like doing a round robin type showing would be more akin to what a real estate agent would do instead of the wholesaling role we are trying to take. Its one of the reasons why the seller was willing to go with us instead of a traditional listing.

The location of this property is in the prime area of San Pedro, CA (borderline Palos Verdes). We got it in contract for <$230k, the comps in the same complex go for $275k-$325k. I hope this gives a little more insight about our deal. We look forward to hearing everyones feedback! 

Thanks

Only real advice would be view the property yourself and have a solid scope of work. In sales we say buyers are liars, in real estate sellers are liars. I would never trust what a seller considers cosmetic. Plus once you view the property and have a solid scope of work and pictures maybe your list of buyers get narrowed down to the serious buyers. Less people to show. Just my 2 cents 

Originally posted by @Ceasar Blackman :

Only real advice would be view the property yourself and have a solid scope of work. In sales we say buyers are liars, in real estate sellers are liars. I would never trust what a seller considers cosmetic. Plus once you view the property and have a solid scope of work and pictures maybe your list of buyers get narrowed down to the serious buyers. Less people to show. Just my 2 cents 

 Took your advice and went out to San Pedro to check out the surrounding community. We didn't get to see the actual property we have in contract but our agent partner was able to get us into a unit that has the same layout just to get a feel of what could possibly go wrong. We walked by the one we have under contract and the porch and door area do seem to be in great condition and well kept. The window-mounted a/c units also seem to be the newest on the block. We have an appointment to visit the home later this week.

Getting really excited about this property. Also, I was able to confirm with our partners about a wholesale price. We will no longer go for the "you tell me how much you want for it" strategy and have come up with a firm $246k. I feel like this will ensure that our buyers a solid margin for their profit as well (it will meet a ~6.5% cap rate if rent is raised to market prices).

Thanks!

Originally posted by @Matthew Chang :

2. Take buyers to view the property together (we haven't viewed the property either)

3. Ask what the buyers are willing to pay for the property and avoid, if possible giving an offer first

Congratulations on your opportunity, Matthew!

I agree with the previous comments that you should 1) Not trust what the seller says 2) View the property yourself first.

I recommend viewing the property yourself with a contractor, real estate agent, etc. first so that you can find out what the estimated repairs are. It sounds like your group of investors are interested in buy and hold? If so, I would subtract the estimated costs of repairs from the comps and accept no less than that. 

Yes, resist the urge to name a price first - other than what the comps for the area are. Have documents that show that?

That's my 2 cents, too!

Best $$$ to you!

Originally posted by @Tatiana R. :
Originally posted by @Matthew Chang:

2. Take buyers to view the property together (we haven't viewed the property either)

3. Ask what the buyers are willing to pay for the property and avoid, if possible giving an offer first

Congratulations on your opportunity, Matthew!

I agree with the previous comments that you should 1) Not trust what the seller says 2) View the property yourself first.

I recommend viewing the property yourself with a contractor, real estate agent, etc. first so that you can find out what the estimated repairs are. It sounds like your group of investors are interested in buy and hold? If so, I would subtract the estimated costs of repairs from the comps and accept no less than that. 

Yes, resist the urge to name a price first - other than what the comps for the area are. Have documents that show that?

That's my 2 cents, too!

Best $$$ to you!

 Hi Tatiana,

Thanks for the response. We did end up going to visit the area and actually toured a unit that has the same layout. We walked past the unit we are in contract with and just viewing the outside, looks like it has been well taken care of. 

We are at this point pretty firm on not buying this property for ourselves. We instead want to wholesale this out. 

Thanks,

Matt

Update: We just noticed that on our purchase agreement that he signed using his name instead of the trust that the property is owned under. Now this can cause problems. We have to make sure he is the beneficiary of the trust and not just a part owner. Granted the name of the trust is his name, you never know.

So we dropped our check off at the escrow company and should have word from title soon. Will keep you guys posted!

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