Beginner Wholesale Advice

Hello Everyone,

I am persuing wholesale real estate investing. By this I mean tying up a property under contract and assigning it to a investor/landlord. I have read all the sites that tell you the same stuff over, and over, and over. I need actuall advice from people in the business. First Question: What type of contract do I use to get the property tied up so I can assign it. I have heard that it is so many different things I don’t know which way is up. Second: I do not want to have to buy this property should I not be able to find an end buyer. So what can I do to prevent that?
Third: I am having trouble understanding what my profit should be. Example, Home owner needs to sell. Their house has an appraised value of $100,000. I determine that the house could use $25,000 in repair and renovations. The ARV turns out to be $180,000. $180,000 X .07 (70%)= $126,000-$25,000(repair/ renovation cost)=$101,000-5%(my fee)= $95,950 (my offer to the seller). With the end buyer making the 30% I deducted from the ARV to make the offer, and I walk away with $5,050 as my profit from the deal. Can anyone tell me any flaws with that or am I on track.

There will be many many more questions to come. But I sincerely appreciate the responses you guys will give me,

You can use a purchase to sales contract or an option contract to lock up the property. Just make sure when you put your name or LLC as the purchaser to also add the words “and or assign.”

Second, if you use a sales contract you just have to put some general contingencies that allow you to back out of the transaction. Example: Ability to obtain financing, find another buyer etc.

As for using an option contract, you are pretty clear in your interest in the opportunity not the obligation. On top of that make sure you give yourself enough time in the option contract so that you can find a buyer. I normally do 6 to 12 months option contract.

Third: Always start higher then what you want to make because people will always work you down.


Basically you can use your local real estate form. Just be sure you understand all of the aspects of it. If it doesn’t have an inspection clause I would recommend adding one.

I would stay away from other contingencies such as “Buyers ability to obtain financing” and “Partner approval” both of those make you offer look much weaker. Having said that, most sellers will allow you an amount of time to make it through for inspections.

On the signature line on the p/a put your “name and/or assignees” NOT “and/or assign” as that makes no sense assign is a verb not a noun…Nothing against the other dude but, I don’t want to see you mess up.

You DO NOT need to use an llc, you can use your personal name. An llc will come in hand if you are working with a non assignable contract. Then instead of assigning the deal you will sell the llc.

Make it easy on yourself, if you wholesaling the deal, your profit is simply the difference between the contact price with the seller and the contract price with the buyer less closing fees, expect double fees if your doing a double closing…Or you profit is just your assignment fee.

Good luck

Thank you guys very much for your replys. I have read up on double closings and I think i am going to stick with just an assignment fee. That way I stay out of the ownership list of the property. Another question. Do I still pay closing costs if I just assign the contract?

Can you explain the assignment process and how it works?

From my understanding, i find a motivated seller, lock it up under contract for a certain amount, with an assignment clause on the contract. Now with my buyers, of coarse already lined up :bobble, i have them sign the same contract or a seperate contract for a slighly marked up sales price? Then proceed to closing with a title co? From that point does the escrow co dispurse funds?

Let me know if im on the right track here or if im sounding like bumbling fool :flush

That is to my best knowledge of what wholesaling is. Because I am still learning the ropes I am not sure how the closing process works. If anyone out ther can explain how this works I woud greatly appreciate it. I though that you could just give the end buyer your contract after he gave you your fee. But I’m guessing I have to be there at some point of closing. :deal

With great respect, the noun “assign” simply means “assignee.” ( I had to look it up) :biggrin

Wholesaling is my favorite way to get started!

If I have a contract with a motivated seller and want to do a double closing with a buyer (who must get financing from a bank) How can I create a contract with the final buyer for a property that I myself only have a contract and no ownership?

Will my potential buyers bank provide financing and go to close based on a contract with me who has no ownership (just a contract)??

If your doing a back to back closing then you will do a new contract with your buyer and there is no assigning done.

If you assigning a contract then you will do use a assignment of contact form to assign the contract from you to your buyer. On that form you will state the amount that you intend on making as a fee for assigning the contract.

good luck