Investment Info:
Single-family residence wholesale investment in Arlington.
Purchase price: $130,000
Cash invested: $1,010
Sale price: $160,000
This was another wholesale deal we locked up. This seller inherited the property from her Father who had passed away due to cancer. She had quit her job over a year prior to care for him and was absorbing nearly $1,000/mo. in PITI. She never rented it out, so it was vacant. This property took about 2 months of continuous follow-up and relationship rapport building before we got it under contract. When we were just about ready to get the contract signed, she had mentioned she was being bombarded by calls about that house. But because of our existing relationship, she never returned any of the calls. She wanted to work with me and our company. She even had offers that came in over what we were offering. As they say, "the money is in the follow-up". If you're not following up with your leads, you are seriously missing out on a ton of deals.
Anyways, we locked it up at $130,000, email blasted our cash buyers and in some of the FB RE groups we are in. We had a ton of interest. We held a 1 hour inspection the day after I sent the notice out and had about 17+ people show up. It became a buyer frenzy. The fear of loss was at the top of many of the investors' mind. Within 24 hours (our cutoff time for all highest and best offers), we had about 15 offers. And our highest offer was also our best. All cash and closed in a little over 10 days after we locked up our buyer.
We did a double-close on this one. After all closing costs, we netted: $29,266.20...to be exact!
What made you interested in investing in this type of deal?
Our long term goal is to build up our cash reserves using wholesaling as our main strategy. IMO, cash is not king here...cash flow is! So we're utilizing wholesaling to ultimately purchase buy/hold properties for long term. Wholesaling is earned income. If you're not working the business (or people that you've hired), you not making money. Whereas, buy/hold, as long as you have your team, will bring the money in day after day, year after year.
How did you find this deal and how did you negotiate it?
We pulled a high equity absentee owner list within specific zip codes. Our cold caller qualified the lead and sent it to me. From there, it's all about building rapport. What's the condition of the property? Why are you selling? How soon? What's the least you would consider if I paid all cash and you paid zero in commissions and closing costs and closed on your timeline? These are just some of the questions we ask. Bottom line...always have patience and always be pulling away. Don't sound eager.
How did you finance this deal?
We didn't. This was a wholesale deal. We deposited $1,010 EMD with escrow. Why the extra $10? This was a small option fee that is required by Texas law to have an option period (or inspection period) in our contract. This gives us the time to locate our end buyer. If we can't locate our end buyer within a set time, we can back out of the contract for whatever reason and get our entire $1,000 EMD. The seller would keep the $10 option fee.
How did you add value to the deal?
By being an empathetic ear. She lost her Father to cancer. I shared the story of losing my sister to cancer. It was the most difficult time in my life. So she had someone she could relate with. But even if I hadn't shared that story with her, it was all about just being patient and listening well. There were days of zero communication, plus being around the holidays, it was very emotional for her. I think that not pressuring her, being empathetic to her situation and solving her problem.
What was the outcome?
As I mentioned in the description above, we secured our buyer within our option period or inspection period, as what wholesalers like to call it. Once the buyers $5k non-refundable EMD was received by escrow, we were able to close on the property in a little over 10 days. From when escrow opened (January 2nd) to close, it took just 15 days to close. After some closing costs, since we did a double close, we walked away with $29,266.20. Not bad for about 15 hours of my time.
Lessons learned? Challenges?
This was the biggest buyer frenzy I had gone through. So this created a lot of challenges. When you have a property that is highly desirable by many investors, you MUST have your systems in place. Fortunately, I did! There was a ton of follow-up with those that inquired. Follow-up with those that showed up to the inspection. And follow-up with all the offers that came in. I had to juggle a lot with the amount of interest we had. Always be prepared for a ton of interest, not the other way around.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Hat's off to my nephew Harrison for handling the inspection. He did an excellent job and handled it well.
