Double Dip - Wholesale Deal Plus Hard Money Loan

[Owen Dashner]

Investment Info:

Single-family residence wholesale investment in Waterloo.

Purchase price: $67,500
Cash invested: $7,500
Sale price: $90,000

Contributors:
Brandon Tauber

This was an off-market wholesale deal that was brought to us by our foundation contractor. It was in a small town called Waterloo just outside of Omaha, NE. The house needed a foundation repair of $5,500 and a cosmetic remodel throughout the house. We paid our foundation guy $2000 for the referral, plus gave him the work. We fixed the foundation, then sold it to a newer investor for $90,000, and we funded his purchase of it with a hard money loan.

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

This was an extremely motivated seller who wanted to sell quickly, as-is, and was reasonable with her asking price. Our favorite type of deal.

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

Our foundation contractor brought it to us. We paid him a referral fee of $2,000 plus gave him the foundation repair work. The seller called us at 11 am and was going to sign a contract at 3 pm that day for $65,000. My partner, Brandon, went and looked at the house at 1 pm and locked up the deal for $67,500 with a fast closing.

How did you finance this deal?

We bought it using our line of credit with a small local Omaha bank.

How did you add value to the deal?

We fixed the foundation repair for $5,500, and that's the only thing we did to it.

What was the outcome?

We ended up with a profit of about $15,000 on the deal, plus we did the hard money loan for the new buyer, so we will be making 18% interest on the $90K loan for the next several months.

Lessons learned? Challenges?

It's nice to have a capable partner. When I got the call from the seller, I had just teed off at a golf tournament. So I had Brandon connect with the seller and he went immediately over to the house and got it under contract. I literally never stepped foot in or laid eyes on the house.

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

5 Points Bank for our line of credit, Steve Gnader, owner of Quality Foundation Repair for the foundation work (great business).

We posted this deal in our Omaha Real Estate Meetup Facebook group, and our end buyer responded and bought the deal. No commissions.