Hello Everyone,
I appreciate any comments and insight I can get regarding commercial real estate wholesaling, a few specifically I would like to iron out. Please keep in mind I am in the beginning due-diligence phases. I have decided to pursue wholesaling to start my investment career to build up experience and knowledge so I am not very familiar with the actual process of offer, contract and assignment.
1. Purchase and Sale: When going through the P&S typically the seller requires a proof of funds, especially with cash offers. How do you properly execute the contract without having proof of funds apparent to the seller?
In addition, the deposit on the property is typically 5% - 10%, I have read numerous forums, etc. that proclaim that wholesaling is an excellent way to get started as a new investor with minimal capital available. I plan on putting in $30,000 into my business to start however, if I look to flip the contract for a $300,000 house, all of my capital will be tied up in the deal until I am able to find a buyer or my out clause takes effect, is the idea that you try negotiating with sellers to accept smaller amounts of cash? It doesn't seem that many people would accept such a small deposit, would the alternative be that I take out a line of credit for these deposits so I don't have working capital tied up for periods of 30 - 45 days?
2. Lead Generation: I have been looking into a few different places to begin my wholesale lead flow. I am interested in commercial real estate primarily and multifamily properties secondary, so my model will be to target on the residential side 2 - 4 family properties and on the commercial 4 unit + apartments, office and retail spaces. I have outlined my target markets and towns, I have also started reaching out to the town assessors for property owners lists and a special request to highlight and show the owners and properties that have any tax liens, etc. In addition, I have begun looking into the recent eviction proceedings for the counties that make up my target market. I want to put my efforts to the fastest way to profitability, lowest possible cash injection with highest turn to profitability, are there any other public records, places that would be of benefit to me? I have started building relationships with various brokers in the multi-family sector however, I need to get a stronger plan put together before I approach a commercial broker. Any insights into my current approach, etc. would be greatly appreciated, as well as recommendations o where else I might be able to market effectively to commercial property owners.
3. Property Inspection: As a wholesaler, do I take on the expense of getting the property inspected? I understand that in order to be able to properly sell a deal it should have gone through an estimate from a General Contractor which outlines any potential expenses that the other buyer might recognize in their investment. I suppose I am unclear as to whether it is my responsibility or the actual buyers responsibility to recognize these expenses, since I will never actually purchase the property.
4. Closing Company/Attorney: When I go to the closing attorney/ title company, etc. are these expenses that the actual buyer realizes or that I realize? If the wholesaler typically realizes the expense is there a reimbursement? Do I choose the title company/closing attorney or does the actual buyer choose this company/person?
I greatly appreciate any insight and assistance. Thank you.
Sincerely,
Matt Marshall