Finding the Deal
I found the property 2 years ago after the owner called a postcard that I had sent. I remembered speaking with her. Her asking price was $9,000 for a property located in New Bern, NC, Craven County. Hurricane Florence had battered the property and it had some major issues. It was apparent that this would not be appealing to an investor, as I could not justify the purchase after a preliminary look at the rehab (or knockdown cost), the location, and the ARV. The 9k was firm with the owner and we decided to leave the deal on the table. 3 weeks ago I received a phone call from the owner saying that she was still looking to sell. They had seen one of my signs and decided that they wanted to re-start our previous negotiation.
Negotiating
Their price had not changed from our conversation 2 years ago. After a couple of phone conversations and a heart to heart, we were able to come to an agreement. She had some outstanding debts that she needed to take care of, was tired of paying taxes on the property, and really just wanted someone to hand walk her through the sale. We agreed on $5,000. I went to the seller's property to secure the contract. I really was not sure what it could be assigned for due to the amount of work that would need to be done from the damage incurred during Hurricane Florence. The end-buyer would be looking at a full knockdown or a rehab. Also, it was in a C class area. I knew that this would be more of a challenge and I was not expecting it to go through. The plan was to offer it up to Facebook Marketplace, Craigslist, and a couple investors, to see what the interest was. At this price point, I was not willing to bring in a contractor or inspector. Every potential buyer I spoke with got my verbal list of disclosures to do their own due diligence, followed by a “yeah.. it probably needs to be knocked down”, and any information that the seller relayed to me.
The property was posted on Craigslist and Facebook Marketplace for $9,000 with pictures and a detailed description based on my walkthrough and tax records. After three days I had over 500 inquiries about the property. Only about five or six individuals actually made an offer and wanted to move forward. I found a buyer who really wanted it after seeing it. After meeting with them, it was clear that they were very excited to get into the property and knew what they were signing up for. I prepped the assignment contract once we had secured a number. $8,500 was what we came up with. I answered what I could about the property and questions they had about closing, finally leaving them with a couple of referrals for home inspectors. We signed the assignment of contract at the best place for business and breakfast. Waffle House.
Closing and Future Plans
After assigning the contract and before closing, I was telling other potential buyers that the sale was currently pending and that it was no longer available for showings. A gentleman who I had corresponded with over Facebook Messenger looked up the seller's address on the tax records and showed up at her house. From the seller's account of the interaction, he was offering $6,000 on the $5000 that I had the property under contract, essentially trying to go “around me”. It was interesting to see this happen because I had heard of wholesalers or buyers going around one another in order to secure a purchase directly with the seller. Luckily for me, the seller and I had great rapport, and she was very put off by this gentleman just showing up at her house. She informed me right away.
I had to run to her house to give her a copy of the contract and to scan copies of her marriage certificate (requested by the closing attorney). She expressed to me that she was not able to get a ride to closing which would be in Havelock, NC. This is one of the many instances where I think I found my unfair advantage in the deal: I was willing to bend and flex with the seller.
Problem: She didn't have a smartphone or email.
Solution: I drove to her house to deliver copies and scan copies for the attorney.
Problem: She didn't have reliable transportation.
Solution: I was on standby to pick her up or order an Uber to get her to closing. I ended up Ubering her to closing.
Problem: She didn't bring her ID to closing.
Solution: Her granddaughter received instructions to take a picture of the ID and send it to the attorney once she arrived home.
A couple of days later, the attorney reached out and told me that both the seller and buyer documents we're ready to go and to notify both parties that we would be set to close for the following day. I let the buyer know that we would be closing on Friday and gave the seller a phone call as well. When I showed up at closing she had already signed all the seller documents and requested a ride home, which I obliged. Everything went smoothly. The seller thanked me and expressed her gratitude. Her debts would be paid with the sale of the property. The buyers were just as grateful, as they kept mentioning that this was a “blessing”, and that they would love to do business again.
The Numbers
Post Card: $1.06
Bandit Sign: $1.25
Contract Purchase Price: $5,000
Assignee (Buyer) Agreed to: $8,500
Assignment Fee to Assignor (Me): $3,500
For my first wholesale, I think it went very well. Although, next time I want to be more involved in the due diligence, “earning” my assignment fee by presenting other investors with contractor bids and preliminary analysis’ for multiple exit strategies. This experience has provided me proof of concept and wholesaling will now be an “easy to reach” tool in the toolbox. I now know that this is a very straightforward process that can be replicated over and over. I’m laser-focused on getting the pipeline filled. The proceeds will go towards my next deal and a portion towards more marketing materials. It will not go towards that One-Wheel that I really want. Maybe the next one...
Thank you for reading and let me know if you have any questions or comments!
