First prospective wholesale deal in LA. Would love advice!

[Kaivan Entezarmahdi]

Hi,

I have just recently got into real estate, purchasing my first home last month. I still have some cash in the bank and am looking to invest it. I have a friend who has been wholesaling and flipping, and I asked him to let me know if he comes across any deals that we could partner on. He has come across a potential wholesale deal in Los Angeles, but has no cash. He is asking that I put up the earnest money and he will write the contract in my name with a 10 day contingency period. The earnest money would be $60,000. He hasn't gone into all of the details of the deal yet, but basically I would put up the earnest money, the contract would be in my name, he will do all of the work to wholesale it, and I will get 25% of the earnings once he sells the contract (he anticipates selling it for $100-150k). 

It seems to me that I am not really at risk, because the contract will be in my name only and we will have a 10-day contingency period at which point I can back out and get my earnest money back. Does anyone see any risk that I am not seeing? It seems like if it's a bad deal, then all I lose is the ability to use the $60k for 10 days, but if it's a good deal, then I stand to make a lot of money in a short period of time. 

I would appreciate any feedback, as this is my first deal in RE outside of buying my own home and I'm eager to get my feet wet. 

Thanks,

Kaivan 

[Brandon Battle]

Kaivan Entezarmahdi,Everything you just wrote about this wholesale deals stinks like dead fish.If your friend was a real wholesaler and flipper he wouldn't need you at all because wholesaling doesn't require earnest money actually being wired into escrow at all.If he actually knew what he was doing,he would have already obtained a long list of confirmed cash buyers who would be seriously interested in the property and contacted them to make sure they have enough cash available to pay him and assign the contract to them before the 72 hour window to fund escrow with earnest money expires in California.He would actually profit around 10k to 20k,not 125k for 3 days work without a dime ever leaving his pocket.I'm sorry but it sounds like he doesn't know the business or is trying to pull off something with your 60k in his pockets.I would seriously question him and his methods and previous successful transactions (if any) before plunking down a penny.Be Careful With Your Cash!!! Believe me,I am already in a trap with another clown who wanted to make me "Rich" and hasn't given me back a dime.