Wholesale a Wholesale?

Question

Hello all! Hoping you guys can help. I am super noob when it comes to REI so please forgive my ignorance to this. Here is the deal: There are 4 actors---the motivated seller, wholesaler A, wholesaler b (me), and my cash buyer.

I was on craigslist and found a single family home that needs a rehab. I called the guy (wholesaler A) who informed that he already had the property under contact and he was looking for a buyer. So he is a wholesaler looking for a buyer to buy the property but doesn't know how to get buyers. I am very new to this and do not have the confidence yet to rehab. I did however do my due diligence and amassed at least 5-7 buyers for when I begin wholesaling. My question to you all is: (A) Can I wholesale the wholesale to my buyer? and if so (B) how would I go about it? would my buyer be paying both me and the other wholsaler? is there more paperwork involved then just the purchase & sign agreement and the assignment of contract? Has anyone been in this situation before? Please inform me as this will of course determine what I do next?

Thank you.

Jeff Filali · Answer

Owner sells to Wholesaler A for X, Wholesaler A sells or assigns to Wholesaler B for X+Y, Wholesaler B sells or assigns to Cash buyer for X+Y+Z.   It happens a lot.  If structured correct, all parties are protected and cannot cut anyone out of the deal.  Depending on what state you're in, and what role you play, it could be a little complicated, but its doable.

Nikolas Ferreira · Answer

when you start cutting the pie so many times it starts to become less profitable for the investor which in turn might cost you a buyer! personally what i would do is talk to the "wholesaler" and say listen i got a buyer. how about we split the assignment fee. 50/50 or 60/40 whatever you both can agree with. because without your buyer he might not sell and without him you might not have a property for your buyer. this way everyone wins..

Account Closed · Answer

Daisy chain Oh daisy chain when will it end ?

Jeff Filali · Answer

As long as your intending on closing on your deal, its very simple.  No different then if you purchased a property in Jan, closed on Jan 31st, sold to someone else on Feb 1, they closed on Feb 15th and sold to another end buyer on Feb 16th and closed on March 1st.  But you do not have to carry the process out that long, in most states this could all happen in one day, but you would need an investor friendly title company who knows how to do this.  I've heard some states may require a day between the transactions.  But honestly, don't make a BFD out of it and it won't be.

If you cannot close on the deal in the first place, then that's a totally different issue and you probably don't need to even think about trying to put together a deal like this.

Melanie Hartmann · Answer

This post is 3 years old but for those reading it in the future, there are ways to do this. However, please consult with a knowledgeable legal professional to make sure you and all parties involved are properly protected in the transaction.

Typically, we sign joint venture agreements when we partner with others on real estate transactions.

That being said, in a situation such as the one described in the original post, it may be best to stay away. Given that both wholesalers sound inexperienced and did not have a prior relationship outside of connecting on this deal via Craigslist. Unless they both have solid mentors coaching them through the deal there are just too many things that could go wrong due to inexperience.

Account Closed, what ended up happening on this deal? And what types of real estate investing are you getting into these days?

Account Closed · Answer

Account Closed If you don't intend on closing yourself, make sure to inform the seller that you intend to profit off of the sale of their home.

Account Closed · Answer

Account Closed Awesome. That is great to know as he said he has at least 5 more properties. Have you been in the situation before?

Lydia R. · Answer

@Stefan Crichlow It is possible to wholesale this deal. Couple things. 1. Make sure you inform wholesaler A that this is your intention 2. You fill out an assignment agreement with wholesaler A for the purchase price plus their wholesale fee. You add your wholesale fee and market the property at a new price to your buyers. The problem with this is that the deal still has to make sense for your buyers. If not then you need to discuss with wholesaler A splitting their wholesale fee with you if you bring a buyer. Deals like this are easier if you have specific buyers that you know would be interested.

Mar Tell Dennis · Answer

@Stefan Crichlow question for you, I am also new to this. So how did you find your buyers list? How did you accumulate them.

Wholesale a Wholesale?

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