The 3 Keys to a Successful Wholesale Deal (guest blog post)

Many thanks to our guest blogger, Cornelius Henderson from Cooperative Solutions LLC, based in Washington, DC.  Cornelius has a wealth of experience in wholesaling real estate and has provided a few very valuable tips in his post below.

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“Earn a Six Figure Income Wholesaling Real Estate in 2011”

 

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<Enter Cornelius>

The 3 Keys To A Successful Wholesale Deal

Some people call it “flipping houses” while others call it “wholesaling.”  New investors execute this investing strategy because they know it allows “newbies” to get involved in real estate without a lot of their own money or risk.  Experienced investors execute this strategy so that we can maintain positive monthly cash flow to satisfy our bankers and pay the monthly bills.  Regardless of your investing experience, the ability to execute a successful wholesale deal is an essential tool for any real estate investor.  There are three fundamental steps to a successful wholesale deal:  the motivated seller, the qualified buyer and the ability to provide a turn-key experience.  I will illustrate each of these through a deal we completed in Washington, DC.

The first and most important step to a successful wholesale deal is to get a property under contract from a motivated seller.  My personal favorite motivated sellers are personal representatives of estates, frustrated landlords and out of town landlords.  This particular deal was with a guy in Florida who was the personal representative of an estate with a property in DC.  The property was in fair condition and we determined that with about $50,000 in repairs, it would be worth about $330,000.  Based on this information, we knew the investors on our Prime Buyer’s List would buy this property for about $165,000.  Although the seller asked for $175,000, we successfully agreed to a purchase price of $150,000 which would provide us with a $15,000 wholesale fee.  Once we had the contract, the most important part was complete but we still had two more steps to get our check.

The second step to obtaining our wholesale fee was to obtain a qualified buyer to assign our right to purchase the property to.  We pulled a buyer from our list that said he was active in the area and we gave him the first shot at the deal.  We had not worked with the buyer before so we requested a substantial deposit and verification of the hard money relationship that he was using.  These are important steps in today’s current marketplace.  The days of posting a deal on Craigslist and getting a buyer who can actually close on a deal are over.  You MUST qualify your buyer!  Do not skip this step or you may not get your check!

The final step to our deal is our ability to provide a turn-key experience.  This buyer was interested in our deal because the numbers worked and we provided everything for him.  We provided the comparable properties sold in the last 3 months, pictures, virtual tour, approved hard money lender, estimates from a licensed and insured contractor, closing attorney and title company PLUS a list of buyer’s agents in the area who have potential buyers.  Essentially, all he had to do was bring the cash needed to close the deal, tell everybody “GO” and then cash his check at the end.  In this market, providing turn-key customer service is critical to getting your wholesale check whether the investor uses the services provided or not.

In summary, a successful wholesale starts with a motivated seller.  Once you have the deal, you simply have to locate a qualified buyer and provide a turn-key experience.  Naturally, if you are looking for a quality wholesale deals, join our Prime Buyer’s List at www.DCMetroRealEstateDeals.com.  Additionally, we provide a wealth of FREE information on our Facebook page at www.facebook.com/cooperativesolutions.

About the author…
Cornelius Henderson is the managing partner of Cooperative Solutions, LLC, a residential and commercial real estate development firmed based in Washington, DC.

 

PS-

Don’t forget to sign up for our FREE webinar this Thursday 3/31 with Vena Jones-Cox

“Earn a Six Figure Income Wholesaling Real Estate in 2011”

http://bit.ly/FlipMore –Sign up here