My Accidental Wholesale

[Sarah Msuya]

Investment Info:

Small multi-family (2-4 units) wholesale investment.

Purchase price: $188,600
Cash invested: $1,000
Sale price: $194,000

I saw a small multi in my hometown that needed a lot of work. At the showing I told the listing agent that I really love side by side duplexes (this one was one unit over the other).
I put a low offer in and it didn’t get accepted. When she notified us of the decline, she let us know that that duplex was a part of a portfolio she was selling one by one for an estate. There was a side by side coming in the same town within a week or two that I might like.

I searched the city's property tax records to find the owner and then searched for other properties that individual owned. By looking at the pictures, I was able to find the side by side and drove by it. I spoke to my agent and asked if we could put an offer in even though it wasn't listed and she said yes. I decided to offer the amount the town had for its valuation which was $188,600. The offer was accepted with $1,000 EMD.

I was going to use private money at 7% for 80% of the purchase price and 20% of my own funds from my HELOC on my primary. After the rehab I would refinance it all conventionally. I brought my contact that was connecting me to the private money to the inspection. The inspection revealed a number of bigger ticket items and he didn't think the private money lender and he didn't think the lender would be comfortable lending on a riskier project like that to a new borrower.

I was also starting to feel in over my head with it. I knew the guy who owned the building next door from my job as the local bank manager. I had spoken to him about real estate investing before at work and had his number. I decided to call him to see if he was interested in buying the contract before it went to market. My realtor had never participated in this type of thing but agreed to write the contract for me if a condition was using her as his realtor for the purchase. The duplex on the other side of this home was listed during these negotiations at $299,000, so if it went to market, he realized, it would likely go for way more than the $194,000 I was offering it to him for. After 4-5 days back and forth, he decided to buy the contract from me for $5,400. That was my accidental wholesale 😊.

What made you interested in investing in this type of deal?

I wanted to do a BRRR and was looking for a small multi.

How did you find this deal and how did you negotiate it?

I saw a duplex that needed a lot of work. I told the listing agent that I really love side by side duplexes .
I put a low offer in and it didn’t get accepted. When she notified us, she said that duplex was a part of a portfolio she was selling for an estate. There was a side by side coming soon that I might like.

I searched the city’s property tax records and found it. I offered the valuation amount in the tax records and got it under contract before it hit the market.

How did you finance this deal?

I put $1000 EMD down and then whole-saled the contract.

How did you add value to the deal?

I got it locked up before hitting the market.

What was the outcome?

I sold the contract to the neighbor (past bank client of mine) for $5400. He had tons of instant equity. He's fixed it up and rented it and owns it to this day.

Lessons learned? Challenges?

1. That realtors don't typically get involed in wholesales and I can do the contract myself with a title company.
2. Talk to everyone about real estate, you never know what will come of it.
3. Continue working a lead from whatever angle you can. You can't buy it, can you wholesale it?
4. Don't waste having a property under contract if you can help it.