Wholesaling A House With A Mortgage - Numbers?

[Ray Hernandez]

I've been looking into wholesaling the past couple of days since I may tie up a lot of my capital in other deals and I'll probably get pretty bored doing nothing. So now I came across one question that I still don't understand after looking into it.

How does wholesaling a house with a mortgage work?

I can understand better if I see some numbers as an example, I'm a little slow lol.

Can anyone provide a random scenario that includes all the numbers? Remaining mortgage, arv, how much the seller wants, repairs, etc. If I can see how it works I'd likely understand.

Much appreciated!

[Kyle J.]

I'll use round numbers for simplicity sake.  Suppose you have a house worth $100k as-is that has a mortgage balance left of $50k.  The seller just wants a quick sale so he agrees to sell it to you (Mr. Wholesaler) for $70k.  You, in turn, wholesale it to your cash buyer Mr. End Buyer for $75k (the $70k purchase price + your $5k wholesale fee).

In this example, Mr. End Buyer would end up paying $75k to the title/escrow company, of which $50k would go to the existing lender to satisfy/payoff the mortgage, roughly $20k would go to the seller (minus any previously agreed upon fees or other monies owed like prorated property taxes, etc), and $5k would go to you Mr. Wholesaler. 

How much Mr. End Buyer then puts into it for repairs and what he ends up selling it for later is really irrelevant to the question of how the original mortgage gets paid off. 

Here's some more reading that might be helpful: The Ultimate Beginner’s Guide to Real Estate Wholesaling.