Accidental Wholesaling for beginner investor

[Leon Lai]

Hello all,

I am a fairly new buy-and-hold investor based in Orange County. I consider myself new because I've been investing for over a year and have own three properties so far with my business partner. Long story short, I stumble across a deal that I found on facebook in the zip code 92105 San Diego, CA ( I will post details on how I found it if I successfully execute the deal). Due to my current situation, limited time and capital, I plan to wholesale this deal. The seller and I are going to sign purchase agreement in less than 2 weeks. The seller is an out-of-state investor who wants to sell his house to invest somewhere else and can only stay for 2 weeks in San Diego to complete the transaction. Needless to say, I have to close the deal in two weeks.  However, I am completely new to wholesaling as I have never done this before. I generally know what it is but I don't know what steps to take, what kind of paperwork I need to prepare. I plan to assign the contract but I have not found a cash buyer yet at this moment. Here are the questions I've been pondering:

1) Where do I go to find cash buyers ? ( local fb real estate groups, forums ...etc )

2) Once I find a good title company that has experience with wholesaler, do I let the title company guide me on the paperwork during the transaction ?

3) This question gears toward experienced wholesalers, what tips do you have to communicate with both seller and buyer to ensure a smooth transaction that makes both parties happy ?

4) What resources (books, podcast, blogs, forums) do you recommend me read to supercharge my knowledge as I have less than two weeks to prepare for this deal ?

I thank you kindly in advance and look forward to connecting with other like-minded investors.

Best,

Leon

[Bruce May]

@Leon Lai, it's really not that complicated but can seem to be. I'll give you and the others an overview. I have wholesaled properties in San Diego, but don't anymore because I found it stressful.

Here's the simple steps to it. Get the house under contract. Using a simple 1 or 2 page purchase agreement is best. The purchase agreement is assignable unless stated in it that it is not, but most wholesalers put "John Doe and/or assigns" as the buyer. Explain to the seller that you are likely going to bring in a partner and that you might buy the home in an entity or your partner's name.

Then find an  escrow company and a title company that understands and allows you to assign the contract or do a double close. If you double close you have to buy the property and then immediately turn around and sell to your end buyer. This way is easier because you are the actual buyer from the seller but it will cost you more money. This is often referred to as an A to B & B to C transaction (You're "B," seller is "A" and end buyer is "C").

Next, find your buyer and either assign the contract to them or do another purchase agreement with them to buy it from you. A double close will require you to open a second escrow and pay all the associated fees. You should use the same escrow and title company for both transactions. The final step is to either have your buyer close your purchase if you have assigned the contract to them or complete the double close.

You get paid either from escrow when everything is done or directly from your end buyer outside escrow. Good luck; timing is everything when wholesaling.