Wholesaling while serving active duty: my first wholesale deal

[Andrew Lekowski]

Investment Info:

Mobile home wholesale investment in Ozark.

Purchase price: $12,000
Cash invested: $1
Sale price: $17,500

This deal was originally found by another more experienced local investor that I met at a real estate meet-up. He contacted me, asking if we wanted in on the deal. He wanted someone with high energy and time, and we had some to spare! Originally intended to be a buy and hold for him, we decided that because it was located outside of our investment radius (~45 minute one way drive) we would try to wholesale it. The transaction itself was an extended double close.

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

It sort of just happened! An experienced investor brought a great deal to the table as a buy and hold, and half way through we decided to wholesale it! Great deals give you a lot of exit strategies. We split everything 50/50 with no prior operating agreement, LLC, or paperwork. Great to do work with honest people! We tracked all income and expenses down to the cent through a simple Google Sheets page.

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

All done my my partner. The property itself was 2.68 acres of land with a beat up mobile home on it. The tax-assessed value of the land was $17k itself, so all in all a $12k contract price was a safe investment. We just needed the right assignee! This wholesale was our first ever, and we knew nothing about wholesaling, but thanks to Google and my BiggerPockets education, we made it happen!

How did you finance this deal?

Paid for in cash by my partner. If things did not work out, I would have taken a 50/50 equity stake in it as a buy and hold, however the way everything worked out it was not necessary.

We got it under contract at $12,000 with an early occupancy agreement so that we could begin the advertising process. The only "value-add" work we did was clear out the property: a crazy amount of trash (-$), scrap metal ($), and Facebook Marketplace sell-ables ($$$).

How did you add value to the deal?

Through creative advertising, selling valuables inside, making scrap yard trips, and cutting the grass. In terms of actual work to the mobile home itself, we did not do anything more than clear out trash. All in all, through our sweat equity we added $6251.50 of value to something that originally was only worth $12,000.00. A low risk way to generate some cash!

What was the outcome?

All in all, we made a quick buck, and I learned quite a bit about wholesaling, contract law, and advertising real estate. This was the first partnership I have been in, and it turned out to be a blessing!

After splitting the profit 50/50, myself and my wife netted $3125.75 for about a weekend's worth of work and quite a bit of elbow grease clearing out the property and selling the valuables. With zero money down and as a first wholesale deal, it wasn't bad at all!

Lessons learned? Challenges?

When wholesaling, any sort of financed offer is inferior. In this case, our assignee financed half of the deal through a friend who lent him 50% of the funds. We originally had assumed because these funds didn't come from the bank, the deal would go through as smoothly as cash. Wrong. The friend who provided the financing wanted everything done through a lawyer, which is smart and I would do the same, but it caused our closing to be delayed weeks! We had to do a double close vs. an assign.

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

I would like to give a shout out to my partner Tom Wojtala, and his wife Kerry. They took myself and my wife under their wing and taught us a lot about real estate investing. Prior to this deal, Tom had also given his help while my wife and I renovated our fourplex, and he even went so far as to give us a water heater he had lying around! Great people and even greater savvy investors!