Creating cash out of first deal

8 Replies

Hello BP community! I am trying to do my first real estate deal and am wondering how to structure it. I have found a property for $295k in a nice neighborhood with an ARV of $385k the seller acquired through adverse possession. I cannot purchase the property myself as I do not have the funds for it. However, I have found an investor whom I’ve showed the property to and is interested but needs to get inside for the contractor to give a repair estimation to get actuals. How do I set this deal up so that I can ensure I make money as the finder? Is there a contract I fill out? Thank you! Any details of how to close this out is much appreciated!

Sounds like a good wholesale deal opportunity... You'd want to begin by getting the house under an assignable contract between you (or your entity) and the seller at a price that let's you add your wholesale fee and still provide a good resulting purchase price for your end buyer. That contract would need to state you have the right to inspect the property for which the seller would need to provide access. It would also need to state that the seller must be able to provide clear and insurable title, as having acquired the house through adverse possession may become an issue.

The numbers don’t really make sense to me but that’s non of my business. 

Sign a contract with the seller , give yourself an inspection period. But if the buyer really wants to cut you off he will wait for your contract to expire and mKe one with the seller himself.

I will assume the seller lives in the property .

Your goal here is that the buyer and seller won’t meet each other .

I would schedule a time that will be good for me, for the seller and for the contractor but not for the buyer. Tell the buyer you’ll walk with the contractor , he doesn’t need to spend he’s precious time to walk half broken houses with contractors 😉

This is brokering real estate without a license. See 475. Completely illegal and a felony if they want to pursue charges.

@Jonathan Taylor Smith  Thank you! That was the precise advise I was looking for. Any other tips for actually filling out the contract?

@Yiftach Ilyov   I will have to do a walkthrough with the contractor. Though he was telling me it's impossible for him to give 100% accurate repair estimates without looking behind the walls. Any ideas of how to give a PRECISE repairs estimate? Also, if the investor wants to get keep getting cheap houses from me, then she won't cut me out for a measly couple thousand dollars I hope. If not, then I just won't send properties her way in the future :) 

@John Thedford I have a real estate license. I am a newbie, but this would not be illegal for me to do. Also, how do so many wholesalers get away with it without being punished if this were illegal?

\\\\ Thanks all for your replies! Love to hear from people more experienced than I!

Originally posted by @Matthew Rodriguez :

@Jonathan Taylor Smith  Thank you! That was the precise advise I was looking for. Any other tips for actually filling out the contract?

@Yiftach Ilyov   I will have to do a walkthrough with the contractor. Though he was telling me it's impossible for him to give 100% accurate repair estimates without looking behind the walls. Any ideas of how to give a PRECISE repairs estimate? Also, if the investor wants to get keep getting cheap houses from me, then she won't cut me out for a measly couple thousand dollars I hope. If not, then I just won't send properties her way in the future :) 

@John Thedford I have a real estate license. I am a newbie, but this would not be illegal for me to do. Also, how do so many wholesalers get away with it without being punished if this were illegal?

\\\\ Thanks all for your replies! Love to hear from people more experienced than I!

 More and more of them are finding their way to the state enforcement people thanks to the public and people in the industry. Where I went to school we were taught that we must report these unlicensed brokers as it is a duty required. I have reported quite a few of them and most end up with a cease and desist. The biggest problem is those that promote the activity that don't even realize their actions are illegal. Every other post on BP seems to be about "wholesaling" with little thought of legalities, let alone the damage done to the public. 

@Matthew Rodriguez

Don't forget, if you work assignments, all assignment fees MUST go through your broker or YOU would be operating illegally. Personally, I don't assign. Why give away tens of thousands of dollars vs buy and holding rentals. It really doesn't make sense, and often claimed ARV are simply mythomania BS.

Originally posted by @Matthew Rodriguez :

@John Thedford I have a real estate license. I am a newbie, but this would not be illegal for me to do. Also, how do so many wholesalers get away with it without being punished if this were illegal?

 I don't understand. If you are licensed, why don't you just have them sign a listing agreement and broker the deal? Why wholesale it for a "a couple thousand"?

Originally posted by @Matthew Rodriguez :

@Jonathan Taylor Smith  Thank you! That was the precise advise I was looking for. Any other tips for actually filling out the contract?

@Yiftach Ilyov   I will have to do a walkthrough with the contractor. Though he was telling me it's impossible for him to give 100% accurate repair estimates without looking behind the walls. Any ideas of how to give a PRECISE repairs estimate? Also, if the investor wants to get keep getting cheap houses from me, then she won't cut me out for a measly couple thousand dollars I hope. If not, then I just won't send properties her way in the future :) 

@John Thedford I have a real estate license. I am a newbie, but this would not be illegal for me to do. Also, how do so many wholesalers get away with it without being punished if this were illegal?

\\\\ Thanks all for your replies! Love to hear from people more experienced than I!

When a contractor says he needs to open the walls to give an exact quote most of the timed it means “In order To know if the systems(plumbing , electric, Hvac which are behind the walls) need attention walls need to be open.

BUT a good contractor can know even without opening the walls. You can look for the signs also.

Few tips:

Figure out if the water lines are pvc/cpvc or galvanized by looking under the sinks . Try to go in the attic to see if the water lines run there 

Open a few outlets around the house and open the service panel completely. If the wires are yellow or white they’re relatively new and updated. Check if the outlets are grounded. If panel is 150 amp and more it’s been updated

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