First Whole Sale Deal

[Mary Spalding]

I have a possible wholesale deal and the owner owns it out right and is offering seller financing.
He is selling it because he has had it 18 years and is tired of being a landlord.
It is a fourplex with two 2/1's and two 1/1 studios
Gross rents have historically brought in $575 for each 2/1 and $350 each for the studios
I am guessing if you go low on the rents, and do $500 each and studios $300, they would be likely to rent easily.

Area is much sought after. Units are turn key. He has rehabbed well and it is ready to go.
He is willing to do seller financing with an asking price of $140,000 and 5% over 30 years with payments approx 670 a month.

He says he is open to folks buying outright or doing his financing, so I felt it is a decent opportunity to look at wholesaling.
I don't really want another rental right now, but would love the opportunity to wholesale it.

How do I present that opportunity to other investors that may be interested? The seller just did not want to deal with a real estate agent, which I am not.

I would love to get it under contract without coming off like an idiot.

Suggestions as this appears to be a decent cash flow option.

Mary

[Jon Holdman]

Its not a killer deal in my opinion, but if its a good deal for your area perhaps you'll find a buyer. I get $925 (NOI) - $670 (P&I) = $255 a month or $3060 a year in cash flow. With $20K in, that's 15% cash on cash, which certainly is not bad. Its just that you have to kick in $20K and deal with four sets of tenants to pocket that $3000 a year. Self managed and its more like $6400 a year or 32% cash on cash. I would think you could find a buyer.

Seems like a simple wholesale deal. Put it under contract and be sure the contract allows assignments. I'd be upfront (though, I'm not a wholesaler), and tell the guy you may well sell it to someone else. Find a buyer, assign the contract and walk away with your fee.

The trick is going to be your fee. If you add it on, the seller is still going to want $20K and a $120K note. So, your buyer will be out of pocket for your fee. If that's $5K they have $25K up front into the deal. If you want more like $10K they're at $30K up front, which is getting close to what they could do at a bank. That lessens the appeal of the seller financing, though it still has the attraction of avoiding a bank.

Alternatively, you could try to get the seller to cover some of your fee. A regular commission would cost him $8,400. Maybe you could convince him to give you some chunk of that, plus whatever you get over $140K.

And, yes, there are many questions I don't know the answer to :-). Maybe I'll post one of those and see what you guys think.