Fix & Flip Turned Assignment / Wholesale Opportunity

[Gabriel Graumann]

Investment Info:

Single-family residence wholesale investment in Everett.

Purchase price: $263,000
Sale price: $275,000

MLS listed property I put under contract w/intention of renovating. Found an investor willing to take the deal w/an assignment fee plus I retained the scheduled commission. Result was a 10 day wholesale deal for a listed property.

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

I was looking to add a project that I could start work on in January 2020, and this property had just came back to market after failing to close for the 5th time in 2.5 months.

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

It was a MLS listed property that had failed to close on the previous 5 occasions. Listed price was $289,000, so I used the likely frustration and fatigue element of the sellers numerous failed closings as my leverage and presented an all cash, zero contingencies, and a 10 day close at $255K, which was countered to $263K which I accepted.

How did you finance this deal?

All cash was the offer, and those were the required terms of the buyer I assigned it to.

How did you add value to the deal?

My value was securing the deal below market value and still leaving enough value on the purchase for an investor to take it over.

What was the outcome?

I was approached by another investor who's offer had not been accepted and we agreed to an assignment of the deal with a $12,000 assignment fee, plus I retained the commission earned as the buyer side broker.

Lessons learned? Challenges?

Be creative and open to any outcome. I liked the deal going in but knowing it was fire damage I ran my numbers far more conservative than other investors. While my spreadsheet showed a possible net profit at $55-60K in 5 months on resale, I was willing to take 21% of that profit on the front end and shop for a different deal. There was plenty of risk for a deal like this one, delays at the city for permitting, new code issues to address, costs running higher than anticipated, etc.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I represented myself on the initial offer and then the represented the buyer as the buy side broker.