First Wholesale Deal

[Ryan MacDonald]

Investment Info:

Single-family residence wholesale investment in New Braunfels.

Purchase price: $73,000
Cash invested: $1,000
Sale price: $88,000

Contributors:
Logan Fullmer

This was a SFR property that needed a substantial amount of work. Based on the condition of the home and the ARV, I decided to wholesale it and contracted it for mortgage payoff as they wanted out and were scheduled to buyer their next home. I ended up assigning to and end buyer for $15K. I also connected the sellers with a realtor resulting in an additional 25% of the realtors commission as a marketing/advertising fee.

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

It was a good opportunity and allowed me to get my first solo investment with no money out of pocket.

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

Direct mail yellow letters. I analyzed the property and when I determined their payoff and my comfort with exposure, I anchored them with a purchase price below their mortgage payoff if I was to do the flip myself knowing they would say no, but I had built rapport with them and new I was still safe. I ended up asking to contract for payoff and they said yes as they just wanted out.

How did you finance this deal?

I assigned the contract but had some personal funds to cover some of the initial costs.

How did you add value to the deal?

I did not do anything to the property myself. I did clear the liens and paid for them in advance of closing in order to clear title to close which took some time as they were old liens.

What was the outcome?

I assigned the contract to a buyer for $15K over payoff as well as referred the sellers to an agent who represented them in the purchase of the new build home the were wanting to buy. Because the builder was running a 5% commission incentive for buyers agents, I received 25% of her commission which equated to a little less than $3K in my pocket.

Lessons learned? Challenges?

I learned you have to negotiate the right price up front and stick to the real numbers so as to not waste time on a bad deal. Also, I learned how to request payoffs on old liens and get them cleared in order to be able to close on the property.