Profiting $20k from my very first real estate deal! (Wholesale)

[Kyle Geoghagan]

Investment Info:

Single-family residence wholesale investment.

Purchase price: $35,000
Sale price: $55,000

This was my first real estate deal ever back in 2021! After learning about what wholesaling was in February 2021, researching it deeper and getting motivated to get into the game, I applied for my LLC in April and got to work getting everything set up. I got a free-trial for Deal Machine as a very broke college student. The trial only allowed for 5 or so houses, so I went driving in my area and picked out some properties I thought would work. I manually wrote down the rest and had a list of about 20-30 properties to call on. I skipped traced them all and started calling. I made 3 calls, the first two went to voicemail and the third picked up (my first ever cold calls!). I asked if they were interested in selling and they just so happened to be very motivated sellers. After a couple of days, walking through the property, and some negotiations I was able to get it under contract for $35,000 with only a $100 earnest money deposit on 6/12/2021. I advertised the property on Facebook Market Place with a flyer I made in Microsoft Word. I was able to get an assignment contract signed for $55,000 12 days later on 6/24/2021. After some complications during closing and multiple extensions, we finally got it closed on 7/16/2021 and I was able to walk away with $20,000 plus my initial $100 deposit back. I have since then used this money to upgrade my real estate software to look for better deals and to invest in myself and to grow my business! The person who bought it ended up flipping it for $205,000, but I had later learned they put more than my initial $60,000 repair estimate into it due to WDOs.

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

I had been very interested in real estate ever since reading Rich Dad Poor Dad in 2020, and found this method of investing on TikTok (of all places!). I went to more reliable sources and learned everything slowly but surely.

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

I found the deal driving for dollars in my neighborhood. I knew the sellers were motivated to sell because their elderly father lived there and they had moved him out. The house was in terrible shape and they still had a mortgage on it and still were paying taxes and utilities on a vacant house. I found a sweet spot that covered the rest of their mortgage & was enough to make the numbers work on my end with the ARV formula.

How did you finance this deal?

I only needed $100 out of pocket which was returned to me at the closing table

How did you add value to the deal?

I was able to negotiate the house down enough to where there was room for me to make a profit and to make it a great deal.

What was the outcome?

The sellers walked away happy (no more mortgage + bills plus a small profit), I made $20,000 while only risking $100, and the buyer flipped it for a profit. Win + Win + Win!

Lessons learned? Challenges?

Definitely need to make sure repair estimates are correct. The best way to a good deal is to negotiate it and through seller motivation. As a wholesaler, make sure to protect yourself and have avenues incase people attempt to cut you out. I suspect I was almost cut out of this deal by a more experienced investor (my guess is they were waiting for my contract to expire so they could swoop in). But my avenue to protect myself was the ability to close.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

N/A. This was all off-market