Wholesale Deal Structure

[Jason Morgan]

Good evening BP, I have a question, If I can get a seller to take 60% or less of the ARV and also subtract repairs, is it possible as an incentive to get the seller to accept the offer that I tell the seller after the home sells I will split the profits with him in exchange for him taking a low price? Example, ARV is 100k, 10k in repairs, I offer $40,000 to close in two weeks. Fix up the property and I'm all in the deal for $55,000. Sell the house for $100,000. 45k in profit, give the seller $22,500 after I sell the property months later. Is that possible? I'm thinking it is and just wondering how to structure it. I've never heard anyone mention this as a strategy to close more deals but it seems to be a great way to get sellers to take less on a wholesale deal.

[Jackie Lange]

It is certainly possible.  

But it would be better to talk to the seller to find out what their needs are.  Then make two offers to the seller

Offer 1 $40,000 close in 2 weeks.

Offer 2 - $2,000 now then$40,000 + 50% of the net net profit after the house is fixed up then sold.

I would skip offer 2 and make this offer instead

offer 3 - $2,000 now and $50,000 after the house is fixed up and sold.  It would be written up as a single payment note to be paid when the house resold or within 1 year, which ever comes first.  No payments.  No interest  Close at a title company.  They will create the paperwork

My first rehab, in 1995 or 1996, I made two offers like offer 1 and offer 3.   The seller picked offer 3.  It freed up a lot of cash to get the rehab done.  No payments and no interest was icing on the cake.

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