Last week we put a house under contract in Dacula, Georgia, at 2433 Robin Ridge Road. I knew prior to meeting with the owner that this house was going to be a wholesale real estate deal opportunity.
I did not like the floorplan that much and I could change it by moving walls. The upside profit was not enough in my opinion.
House in Dacula, Georgia RJ put under contract.
The street was okay with similar type houses, but one block over was a much nicer subdivision with newer homes. Click here to see our video of this property.
This house would not produce enough net rent for us to perform the rehab and then resell it to a private investor with property management in place.
Thus, I quickly determined that our most efficient way to profit would be to wholesale this property and let the new buyer do the remodel.
In order to wholesale a house, you must first control it by a contract of some sort. It could be a sales contract or an option to purchase.
Below is the exact contract I used.
Once we controlled the house via a sales contract, we emailed our list of wholesale buyers and set up an open house for last Saturday.
We also listed this house on the Multiple Listing Service (MLS). It is important to have someone from your team there for the open house, especially when the seller is still living in the home which was the case in this situation.
The contract purchase price was $88,000
As you can see by the contract the purchase price was $88,000, so we offered it for sale at $98,000. Clearly, I have room to be flexible on the price as I would be satisfied with a $5,000 profit but. I would be even happier if it was $10,000.
RJ held an open house for buyers on this house.
We didn’t sell the home from our open house and I didn’t want to close on the purchase of this property unless I could sell it in advance.
This was intended to be an assignment of contract wholesale flip with my only expense being $1,000 for the down payment.
But, if I don’t close I get my $1,000 back from my attorney holding it in escrow.
The language in my contract has a weasel clause which allows me a way out of the purchase agreement if it doesn’t sell.
Take another look at the agreement and notice the clause about inspections. That’s my ticket out.
So, I was fully prepared to walk away from this transaction and you should always be willing to walk away as well.
A look inside the house RJ had under contract.
Then a funny thing happened today. One of the prospective buyers put in a full price offer at $98,000 with a 3% commission for their agent.
That’s what makes this business so exciting, as you never know what the tide is going to bring in.
If you create enough activity and have a well thought out business plan, you could be successful.
There is nothing like the exhilaration of a profitable transaction. Is it easy? No! If it was easy, everyone would do it. When you work for an employer, typically you are paid by the hour and there is a ceiling on what you can earn.
When you work for yourself, you’re only constraints are the ones you put on yourself. Me, I like to be rewarded in direct proportion to my knowledge and my ability to take action. There is no clock when you work for yourself and likewise, no ceiling on what you can make.
Recently, one of this blog’s readers contacted me via phone to learn more about negotiating home purchases. I plan to mix up my post with “real deals” we are doing and some types of negotiations. If you need help, let me know!
-RJ Palano
RJP@BuyCashFlowProperties.com
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