Help!! First Wholesale or Flip Opportunity! Need Advice!

[Kimberly James]

Hi Everyone! I really need some good advice. I am absolutely new to real estate investing and something may have dropped in my lap. I have a family member through marriage who inherited an apartment in a great area in downtown Brooklyn and she is doing nothing with it, not even living in it. The apartment is 1br/1ba and has a doorman, gym, etc. other listings in that same building have sold for upwards of $800k renovated (but those listings are majority 2brs). This apartment is large, but outdated. Should I approach her and try to get a contract and assign it to a seller for a little profit or should I try to get a loan from somewhere, buy the property, and renovate and sale it myself. She is looking to sale the apartment for about half of what apartments are selling for in the area. Thanks in advance for any help.

Kim

[Christina R.]

@Kimberly James

Awesome that now you have the REI mindset going that your ears are attuned to anything that may present an opportunity (it's amazing how that works subconsciously).

I have 2 unsolicited pieces of advice that I gleaned from joining BP - which I think was about 2 years ago - reading posts, networking, etc.

The first is if you have no real estate experience and have never managed or been the participant (i.e., property owner) in a major rehab (which sounds like what this apartment is going to need to fetch top dollar) then doing it from a distance is going to be tremendously difficult.  I just finished my first rental rehab in Baltimore and that's 16 miles from me but at times it could have a been a thousand miles away for the fact that issues crop up and you want to immediately jump on it but you can't when you are not there doing this full-time.    Which brings me to the corresponding point in this - you have to have a team of contractors, rehabbers that you trust unless you plan on doing all the work entirely on your own.  That's not just swinging the hammer.  That's layout, design, permitting, dealing with the borough/city, etc. 

The second is that this is a family member. Think very, very carefully about the relationship you want to have with this person in the future should you contract her property and then wholesale it. If you are interested in preserving the relationship and family peace then this is a very dicey area to enter into. If she finds out she could have gotten more money by listing it with an agent who is going to market it to a zillion eyes on the MLS , you have a potential situation on your hands. I asked here on BP about wholesaling a friend's property and that was the sage advice that I got 2 years ago. Reality is, after asking that question, obtaining my license and going through months of learning about real estate, I see with hindsight my friend was best served by listing and selling it the "traditional" way. No messiness in the friendship either!

Now your relative may not want to deal with the hassle of listing, etc., and for many that is motivation enough to not sell it the traditional way but you need to be very, very VERY clear with her about this and have her literally sign off on the fact that you are entering this arrangement as an investor with the intent to profit off the property by either wholesaling the contract, fixing the house and flipping it, wholetailing it (you personally buy it then immediately list it with a realtor to resell it), or keeping it for a rental... since you intend to purchase way below market value then be absolutely clear and prepared that she may be fine with it.... now, but that could very likely change in the future.

Good luck!