Equity with wholesale deal

[Zachary Wright]

How do you handle getting equity in a property in a wholesale deal? Can that be written into the contract ?

[Barry Pekin]

@Zachary Wright,

One of the things I love about REI is the flexibility. You can certainly retain a piece of the property if it makes sense and you can work that out with the buyer.

If your buyer is a rehabber, I don't see how it would work.  They are going to sell the property to a new homeowner who is going to get 100% ownership of the property.

If your buyer is a landlord, you could offer a deal where they pay less and you retain a certain percentage of the property.  In this case, I can see it being a possibility, but still an outside chance.  You're essentially talking about some sort of partnership, and if you're going to partner with someone, both sides have to feel very good about each other AND have a GREAT contract that lays everything out in detail.  You need a good lawyer to write this up so that you address all sorts of things such as what to do in the event of the death of one of the partners, or what to do when you want to sell, or what happens when one partner is sued and they go after the property.

Here's my advice.  Use wholesaling to pay off debt (if you have any) and build cash.  When you have cash that you can start using to buy properties for longer term investments, cherry pick your best wholesale deals to keep for yourself.

If you're going to partner with someone, pick a person up front, and not based on the opportunity of just a single deal.  Treat that person like your spouse, for this is going to be a very close relationship.