when you wholesale another wholesalers deal is that the same as a joint venture deal,how is it done
A JV is when you form a partnership usually on one deal with the purpose of splitting profits at a particular percentage usually 50 percent split or whatever the two partners feel is workable. The purpose of a partnership can be to fill the needs of whoever is lacking you could say. Like if I tied up a really good deal but I didn’t have the earnest money deposit I might find a partner who had the money and we would form a partnership and split profits jointly. If I had my own earnest money then I wouldn’t probably have done a partnership.
When you wholesale another investors deal or let another investor wholesale your deal you have to do that by way of a flex option contract that gives your investor the option to purchase stipulated upon the fact that if you find a buyer before he does then his option is null and void. If he finds a buyer before you do then he has the right to purchase the property at the price he contracted with you. You would use a Flex Option and not an Option to Purchase because the option to purchase will tie your property up while waiting on the buyer to find an investor to flip to and you couldn’t go with your own buyer until the option expired. A flex option however doesnt require this.
So if your trying to wholesale another wholesalers deal how do you lock the buyer in without having them go around you?
I don’t believe any investor is going to give you a locked in contract to wholesale his deal all dependent upon your buyers list people doing something. However a flex option will alow the investor to continue to find a buyer while you are lining yours up. Whoever moves first gets the money. However I suppose you could record the option in the public records, but if you are doing REOs and the investors know you bought it from a bank, it’s not likely they are going to try and talk to the bank about the deal. Maybe they could talk to the investor who’s deal you are trying to wholesale but that’s real hard to do. They only have access to the public records for the owner and the owner would be the bank. They really wouldn’t be able to find the investor you are contracted with
If it’s a FSBO seller more than likely the investor that you are contracted with will have a recorded option to protect the deal being swiped by someone going to the seller to strike up something.
It could be considered a “joint venture”. In short, I would get a contract with the buyer. If I couldn’t get a contract with the buyer, I would get the contract with the wholesaler. I would also get a contract with the seller. Aside from the contracts, to do the deal correctly, I would also use my title company (ESCROW company or attorney). In addition to put more controls in place, if the buyer needed financing, I would use my mortgage company.
the only time you joint venture a wholesale property is if you don’t have the time to sell the property yourself, maybe because you work to many hours, don’t have the money or you just want to outsource some of the grunt work.
if you have the means and the know how then you would use the flex option as it has been called. the flexible option allows the holder more exposure for their contract with networks they wouldn’t know about.
there are benefits with both methods so the determination comes down to your plan and how much time you really want to put into this.