First Deal Where to Start

[Lisa G.]

Have a potential deal. What are the questions I ask the seller in order to properly review deal. Not sure I have all necessary information. I am a new wholesaler and this would be my first deal. This seller is trying to sell their condo that has a tenant currently in the unit.  I went to zillow.com and the value of the property is lower than what seller wants to offer. What are the questions I need to ask seller? How do I know the deal is a good one?  

[Kerry Smith]

@Lisa G. Congrats on your first real estate deal and first post on Bigger Pockets. Lisa, I would strongly recommend your next post be an introductory post in the New Member's Section of the site. Next thing is to fill out your BP profile, and upload a picture of yourself. Completing your profile helps people get to know you, and understand what you are looking for as a real estate investor. I am assuming you're looking at this condo to flip it?

Ok, on your deal:

1. After Repair Value (ARV) - You need to find out what the actual ARV of the property is. You can do this through a myriad of ways, but the easiest is to find yourself a good agent, who is also an investor themselves. Yes, that means interviewing agents to find the right one!

2. Repair Estimate - Now that you have an ARV, you have to estimate the repairs needed. Most flippers are going to use something similar to the 70% Rule, or J Scott's "Flipping Rule," to determine if a property is a good flip. Knowing this, you must estimate the repairs needed to bring this condo to full market value. There are multiple ways to estimate the repairs: Estimate them yourself, Find a good contractor to do the estimates, or take an educated guess. If you have the opportunity to visit the property yourself, and can take 30-60 minutes to go step-by-step through a rehab analysis spreadsheet that is probably your best bet. I recommend J Scott's book on Flipping Houses and it's partner The Book on Estimating Rehab Costs.

3. Determine Desired Profit - How much do you want to make on your first wholesale deal? $2500, $5000, $10000? Make sure that you include your desired profit when you crunch the numbers, otherwise you will be cutting in to your Buyer's profits - which is a no-no in wholesaling. 

4. Get The Deal Under Contract - Now that you've run the numbers, and if everything makes sense. Get It Under Contract! There are several purchase agreements available in the BP File Place. Make sure you have the "assignment of interest/position" clause in the agreement, so you can wholesale it to another Buyer.

5. Find A Buyer - You've got a deal under contract, great! Now you have a few weeks to find someone to sell it too. If you've done a good job on your numbers, and it is in fact a deal - You should be able to find someone to sell it to. After a few minutes of Googling I found that the Boston area has an active REIA club near by. HERE is their website. I would suggest starting there to find a cash Buyer. Your other option is to shop your deal around in the BP Marketplace. There are several active cash buyer's on BP, and I am certain there are at least a dozen working the Boston area.

6. Close The Deal - You've arrived at the closing table, depending on your title company you may execute a "double closing," or a simultaneous closing. Once the A to B and B to C contracts are completed, you will get your check.

Lisa, remember as a wholesaler you really need to BRING VALUE to the table for all parties. It's not just a money game. How are you helping the Seller? What problems are you solving for them? In regard to the Buyer, how are you helping them? Are you providing accurate ARV/Repair estimates? Is this a truly "deal"?

Lastly, take some time to listen to the BP Podcasts. There are a lot of good podcasts centered on wholesaling:

Podcast #67 w/Tim Gordon

Podcast #42 w/Mike Nelson

Podcast #31 w/Lamar Cannon

Podcast #21 w/Jerry Puckett

Podcast #12 w/Sharon Vornholt

Good luck!