Inheritance & Foreclosure wholesale deal

[Ryan MacDonald]

Investment Info:

Single-family residence wholesale investment in Round Rock.

Purchase price: $70,000
Cash invested: $1
Sale price: $100,000

Contributors:
Cameron Whitehead, Logan Fullmer

This was a wholesale deal where we had to help a family facing foreclosure on an inherited house with a total of 15 heirs and a fast approaching deadline. We ended up contracting the property for $70K and partnered with a wholesale company as our buyer since we didn't know the area very well. The wholesale company contracted with us for $100K and then turned around and sold it to another investor via their database for about $120-$130K.

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

It was a nice wholesale deal with a lot of distress and a good return. Overall, there were 15 heirs, 4 affidavits of Heirship that needed to be done, a divided family and a title company that didn't want to ensure title because of all of the issues that arose from a family with legal, financial and other issues.

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

It fell into our laps as a person who just started in REI had his relatives facing the foreclosure. One of the 15 heirs signed a contract with another wholesaler but could not get the remaining ones on board. With the help of the family member, we got all 15 heirs to sign with us and said due tot he complexity of the deal, we were able to payoff the remaining debts and put some money in each of their pockets.

How did you finance this deal?

We wholesaled the deal to and end buyer so there was not out of pocket expenses.

How did you add value to the deal?

We helped the family clear the title issues, connected the family across the state with mobile notaries as well as traveling to help take them to notarize documents, worked through the title issues and provided value to another wholesale company to make money, who in turn found a buyer who was looking for a fix and flip deal in the area.

What was the outcome?

We wholesaled the property to another wholesale company, who then turned around and sold the property to an end buyer. The family got money in their pocket, we made a nice profit, the wholesale company made a nice profit and the end buyer got a new project to flip.

Lessons learned? Challenges?

I learned about title companies minimizing their risk by not providing a policy due to a variety of factors that make them feel uncomfortable. Due to the wholesale companies volume that the run though their title company (30+ per month), their title company took the risk and went ahead and provided a title policy which allowed us to close the deal.