Best strategy for this deal: wholesale, wholetail, hard money

5 Replies

Hey BP thanks for taking the time to share your input. I am struggling to find out how to structure this deal that makes the most sense. 

I have a townhome (1 side of a duplex) under contract for $165k in Atlantic Beach FL. It needs $16k worth of work to have an ARV of $215k with a lot of appreciation upside.

Obviously I don't think there is enough equity to wholesale to a cash buyer at that price (If you want it though let me know). 

I would flip it myself or keep as a rental however I have 2 other flips going on and likely don't have the time or funds to take on another yet. 

I actually have a buyer that's interested in it as his primary home that he would basically house hack. He would need a loan however to purchase it from me and I'm not sure the best way to set this up.

Can I assign my contract over to him and will lenders then lend to him based on an assigned contract and how would I get paid? If so any recommendations on lenders?  (I am thinking the buyer will want a conventional loan and not hard money if possible)

would this be good for transactional lending? again I think the buyers lender would need to approve this.

How would I set up a simultaneous or double closing? Does anyone know lenders that would do this?

A last resort I guess would be to purchase it myself with hard money and then sell to my buyer 30 days later. Or make him get the hard money loan and then he can refi 6 months later. 

any recommendations or thoughts would be greatly appreciated. 

Cheers!

@Max Biggar Your options depend on what you are allowed or not allowed to do as per the purchase & sales agreement you have signed with the buyer.
Does the paper you have signed allows you to assign the contract to someone?

@Max Biggar - you've laid out a lot of information but the details do matter here. If I were in your shoes, I would probably still try to work to get the front end price better so you could just do a typical wholesale transaction. Depending on the condition of the house, you might have potential to wholetail deal there and net about $20-30K assuming you don't touch it. 

I personally wouldn't advocate taking on ownership risk (e.g. interest, points, fees, carrying costs, etc.) for that level of margin though. 

You could assign your purchase and sale agreement to your buyer as long as that right is within the agreement. I would also caution you to look out for an issue with the lender if he is going to go with a conventional or traditional loan. Regarding your fees, you don't have to get paid an assignment fee at closing. You could be paid those funds outside of a closing and HUD-1 Statement in a direct transaction with the buyer.

thanks @Marvin McTaw and @Patrice Penda . Yes I can assign the contract and my concern is with my end buyer's lender not allowing that. 

I am working with my buyer to see if he will get a hardmoney loan for a discount in order to close quickly. 

If not, this is a property that I wouldn't mind owning. It is very close to my home and I have done 2 other flips on that street so if I need to use the hml myself and wait 60 days to sell to my buyer and he then backs out I would just do the work myself as originally planned. 

@Max Biggar Since your buyer wants to occupy the place, in general he won't be able to get a HML for it. Non-owner occupied only. if it's a good deal, try to close on it yourself or market to a different buyer who can pay cash.

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