Attempting to wholesale Grandmothers Uncle house...

Wholesaling
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Attempting to wholesale Grandmothers Uncle house...

Jordan Foster
Member since 2019 · 4 posts · 0 votes

Hello Bigger Pockets community!

Ive recently moved back to my hometown with aspirations of learning the ins and outs of real estate, as I have goals to reach financial independence utilizing real estate investing as one of my streams of income. Outside of Monopoly, I've never been involved with anything real estate related so its all pretty daunting. I understand that you dont learn much in your comfort zone so Ive made a decision to chase whatever I can grab a hold of.

As I make this decision, I come to find out that my grandmother has been made responsible for my great-uncle properties (paid off) and everything has been put in her name. Due to my uncles deteriorating condition, he didnt keep up the properties too much, so all of them are vacant. My grandmother has her own stresses and doesnt have time to put energy into the upkeep either, so shes looking to sell everything. 

I keep reading everywhere that wholesaling is a great way to get into real estate, then I read its an illegal shady business that turns desperate individual victims. Being that I dont really understand the process in its totality, I kinda feel stuck. Ive had conversations with my grandmother in attempts to explain to her the value of the property and potentiality to establish wealth thru renting, but shes tired and wants to get rid of it. So I look at this as an opportunity to wholesale the property and learn a little bit more about real estate while actually gaining something to jump start my journey into real estate. She has handed me the keys to look at the property (doing that tomorrow), but I still dont really know how I should proceed...

My thoughts were that I have to find out how to assign a contract, then get in touch with a realtor/title company??? Idk, but that why I hoping someone could give me insight into my situation so I dont do anything backwards. 

Thanks guys for the help and I appreciate giving my situation and attention or consideration!

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Lydia R.
Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
7y

@Jordan Foster I am a firm believer in never wholesaling property that belongs to friends or family. It gets complicated...

What I will suggest you do in this case is this: 1. Find out how much your grandmother wants for the properties. If she has absolutely no idea then just split the profits with her 50/50. Also make sure she doesnt have any benefits that would be negatively affected by her receiving a lumps sum of money. For example, people who receive disability payments are only allowed to receive X dollars a month and anything beyond that makes them ineligible to continue receiving benefits

2. Get your grandmother to sign the ownership of the properties over to you. Please do not screw over your grandmother here. If she has any concerns you can have her seller finance them to you...but thats a lot to put an older person through so just dont screw her over and you can skip making this more complicated.

3. Find a flat fee listing agent who will list the properties for you for a flat fee. You will get all the calls and inquiries. This will be a fantastic learning experience for you because you get to deal with investor/buyers. You will essentially be wholesaling the properties, but instead of doing an assignment you will own the properties out right and you can sell for a discounted but profitable price. You could also skip the agent and put the properties directly on Zillow but you get better exposure on the MLS.

4. When you get inquiries you will get a ton of hands on experience negotiating with buyers and handling the closing aspect of wholesaling. It will help you get a lot more comfortable with the process.

5. Close the deal with your buyer and split the proceeds with your grandmother. Use the extra cash to get your wholesaling business off the ground.

This is exactly what I would do if I were in your shoes. Good luck!! Feel free to reach out if you have questions!

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  • Lydia R.
    Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
    7y

    @Jordan Foster I am a firm believer in never wholesaling property that belongs to friends or family. It gets complicated...

    What I will suggest you do in this case is this: 1. Find out how much your grandmother wants for the properties. If she has absolutely no idea then just split the profits with her 50/50. Also make sure she doesnt have any benefits that would be negatively affected by her receiving a lumps sum of money. For example, people who receive disability payments are only allowed to receive X dollars a month and anything beyond that makes them ineligible to continue receiving benefits

    2. Get your grandmother to sign the ownership of the properties over to you. Please do not screw over your grandmother here. If she has any concerns you can have her seller finance them to you...but thats a lot to put an older person through so just dont screw her over and you can skip making this more complicated.

    3. Find a flat fee listing agent who will list the properties for you for a flat fee. You will get all the calls and inquiries. This will be a fantastic learning experience for you because you get to deal with investor/buyers. You will essentially be wholesaling the properties, but instead of doing an assignment you will own the properties out right and you can sell for a discounted but profitable price. You could also skip the agent and put the properties directly on Zillow but you get better exposure on the MLS.

    4. When you get inquiries you will get a ton of hands on experience negotiating with buyers and handling the closing aspect of wholesaling. It will help you get a lot more comfortable with the process.

    5. Close the deal with your buyer and split the proceeds with your grandmother. Use the extra cash to get your wholesaling business off the ground.

    This is exactly what I would do if I were in your shoes. Good luck!! Feel free to reach out if you have questions!

    2Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    @Jordan Foster @Lydia R. “Splitting the profits 50/50” (50% of selling price)seems Very greedy and taking advantage.  Taking 50% of the sales proceeds on a property a relative has worked for and paid off over decades just seems way over the top.....for just simply helping them with listing and selling them.

    Particularly for someone who doesn’t know a single thing about real estate transactions.

    Jordan, why don’t you just get your license...you can probably do it within a month.

    2Reply
  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    7y

    Wholesaling can be illegal if you do it wrong, and if you are this green, the timing may not be great. Have you spoken with your grandmother about carrying the loans for you? She gets a stress free, monthly payment with no responsibilities for managing or improving the properties, you can fix them up, rent them out and start building a portfolio. Seems to me that this would be a win/win and you already have an advantage in that you have a relationship with the seller. Opportunity is knocking here- I'd forget the wholesaling and try that route. More straight forward and lucrative for all involved. 

    Best of luck!

    1Reply
  • Lydia R.
    Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
    7y

    @Wayne Brooks The grandmother inherited them from her deceased brother. She didn’t do any work, didnt pay down any debt or build any equity, it hasn’t cost her anything. She got a bunch of property that she doesn’t want or know what to do with. I think a 50/50 split is completely fair if hes going ti step in and handle everything so she doesnt have to do anything.

    0Reply
  • Lydia R.
    Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
    7y

    Here we go with the people who hate wholesaling. There is absolutely nothing illegal about selling a property that you own for a profit. In fact thats probably the most legal way to go about wholesaling. Close on the property yourself, take title and then resell for a profit.

    2Reply
  • Jordan Foster
    OP
    Member since 2019 · 4 posts · 0 votes
    7y
    Originally posted by @Wayne Brooks:

    @Jordan Foster @Lydia R. “Splitting the profits 50/50” (50% of selling price)seems Very greedy and taking advantage.  Taking 50% of the sales proceeds on a property a relative has worked for and paid off over decades just seems way over the top.....for just simply helping them with listing and selling them.

    Particularly for someone who doesn’t know a single thing about real estate transactions.

    Jordan, why don’t you just get your license...you can probably do it within a month.

    To clarify, my grandmothers brother is not deceased. He has dementia, so my grandmothers has been assigned responsibility for his financial endeavors being that he is not of sound mind to conduct business himself. So the sale of the house would still be allocated to his trust, but my takeaway from what Lydia is saying is that I should split the wholesale profit with my grandmother... but that sounds like it could get complicated. Her incentive to get rid of the property comes from the fact that she isnt gaining anything but stress from being involved. So she is trying to let it go to rid herself of the responsibility.

    Time is of the essence here because she has already begun looking into selling the properties as is. So I would love to go and get a more officiated understanding of the matter at hand, but time may not allow that. She is getting calls from different parties daily and it bothers her, so I figured if found someone (I have a potiential buyer; my mother on the other side of the family) I could minimize the loss, and maximize the gain.

    0Reply
  • Jordan Foster
    OP
    Member since 2019 · 4 posts · 0 votes
    7y
    Originally posted by @Corby Goade:

    Wholesaling can be illegal if you do it wrong, and if you are this green, the timing may not be great. Have you spoken with your grandmother about carrying the loans for you? She gets a stress free, monthly payment with no responsibilities for managing or improving the properties, you can fix them up, rent them out and start building a portfolio. Seems to me that this would be a win/win and you already have an advantage in that you have a relationship with the seller. Opportunity is knocking here- I'd forget the wholesaling and try that route. More straight forward and lucrative for all involved. 

    Best of luck!

    Ive considered seller financing for this situation, but im pretty sure my grandmother doesn't want to deal with it at all. She's had the opportunity to rent it, but she just wants it gone. 


    To my understanding, wholesaling becomes illegal when you begin to market the property publicly (Im green though, so if im wrong let me know). My mom on the other side of the family has expressed interest and I was thinking about crafting a deal that satisfies al parties involved, starting with my grandmother (finding out what she wants from the transaction), then to myself (leveraging the data given to me to craft an offer), then to my mother (finding out what works for her and adjusting accordingly). 

    0Reply
  • Greg Jean
    Specialist · Member since 2019 · 8 posts · 0 votes
    7y

    @Wayne Brooks @Lydia T. I can see where you guys are coming from and this makes sense given @Jordan Foster situation. Wholesaling, as mentioned above, isn’t illegal unless done in the wrong ways. It is a great way to get started in RE and very possible to get started given the scenario, however dealing with family (regardless of who put what in) can be a bit risky if info is not disclosed extensively. I personally wouldn’t wholesale family property as, if there’s a misunderstanding, things can go sour.

    0Reply
  • Anthony Rosa
    Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
    7y
    Originally posted by @Lydia R.:

    Here we go with the people who hate wholesaling. There is absolutely nothing illegal about selling a property that you own for a profit. In fact thats probably the most legal way to go about wholesaling. Close on the property yourself, take title and then resell for a profit.

    Is selling a property that you own with title in your name considered wholesaling? I would think it's more like flipping or just selling your home.

    0Reply
  • Lydia R.
    Investor · Austin TX · Member since 2016 · 1k+ posts · 2k+ votes
    7y

    @Anthony Rosa It seems like there are a lot of terms that mean the same thing. Or terms that are used interchangeably but have different meanings. What is the difference between wholesaling and Assigning Contracts? Where do double closes fit in? Personally my opinion of wholesaling is when you are selling a property (or a contract to purchase a property) that you havent made any improvements to. So if you are assigning the contract, double closing or purchasing and reselling those all constitute wholesaling in my book. You are just making a deal available to someone else and taking a small profit in the process. Others may disagree. Maybe that should be a forum topic!

    0Reply
  • Greg Jean
    Specialist · Member since 2019 · 8 posts · 0 votes
    7y

    @Adi Oturkar southern and western regions of the state of MA are most definitely real estate goldmines — especially areas that are going through some kind of redevelopment.

    0Reply
  • Matt P.
    Investor · Columbus, OH · Member since 2015 · 625 posts · 601 votes
    7y

    @Jordan Foster You should buy it from her yourself. Agree to a price and have her be the bank... Then you turn it into your first rental. You might even be able to refinance out of the mortgage she is holding on it for you later on to pay her off and put some cash in your pocket.

    0Reply
  • Jordan Foster
    OP
    Member since 2019 · 4 posts · 0 votes
    7y
    Originally posted by @Matt P.:

    @Jordan Foster You should buy it from her yourself. Agree to a price and have her be the bank... Then you turn it into your first rental. You might even be able to refinance out of the mortgage she is holding on it for you later on to pay her off and put some cash in your pocket.

    This seems to be the best solution to me if were talking about the long game here in relationship to my goals of financial freedom. But now, not only would I be a new homeowner with no knowledge of how a home functions, but I would also be a new landlord... thats seems optimistic to me. Maybe Im making it harder than it has to be. I also dont wanna stress the tenant as a result of my lack on experience. 

    0Reply
  • Sean McCluskey
    Rental Property Investor · Newport Beach, CA · Member since 2017 · 218 posts · 138 votes
    7y

    @Jordan Foster it sounds like you should help manage the properties for the benefit of your grand uncle, without taking a bunch of profit from family members.

    He keeps owning them, you manage them for him as rentals, you charge 10% of rent like a property manager. And that experience will make you feel ready to take over if he passes and your grandmother wants to sell them to you, at a later date.

    Hard for us to know all the variables but I don’t like the idea of selling my demented uncles’ houses for cheap.

    0Reply
  • Account Closed
    Lexington, KY · Member since 2018 · 169 posts · 77 votes
    7y

    @Lydia R. 50%? So if the home is 100k paid off he should get 50k for selling or "wholesaling" it? Is that a joke? If she doesn't know how much she wants he should decide to get 50%?? Man what did I just read. A realtor gets 5% for handling everything but if youre family you should rip off your grandmother and get an extra 45%. 

    @Jordan Foster Please don't listen to the above advice. If the property is worth over 50k get a qualified person to show you the ropes and sell it for you for the MAXIMUM value to help your grandmother and uncles situation/family. Don't use this as an opportunity to be another person who overcharges a disadvantaged person, especially family. If she cannot get a lump sum get it for her in your name. That isn't a reason to take it like Lydia suggests.

    "She didn’t do any work, didnt pay down any debt or build any equity, it hasn’t cost her anything. She got a bunch of property that she doesn’t want or know what to do with" That doesn't make it OK to STEAL! I hope your family does not treat you this way later in life Lydia.

    0Reply
  • Brent Paul
    Rental Property Investor · Shakopee, MN · Member since 2015 · 985 posts · 374 votes
    7y

    Have you thought about purchasing the houses from her with her providing seller financing and keeping them for yourself as a rental?

    You could put in the repairs and possibly up the value on each of them.  She would get a check from you every month.  You would have her covered and some cash flow as extra.  Rent them out for a few years, refinance cash her out, or even flip it.

    0Reply
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