Here’s a wholesale deal I did this month. I did a walk through of the house on video (I’ll post that below) so you can see what the condition of the property can look like when dealing with “fixer-upper” houses.
The house is in a great area called Holland Park in Colorado Springs on the West Side of town. I love this area, and tried to buy a house in the neighborhood when I first moved to Colorado Springs. I got out bid on one house and ended up buying in another area, but I it’s a nice median priced area west of the interstate. The only problem is there aren’t many deals in this area. Most owners take very good care of the houses and the only “below market” houses are often on the busy streets on the edges of the neighborhood. To date I’ve only bought 2 houses in Holland Park. One we still own as a rental. It’s too nice of an area to focus on for wholesale deals and fix and flips. This was a mistake I made early on. It’s close to where I used to work and I’d drive around all the time looking for distressed deals, and there just weren’t many. Other areas have better ongoing opportunities if you are focusing on a specific area.
Here’s my video walk through:
Instead of fixing it up, I offered it (first) up to my wholesale buyers list and, sure enough, someone offered me $13,750 for the deal. A bird-dog brought me the deal. It was foreclosed on by a lender (I think this particular “lender” was more like an investor that bought bad debt, foreclosed and then sold inventory on terms) and they had been advertising it on craigslist and with a few bandit signs in the yard.
They wanted to use their contract (non-assignable) so I just created an LLC (could have done it with a trust too, but not all buyers understand trusts and not all hard money lenders lend on trusts in my area. It’s easier (in my area) to use an LLC), went to contract with the lender with my new LLC, then after my buyer liked the deal and we agreed on a price (I offered originally at 92k and we settled at $88,750. That was 13,750 to me and much better than what I’m making on MLS listed wholesale properties. After more careful inspection (by my buyer) we both agreed it needed more rehab cost than I originally thought, hence we agreed on a better price.
I filled out an agreement to convey membership interest in the LLC, and took a 3,000 deposit at the time we agreed and then the final sale of the LLC would take place on the same day as the closing with the balance of 11,750 to paid in certified funds. After a couple weeks, we closed and I showed up at the title company and collected a check…after drinking some free coffee.
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