How to solve this problem

[Adam Allard]

I started my first direct mail campaign for wholesaling last week, and lo and behold, I actually got my first lead! I'm wondering if I could get some help analyzing this deal, and how I could structure a solution to make everyone happy. 

The gentleman I talked to has a property in Seaside, CA (Monterey County) that he wants to get rid of. That's the good news. The bad news is that this property is in a living trust since his mother passed away, and there's a total of 6 siblings on this trust. Even worse news is that 2 of the siblings don't want to sell, because they are still living there. He tells me they keep giving him the same old story of "just a few more months, we need until October now." Him and the other 3 siblings are ready to sell. They try and push the other 2 siblings still living there to just give them $60K each (so $240,000 total) and then the 2 siblings could keep the house, but they have no means of obtaining a loan for that much and none of the other siblings want to co-sign for that.

Minus the 2 sibling tenant situation, he said he'd be happy if everyone got $60K and the house was off their hands. So in theory I could get this property under contract for a max of $360K, and looking at comps in this area, this 3br 1.5ba with 1040 sqft should have an ARV of about $485K.

Obviously, there's a couple sticky situations here that I, with no experience yet, have no clue how to handle. 

#1 - I don't know the real condition of the property. I don't know how much money would be need to be put into fixing this up. I'd want to assume that since there's already people willing to live in it, that it can't be that terrible (how naive of me).

#2 - The 2 siblings don't want to leave. They don't have to pay for rent right now, why would they? Without going over the top to pay for the house, I don't know how I could convince the other 2 siblings to agree to sell and move. Rent in this area is pretty steep, $1500 a month if you're lucky, more like $2000 - $2500 a month. 

An ideal option in my mind would be to get a cash buyer who would be willing to buy out all the siblings, so $360,000. Then the buyer would agree to let the tenants continue to live there granted they sign a lease and start paying the going monthly rent, which depending on the condition of the house could be about $2000 - $2400 a month. The 4 siblings win, the property is off their hands. The other 2 siblings win, they also get $60K each and get to still live in their property. And the cash buyer wins, hopefully.

There's definitely some flaws to this fairy tale solution. The 2 sibling tenants aren't paying anything currently, and I expect them to just go ahead and start paying $2K + a month in a house they've been living in for free for how long now? I guess hopefully the incentive there is that they'd get $60K each up front. 

Another potential issue is what kind of tenants are they even? What if they just don't pay the rent? What if they are slobs and destroy the house? I mean it doesn't affect me as the wholesaler, but it's definitely things I need to think about as I try and sell this off to a cash buyer. 

Regardless of all of that, I don't even think it matters because cash buyers are usually looking for quick fix and flips, right? I doubt many cash buyers would even go with this option even if the tenants were legitimately good people who pay on time and take good care of the property. I don't think the numbers work to keep this property as a rental, but I do think it has great potential as a flip if I could get the tenants out and get it under contract for only $360,000 with an ARV of $485,000.

Thoughts? Any help, tips, or even just comments are highly appreciated!