First time buying wholesale property. Any gotchas to look out for

[Asim G.]

Hi,

I am planning to buy a wholesale property to buy and hold. I have heard a lot about wholesale in podcasts and read about it in forum posts such as the following.

https://www.biggerpockets.com/renewsblog/2016/07/0...

I wanted to get feedback from the experts here if there is anything I am missing. Here is the status on the property.

1. The property has an occupant in it who is in the process of moving out.

2. The wholesaler has a contract with the current owner and has opened escrow. I have received a preliminary title report, and the property has a clean title.

3. The wholesaler has sent me a copy of his contract with the current owner and an assignment contract. The assignment contract is requiring an EMD of $5000.

4. The contract between the seller and the wholesaler states that the property will be vacant before escrow.

Are there any gotchas in such a transaction that I need to look out for. How do I ensure that the property is vacant before CoE.

Thanks

[Mitch Messer]

Hi @Asim G. If I were you, I'd want that contract between the seller and the wholesaler to have language that provides for a walk-through prior to closing. If not, I'd want an addendum drafted that does. If property is not vacant, undamaged, and in "broom-clean" condition during the walk-through (as determined by me, the buyer), closing would be delayed while seller either addresses all issues or coughs up some money to cover my costs to resolve the matter.

[Mitch Messer]

Hi @Asim G. If I were you, I'd want that contract between the seller and the wholesaler to have language that provides for a walk-through prior to closing. If not, I'd want an addendum drafted that does. If property is not vacant, undamaged, and in "broom-clean" condition during the walk-through (as determined by me, the buyer), closing would be delayed while seller either addresses all issues or coughs up some money to cover my costs to resolve the matter.

[Asim G.]

Thank you @Mitch Messer. The contract between the seller and wholesaler has been amended to provide for walk-through to confirm vacancy before closing. In addition to ensuring the vacancy, here are the steps I have taken

1. I have confirmed that the property has a clean title and the preliminary report looks good. The close is being handled by a title company

2. I will be wiring the money on the morning of the CoE.

Are there any other steps that you will take to make sure there are no gotchas that I could be missing.

I would also like to invite @Jay Hinrichs and @Brandon Turner for their thoughts.

Thanks

[William Allen]

@Asim G.

If the numbers look good, the property looks good, title looks good and you are happy with it is sounds like a standard wholesale deal to me.  Certainly walk through before signing everything to make sure it's still in good shape after the tenants leave but I think as long as you are happy with the price and the condition of the house there isn't much else to think about here.  They are closing with a title company, title insurance is provided, so you are covered there on the standard real estate transaction.  You aren't signing on the hood of a car or handing over a cashiers check made out to the wholesaler so that is good.  

[Mitch Messer]

@Asim G. With clean title, a competent closing company, and now a process for verifying the condition of the property prior to closing, I think you should be fine. Good luck!

[Chris Purcell]

That property better be vacant on the day of closing or NO DEAL!