Need confusing deal advice

3 Replies

I am a broker and have a client who listed his paid off investment property with me. His family is wanting to purchase a nicer home and in effort to get money down he is selling a ran down rental. He has someone contacting him to purchase the home for $700 a month for 3 years. The home is currently rented for $550. 

I offered my seller $10,000 cash to assume the risk of the deal in which he is likely going to take.

I know we shouldn’t assume..but I am talking with the potential contract buyer who sounds stand up. So ASSUMING he can come up with $1,500 down, and the $700 a month I would be willing to sell it to him for 25k. 

This would be my first wholesale/contract deal 

Best way to work this deal? Buy it, lawyer write up a contract sale document, give new buyer equitable title and move on?

If you buy it, you're not a wholesaler anymore.

Here's how you do it:

1 - Make the offer in the name of an LLC for $10k, thus the LLC is the owner of the "contract"

2 - Sell the LLC ONLY (with the contract to buy as an asset of that LLC) for $15k (the profit you would have made if you had to buy the property first)

3 - Buyer of the LLC (and the contract agreement/asset) executes the "contract" your LLC agreed to for $10k

Result:

1 - No money comes out of your pocket...ever. The money paid for the property comes out when the property is bought (contract executed)...which will be by the buyer of your LLC. Remember, the original agreement to buy from the current seller is made by the LLC...not you.

2 - Seller gets their $10k

3 - End buyer gets their property for a total cost of $25k

4 - You make $15k profit

5 - The original seller has no knowledge of the $15k profit you are making. The only money they see changing hands is the only money that pertains to them...the $10k to buy their property...and, the buyer hasn't changed...it's still the same LLC.

6 - ...and, there is no need for a double closing. 

Originally posted by @Drake Espenlaub :

@Joe Villeneuve you reccomend taking that to a real estate lawyer and having them do the appropriate forms. Also, in said contract it would just be in case of default the llc is returned to seller with all contract/assets.

LLC's have very few forms. Don't over complicate it. Just set one up through one of the many online LLC formation companies. You should be able to get it done for an Indiana one for less than $150. It should include everything you need including your Resident agent for a year. This is important since you don't want your name, or any other info, attached to this when you transfer ownership.

Not clear at all on what you are asking about "in case of default".

If you have any questions just PM me direct.