My new Florida wholesaling business model

[David Stewart]

Anent many discussions of the legality (or lack thereof) of wholesaling property in Florida, here's my idea of a business model for wholesaling in Florida:

1. Find properties through marketing means.

2. Identify owners, and contact them.

3. Those who are prospects and looking to sell: Analyze and create offers for buying the property at a price to enable selling to rehabbers at a profit.

4. For a seller who accepts an offer, put a contract on the property at the negotiated wholesale price.

5. Close on the purchase with my own money, cash. (Probably from a real estate IRA.)

6. Sell the property to a rehabber, from a buyer's list or other form of advertising, at a price above what I paid for the property and the closing costs I pay.

7. Close on the sale and receive the check.

8. Collect my check, deposit all my funds into my real estate IRA.

It seems to me that I can do the above without a license. (I do have a real estate license, but could do it without.)

Of course, I'm not doing this with no money, and I'm not doing it "without even taking title to the property." I'm a principal on both sides: I am the buyer, then owner, and seller. No violation of Florida law respecting real estate brokerage.

And now I have to pay a bunch of closing costs, which reduce profit. I could, instead of using my own money, borrow from a hard money lender, or private lenders. But then I have to pay them interest, and that cuts my profit again.

Other than that, what's wrong with this model? Anything legally? Anything financially? Anything stylistically?

[Joaquin Rosario]

Hi @David Stewart this model works very well because you have full control of the deal at which point you can use any means of advertising that you choose. I would recommend speaking with a CPA about using your IRA before you start as they may be some rules that apply. Disclosure (I am not a CPA or acting as one this suggestion is only based on my personal opinion). Hard money and Private money are also a viable option you would just have to factor in the points and interest when negotiating with the seller to make sure the deal is still profitable.

Thanks