Case Study - How I made 120k in one wholesale deal

I have been flipping houses for 9 years now. I have mainly focused on rehabbing over those years. I have only been wholesaling now for 3 years. In that time frame I have found that wholesaling is a lot better. Debating wholesaling over rehabbing is for another time though.

In my years of rehabbing, I had never made as much money at one time as I did with this wholesale, a profit of $120,000.00. This deal was pretty freakin sweet and it came about from hard work and timing.

First let me tell you how I found the deal. I was out looking at properties on the MLS that day. Taking action daily can lead to good things. Anyways, while looking at a property, I noticed the house next door was boarded up with a small sign for an agents contact info. What did I do? I called it! She is an out of town agent and I wasn’t sure what she was going to say when she answered. I told her who I was and what house I was looking at. She says, “I am in town and around the corner from you checking on another house, do you want to come see it?” Umm yes I do! So I went and I met her at another house that she was listing. What I take away from this is, if I wasn’t already taking action that day and wasn’t willing to call her, none of this would have happened.

“I am a great believer in luck, and I find the harder I work, the more I have of it.” — Thomas Jefferson

Once I met her, she informed me that the seller had passed and he had 5 properties out here that his brother needed to sell. She asked if I would be interested in all 5. DING DING DING. Yes I would. To make this story shorter, we agreed that I would buy all 5.

“Take massive action daily.” — Grant Cardone

So here are the numbers. The value of the 5 properties after fixed up was $875k give or take. I figured each house needed 20–25k in rehab. To keep my offer simple, I decided to offer 90k per house, so $450k total purchase price. Back story, I guesstimated that I would make 20k per house net profit after rehab and holding costs etc. So a total of 100k net profit in 6 months or more of time. Rehabbing 5 houses at one time would have been pretty hard to handle for us. But I made my offer and the seller accepted. Now, after some thought, I realized that rehabbing these was not going to work. Knowing that there was 425k in gross spread I crunched some numbers. Here is what it looks like using the whole package of 5 houses;

• 875,000 resale
• 43k in closing on the resale
• 125k in rehab costs
• 450k purchase price
• 256k net profit

Now you might wonder why I would opt to take 120k and not the 256k, it was simple. It was the time value of money. 120k today vs. 256k in 6 months (if the rehabs go perfect and the resales are quick) So I decided to make 20k per house for my wholesale fee. 120k total. I presented the package to a few buyers with a purchase price of 570k leaving them 136k in net profit. The buyer agreed, the paid the 120k fee and they got themselves 5 houses at once. Why would they pay me 120k for these houses ? Why did I deserve 120k for them? Because I found them, I negotiated them, I made the package work. And they got to fill their pipeline with 5 rehabs at one time.

These type of deals don’t come along that often, but when they do, you have to be ready to pounce on them and know how to make them work for all parties. This was a win win win. Seller got 450k, I got 120k, buyers got 135k+ (3 of the houses sold for more than my original ARV so they made even more money)

All this being said. You want to wholesale or rehab or whatever, go take massive action every single day. That is how you begin to succeed.

Cheers,

GZ

“Cry now, laugh later”

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