Wholesale?

[Kevin M.]

how do you properly wholesale a property ?

-find a property for 100k

Put it under contract for 100k

- find a investor to pick it up at 115k

- Then what?

Do you just attach a finders fee through escrow for 15k difference ?

- what happens to my contract?

[Jon Deavers]

I'm a total newbie too, so anybody feel free to correct me on anything said below...

Based on what I've heard/read especially on BP, the first step in properly wholesaling should not be finding a house for 100K. You will need to find a seller who is motivated and willing to negotiate. The mindset should not be "what can I mark this up for?" but rather analyzing the total deal from after-repair-value backwards. The equation would look like: ARV-minus-flipper's markup-minus-repair cost=equals=what you should sell for. Then what you should sell for-minus-what your "finder's fee is" = reasonable amount to offer current owner.

It's my understanding that working from the bottom up by placing a contract on something then trying to mark it up and sell it to a flipper/buy and holder will not pan out for you, the current owner, or your prospective buyers.

Check out the blog post below for a good overview of the process, but I would suggest listening to the podcast too for some really great insights on how a possible wholesaling operation might work. Lots of real life examples from the guests.

Good luck!

http://www.biggerpockets.com/renewsblog/2006/11/25/wholesaling-real-estate-basics/