$48,400+ from stumbling into my first-ever wholesale deal

[Jessie Dillon]

started this year wanting nothing to do with wholesaling real estate, and just made $48,400.00+ on my first-ever wholesale deal... and i only did half the work! 

wholesaling has a bad reputation, for more than one reason. but like anything, it can be done WITH integrity, and WITHOUT integrity.

back in march, i met my now-jv-partner jon stratton from unlocked home project when he reached out about buying my vacation rental in NH (i had it listed 'for sale by owner'). he sold me on the idea of selling to him on 'creative financing,' so my first thoughts obviously were "how did you convince me to do this?" and "how can we work together?"

before even closing on the sale of that NH property, we kicked off a direct mail campaign together (4500 mailers), targeting the following list, in hopes of finding a good offmarket creative finance deal for *me:*

-owners of 5+ unit multifamilies in MA

-owned 15+ years

-with 50%+ equity

my job was to get the mailers out, take intake calls, and start learning about what each seller is going through, and jon and his team's role was to negotiate, get the property under contract, find the end buyer, and coordinate the sale. we got a solid 20-25 leads from this, and got 1 under contract. it wasn't ideal for ME because the sellers were not open to creative financing & i am not into heavy reno jobs, but it made for an amazing wholesale deal!

we did have some hoops to jump through during the closing process, so jon's experience came in clutch, and we walked away with an assignment fee of about $97,000 to split. while this was MOSTLY profit for us, we did have ~$1200+ in kickbacks to pay out, jon has a team to pay, and i'd invested about $4500 (and blood/sweat/tears) in the mailers. 

this deal was a huge win for everyone involved:

- the seller got exactly the price they wanted, no inspection, as-is, no realtor fees, and got to sell with 2 non-paying tenants still occupying the property

- work was created for jon's team, my assistants, the closing company, the attorneys...

- the end buyer negotiated some big discounts with us, and now has HUGE potential upside

- months of work will now be created for the end buyer's renovation team

- the non-paying tenants were offered cash to cover their moving expenses + then some

- 3 people got paid kickbacks for helping get this deal to the finish line (2 RE agents and 1 cold caller)

- 6 future tenants will have newly-gut-renovated units to live in

- the sellers will get to see this building live up to its full potential in 6-12mo, beautifying the town they live in...

the list goes on!

that said, is wholesaling part of my overall RE strategy now? maybe! my primary plan for this year is still to add 50+ rental units to my portfolio with 95%-passive equity partners, creating wealth-building opportunities for those who don't have the time/knowledge/confidence to do it alone, BUT... wholesaling fits into the plan like a perfect puzzle piece, to add cashflow while my value-add multifamily deals are ramping up (1-3y timeline). 

here's where i say thank you to my friends and family who hand-wrote envelopes for hours on end: THANK YOUUUUUUUUUUUUUUUUU loveyou

next up: another round of mailers!

NUMBERS DEEP DIVE FOR THOSE INTERESTED:

4 units that the owner started converting to 6

2 tenants occupying a portion of the property, both non-paying

under contract: 150k

end buyer's price: 250k

ARV: 850-950k once conversion to a 6-unit is complete

MY ADVICE FOR ANYONE LOOKING TO GET INTO WHOLESALING:

- don't be afraid of expensive markets. big prices = big profit margins.

- partner with someone who knows what they're doing! half of something big is way better than all of NOTHING!

- invest time into education. i'm loving jamil damji's new book on wholesaling.