How to wholesale 50+ properties.

Question

I have been working with an investor and he has recently told me that he would like me to sell 50 of his properties and that he would pay me a commision/finders fee. Since I am not an agent I'm not sure how this would work. My first thoughts were to draw up an employment contract that way I'm his employee but was hoping there are better ways to go about this. Any advice would be nice.

Aaron Mazzrillo · Answer

Best way to eat an elephant is one bite at a time. Get contracts on lots of 4-5 houses at a time. Wholesale or retail them off. Try to use the proceeds to keep a few free & clear along the way.

IMHO, if you are dealing with the guy who actually went out and purchased and managed these 50 houses, you're not likely to get such a discount that it will make your time worth dealing with. You don't get to 50 houses without knowing what you are doing and that includes knowing what they are worth. If he inherited these 50 houses, it would be something I'd pursue a little harder.

Make an offer for 4-5 of them. Ask him witch are his worst 4-5 houses and go after them first. If he accepts, sell those and then buy the next batch. If he doesn't, or counters at a higher price (which I'm guess he will), there probably wasn't ever a deal here to begin with. From my experience, older guys with lots of houses typically like to spend time talking to younger, more energetic investors, but rarely make them a real deal. He'll probably die owning every one of these.

FYI, if I were to pursue this, my offer would include seller financing.

Brian L. · Answer

It sounds like you already know that you can not sell properties unless you own them. In CO you can sell properties if you are a full time regular employee (I think that's what I read). You could get all 50 properties under contract then sell them. I'm sure there are other ways, just be careful.

Patrick Henderson · Answer

This is a good rule for me. KISS; Keep it simple stupid.

Be a principal in the deal first and foremost. This opens the door to all the possibilities in the real estate investment world. Creative transactions are what I love about this business and make no mistake this a business. Keep records, not just for tax reasons.

My first question  why was I given this opportunity. I forget the Latin term but essentially it's, who does this benefit. Is this a test? How soon is he willing to act and what kind sale is he looking for, all or partial.

If it's legitimate offer, He knows what he is doing, most likely. He will expect you to take some sort of binding control. Nature of the business.

Second, Due diligence. Know what each property is worth on it;s own. Is it income producing?  Is it performing? Can I make a profit?

Consider all your exit strategies

Fix and flip, wholesale, retail, owner finance and more.

All of these are possible depending terms the seller is willing take and or be a part of. Obviously some of these strategies maximize profits more than others.

If it's wholesale there is one rule.

If there is meat on the table they will come. Wouldn't you?

Good luck. Any questions, feel free to Message me. I don't how that works on this site, as I'm new to this site.

Don Konipol · Answer

Besides the legal issue, operating as a real estate broker without a license has an additional risk; any contract you have with the seller to be paid in the event of a sale is unenforceable.  So you may be doing a lot of work, successfully get his properties sold, and not be legally entitled to collect any compensation.

Using a work around, such as claiming to be the seller's employee, would require the seller's "cooperation", also leading to the possibility of not getting compensated.

Many people when becoming aware that they may not legally be responsible for an obligation to which they freely agreed are able to find, manufacture, discover, or create numerous "reasons" to fit their greed, i.e.desire to not pay that obligation.

However, on the other side I have witnesses third parties who are not licensed receive commission for doing what is essentially real estate brokerage.

You may have an excellent opportunity here, just be aware of the risk of being screwed on payment.

Wes Eaves · Answer

@Joe Santiago What about getting his properties under a contract that is assignable and then assign them to a buyer.  You could charge the buyer a fee to assign the contract to them.

Brian L. · Answer

Every state is different so please check with a local attorney before doing anything that I suggest, I'm just brainstorming with you. You may be able to charge a referral fee if you refer people to the seller. Should be legal as long as you're not involved in negotiation, listing, or other activities that require a license.

Joe Santiago · Answer

Thanks for the response Brian. I do know it's a touchy area. I would normally try and get the properties under an option contract or something that way I can market the property but the seller said he would pay a finder's fee, which got me thinking of ways to make it work.

How to wholesale 50+ properties.

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