My First Real Estate Deal: Wholesale

[Jeffrey Morris]

Investment Info:

Single-family residence wholesale investment.

Purchase price: $40,000
Cash invested: $5,000
Sale price: $97,500

This house was vacant, in very poor condition, a drug den and a thorn in the side of local police and the neighbors. Our first visit was with a police escort. It was our first deal. Our chosen hard money lender took a look at the appraisal and refused to fund it. Plan B (which we developed on the fly) was to wholesale it. We cleaned it up first by removing the dense hedge on the front of the property. That eliminated the cover for the drug addicts and homeless. Then we cleaned the garbage out

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

My wife and I had spent the previous year (2017) attending classes put on by one of the numerous real estate gurus. This property fit the description of what we were advised to pursue.

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

We went to our city code enforcement people and asked them for a list of their blighted properties. They gave us a few and emphasized how much they wanted them cleaned up. We sent out a letter to the owner and they finally responded. From there it took four months of communication before they agreed upon a price.

How did you finance this deal?

We paid cash.

How did you add value to the deal?

We cut the vegetation and removed the garbage. Until we cut away the dense hedge across the front of the property, nobody could see what was there.

What was the outcome?

We found our buyer within three weeks.

Lessons learned? Challenges?

Always have a Plan B, or an Escape Plan, or whatever you want to call it. Be ready to change as the situation demands.