Potential First Deal- Wholesale- Please review my approach

[Erik R.]

Hello All-

Long time lurker here; I've been reading and soaking up as much as possible the past 2 years, and have recently come across my first potential deal.

Background-  I have been discussing strategies and seeking mentorship from an Agent friend who is also a RE investor. After multiple discussions over coffee, he presented me with an opportunity to partner on a wholesale.. my feeling is that he really doesn't need my $, but rather is presenting this as an opportunity for my to learn and get involved in a deal with him. (He does many flips and wholesale deals).

I would appreciate any feedback or advice on this potential deal:

The subject property is a 1,084 Sq Ft, 3Br, 1.1Ba HUD property listed for $127K.

My friend has an interested buyer at $127K, but requires financing. We would put a cash offer into HUD for $120K. I would be providing $20K to fund the cash offer, he would be covering the rest. After closing costs (est $2k high side), I would yield less than $1K. Not much, but I figure it's a good learning experience and it could be easy money.

I've been thinking through exit strategies in case this buyer falls through and for some reason we can't find a backup:

Potential Plan B: Minor Flip / Make improvements to improve it's appeal. It has good bones, including 'newish' baths and kitchen, but needs paint, carpet/flooring, new furnace, and some yard cleanup. Comparable sales (total of 7) came in at $132K. $5K in updates would wash profit to be equivalent to this potential wholesale profit.

Potential Plan C: Rent it.. Comparable rents came in at $1,222 (or 1% of purchase price) in this immediate area. Assuming my contribution is used as down payment, I would cash flow $100/Mo with doing my own PM. Not desirable at all, for my area (as there's better SFH rental potential at lesser prices), but plan C.

I'm trying to put in practice analytics of exit strategies and think through multiple risk scenarios, but think this is a good first step/learning opportunity in REI.

Thoughts?

Also, any advice on how to protect myself with this wholesale partnership? Effectively, I will be separately writing a check to the Title Company, with a proportionate % ownership on the title (NOT writing my realtor friend a check..). Thanks in advance!

Erik