How To Structure This Wholesale Deal

Question

Hey everyone, question. I have a seller who wants to sell that's moving out, but not until 2-3 months from now. I want to lock it in with the purchase agreement now, but how do I do that so it reflects that the sale won't happen until a later date to the buyer?

Jake Wiley · Answer

@Donyelle Keith - From a wholesaling contract perspective, you are writing a contract with the seller that has all the terms of the sale as if you were going to buy it, however, you have the right to assign the contract, so whatever closing date you put in the contract to purchase governs the closing date.

The wholesale contract simply states that the assignee is stepping into your shoes in the purchase contract so it should actually be that simple.   Lessons learned while wholesaling, keep it super simple!

Nicole Heasley Beitenman · Answer

Can you add a leaseback clause that gives the seller the right to rent the property from the buyer for a minimum of 90 days? The sale could proceed and still give the seller time to move out.

James Williams · Answer

Glad to be of assistance.  Hope everything goes well.

Donyelle Keith · Answer

@Jake Wiley thanks for the info, appreciate it.

Donyelle Keith · Answer

Hey James, I appreciate the feedback. Makes sense to extend the closing date if we choose to go this route. I'll probably wait because the seller wants to sell but isn't sure of a round about date that they'll move. Since I first posted, she now wants to do exactly what you said and wait until it closer to the time she'll move out. Thanks for the input.

Donyelle Keith · Answer

Nicole Heasley I'll have to look into it. I heard an investor mention being able to add a clause into the agreement that facilitates it but don't know if it was a lease back clause. I'll definitely look into the option. Thanks.

James Heller · Answer

Hi Donyelle -- You are referring to the closing period. You can set it to be whenever you like, couple of thoughts on this.

- A lot of folks are looking to do a 1031 right now. What I will do in this case is write a contract with a 90 day closing period, and then let them know that I'm flexible to bring that date in if they find a property more quickly. That provides a huge benefit to people who are working with the tight 1031 deadlines

- In some situation, end-buyers may have less interest in a property with a long closing period. I've actually lost a buyer (walked away from $10k in earnest money!) because they found something else before our deal closed. Something to be aware of, this can of course be avoided by waiting to find an end buyer until you are within ~a month of closing

Let me know if there are other questions

Donyelle Keith · Answer

Thanks. Didn't know if it was more to it or not.

How To Structure This Wholesale Deal

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