My First Wholesale, How Do I Get Started?

Question

I live in the North Florida area, and am friends with someone who owns a cheerleading and dance studio. He and his business partner are looking for a new commercial space, somewhere where they can expand from the small space to somewhere with 20k+ square feet. They know that I'm starting out in real estate investing and have asked me to take a look and find them something. I want to do this as a wholesale and not a referral, which would require me to get the property under a P&A contract.

My questions are, what exactly is a P&A contract? What should I be on the lookout for when doing a commercial property vs. other property? Where can I find more information on wholesaling commercial property? How can I make sure if something goes wrong that I have a clear out of the deal?

John Moore · Answer

I would suggest you go to real estate school in the State you are thinking of obtaining a license in as each state is just a little different in the way they do things.  Some states have reciprocal agreements and you might check that out as well.

Darrick P. · Answer

I actually joined FB University on a trial basis (for one month), it's what $100 a month but I couldn't justify the cost with the webinars being of such low quality.

James Hiddle · Answer

And leave your guru BS meter at home as it will go off when the upsell starts making a very loud noise that will distract others for fishing out that checkbook.

Tim G. · Answer

Don't forget to bring your checkbook.

Cristina Corredor · Answer

Check the Fortune Builders model, they are working almost in every city of the United States, a really successful and proven model, step by step of what you must and must not do.

Bill Gulley · Answer

My real feeling is that you should spend the money to go to the RE class for Realtors, that class will put you years ahead of those chasing guru programs. At the end, you can decide then to sit for the test and get a license. The class won't teach you everything, but it will certainly define the paths that can be taken and keep you out of trouble. Hope you do! Good luck..  :)

BTW, the class would put you in a much better position on this deal and if they are waithing 6 months, you might just pull that off! :)

Elizabeth Cody · Answer

Thank you all for the quick answers! The consensus seems to be that this may be too advanced, and I somewhat agree with that. They're not looking to buy for at least another 6 months, so I have the time to do some research and get a better grasp on the process. Will I end up being the wholesaler that does the deal? Maybe not, but I think it would be a good opportunity to at least learn how to do the legwork to get my foot in the door. I've already found a few properties in the area that meet what they're looking for, so maybe the best thing is for me to follow Dean's advice and work more as a referral rather than a full wholesaler.

Bill Gulley should I get my RE license? I'm honestly planning on leaving the area early next year for NYC, so I didn't think getting my RE license was in my best interests, and I own a separate web design company while starting REI, so working under a RE agent just isn't possible at the moment. Can I go to RE school without getting the license? Thank you so much for your help!

Dean Letfus · Answer

Providing you are reasonably confident of being able to find something you can eliminate your risk by getting your friends agreement to make offers in their name with a full due diligence clause. You then also have an assignment fee agreement with them that is triggered as soon as a contract goes unconditional. Risk to you is zero.
I wouldn't wait till you know more. As long as you know what they want see if you can find it. No risk and a good chance of a pay day.
Double closing or assigning contracts that are in YOUR name is a different story. You need a few more clues before you do that!

Bill Gulley · Answer

Elizabeth Cody, Karen is right, you said you're getting started (is that as a Realtor?) I strongly suggest you not go there alone and don't start out with guru stuff, in fact you're not close to ready I'm sure. Before you can buy and sell you need to be able to inspect or vaule condition, find marjet values, know repairs if needed and contract issues. Commercial of alarge empty building that could have been used by a used car dealer could have many issues unlike one used as a clothing store. The infill is usually the tenant responsibility too, so you'd need to advise your "friends" on leasing or buying issues. Just not a practicle situation yet.

Go to a local REI meeting, find another investor and keep your friends identity to yourself as well as what it's to be used for, not that many in that business. See if they will work something out with you and tag along, that's probably the quickest way to help.

Don't be afraid to tell your friends that you're starting out and appreciate the offer, but you aren't ready yet, they will appreciate that and keep you in mind. RE is all about having friends, think about thier clients they can pass your name on to later on, probably hundreds of client/customers. So don't mess it up by falling on your face with them, treat them right and give the best advice you can, which might be, you need to work with old Joe here (making sure Joe is a good and knowldegable type....

Get  a good RE education first. We just got a new member here on BP who runs an RE School in FA, he may be of assistance in this deal too.  Good luck   :)

Stephen Davies · Answer

hey elizabeth, I dont work with commercial properties but you can find the answers to all of your questions at www.flip2freedom.com. Go to the archives section and you can literally look up episodes that will answer every question you have.