Real Estate Wholesaling

[megatabbers]

I own an apartment complex, so yes I do take my own advise, I'm trying to buy more rentals at the best pace possible.

The best book I've read is one minute to rental property riches , the guy who wrote it lives pretty close to me as well.

You can make more money quicker by flipping properties, but the problem with that is that you can loose serious money if you make a mistake. Rentals are MUCH more forgiving because even if you over pay a little you're still making 50% ROI or so. I've seen people even in my small town make $50k to $200k 'mistakes' on flips during a hot market. Not so much with rentals, even if you pay double what you should, you still break even, eventually pay off your mortgage and then have a property free of mortgage.


The other thing is that in 15-20 years or so, your mortgage will be paid off and you'll have a asset worth tens of thousands or hundreds of thousands of dollars you can sell , refi or what not. Real estate is also the best way to get your tax liability down, my apartment takes care of over 50k of tax burden each year , even though it's profitable.

With a good rental you should be buying at 20% to 35% of market value so you realize a decent bit of equity up front. After 15-20yrs of owning it your initial value should increase 300% to 400% even through crummy markets. Some people i know of will take a $20k property, rehab & rent, get some money coming in and sell to a institution for $50k or so.

Cool! Have you ever heard of David Lindahl? The guy is big time into apartments (and amazing marketer overall). I picked up his book about 1.5 months ago ([ame="http://www.amazon.com/Emerging-Real-Estate-Markets--Coming/dp/0470174668/ref=sr_1_1?ie=UTF8&qid=1312634490&sr=8-1"]Amazon.com: Emerging Real Estate Markets: How to Find and Profit from Up-and-Coming Areas (9780470174661): David Lindahl: Books[/ame]) and I'm just getting started in RE myself (starting w/ wholesaling to get my feet wet; actually have a direct mail campaign going live next week) - apartments (buy & hold) are my long-term objective.

 

[Feydakin]

On a similar subject, we've gone the foreclosure route and started picking up property around us to make in to rentals.. Yeah, much of the property needs some TLC to make it livable again, but with what we are paying for it we are able to pay cash for the houses, rehab them, and get them rented in short order.. But again, this assumes you are looking for long term investing vs flipping property..

One thing we did do is hire a hard ass to represent us once the place has been rented out.. We reserve the right to inspect the property, with reasonable advance notice, and have clauses that require basic property upkeep be done by the renter, mow the lawn, keep it tidy, etc.. This guy has zero shame about calling people out and making sure things are kept up like we need them to be.. Saves me the hassle of going around and being the bad guy..

 

[freakin]

That's not wholesaling.

Wholesaling is when you're assigning a contract to someone else for a fee.

Putting a house under contract for 65K w/ an after retail value (ARV) of 90K and you selling someone else that buyer's contract for a flat fee.

What you're talking about is just flipping a house and many municipalities have title-seasoning guidelines that don't even allow that. Not to mention in your example would lose money w/ closing costs and the tax implications.

That is wholesaling.

It doesn't matter how you buy it or sell it as long as you are selling it at wholesale prices. Wholesaling or flipping is just getting paid as a middle man.

You double close on a property if you don't want the buyer finding out how much you have it under contract for. Surprisingly, some buyers don't want you to make a lot of money so you have to hide that shit.

If you are making enough money then the costs of a double close doesn't matter.

Municipalities don't have seasoning issues... Lenders have seasoning issues. Really, do you even have a clue as to what you are talking about?

Assigning the contract shows them how much you are making. If you are only making 10k then no problem. Besides, there can be legal problems unless you are licensed in that state. It can be construed that you are bringing a buyer and seller together for a commission. I would also bet you may have lending problems when you show up on the HUD getting 10k. Lenders don't like surprises nowadays.

 

[REIMktg]

I've never met anyone actually making money doing it, are your friends really doing it or is it more like WaFo style where they're "doing" it.

This is true for most wholesalers.

Personally we do short sale flips in California which lets us resell a property without having to buy and hold. But disclosures,banks and laws make this far from a walk in the park.

I would like to know what title company is allowing you to do this these days. I got out of short sales when the banks started suing title companies for collusion with investors that were doing "flips". IF you can get title then let me know - because I dropped 40 deals for that reason.



Any of you that are into wholesaling in CA I am always ready to buy Fixer properties throughout the state, notes, and even bulk reo if you have access to such a thing but most do not but... In this forum you never know who has done IT work for whom.

 

[danke]

Right now I'm building up a buyers list, currently getting around 5-10 people a day. I'm going to start door knocking and putting out bandit signs next month, by then I hope to have around +100 people on the buyers list so I can just blast out any of my deals by email and hit it on myhousedeals at the same time.

I'm also looking into several hard money options in case I want to do a deal myself.

EDIT: I'm also looking to start flipping junk cars "WE BUY CARS" since I come from a family of mechanics, I can just focus on marketing while they do the labor.

I'm essentially trying to prepare myself to profit from this bear market by any means necessary. Not afraid to get my hands dirty and after six years straight I'm tired of working online to be honest.

 

[BlokBlok]

Right now I'm building up a buyers list, currently getting around 5-10 people a day. I'm going to start door knocking and putting out bandit signs next month, by then I hope to have around +100 people on the buyers list so I can just blast out any of my deals by email and hit it on myhousedeals at the same time.

I'm also looking into several hard money options in case I want to do a deal myself.

EDIT: I'm also looking to start flipping junk cars "WE BUY CARS" since I come from a family of mechanics, I can just focus on marketing while they do the labor.

I'm essentially trying to prepare myself to profit from this bear market by any means necessary. Not afraid to get my hands dirty and after six years straight I'm tired of working online to be honest.

I like it man, good luck and keep us updated. Your interweb skillz will help out big time

 

[super]

I agree. In my market the mortgages are around $400 a month while rents are strong at 1K for the same properties.

Thats gold mine, holly shit! Anybody knows more countries that are like that? most of them are mortgage = rent. Money sure grows on trees in USA lol

 

[johnsirra34]

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[leadsupplier]

Wholesaling can make money , but if you really want to make money in real estate right now, it's in rentals.

Rentals are unpopular , they'll always be unpopular becuase 75% of the people who get into them have no clue about what to do, and do not want to build a rental business model.

I could go into almost any area in the US and build a successful rental business yielding 100%+ ROI per year. It is literally the easiest way to become a millionaire over the course of several years, bar none (Even IM). I'm not saying it's easy to do, just that it requires the lowest skillset to reach one million dollars.

Right now in my area of Central Ohio, I can pick up rentals in reasonable areas for $40,000 , finance them @ 20% ($8000) and make no less than $7000 back a year.

How long of a mortgage?

 

[blogspotter]

I have a slightly unrelated questions. Neither I nor my bro have a lot of idea about the real estate market. We only know that the real estate market is not hot and the prices seem to be at an all time low.
So my brother has been looking for a house/condo in the silicon valley. The problem is that he hasn't been able to close a single one. He makes very good money (6 fig), good stable Job and I have written a letter saying that I can lend him good money too. Financing is not a problem. He has excellent credit score too.

But all the property that he sends a proposal to, well they don't go through. Now he is looking at goood looking properties, all within his budget though...

What do you guys think could be the problem? The last property he wanted, his agent told him that the seller had 3 cash offers... but still... Is this a common phenomena when you hunt for a house? that good houses are hard to come by?

What should he do? How should he present his case or offers?
Should he change his agent?

 

[BigWill]

[ame="http://www.amazon.com/Deals-wheels-finance-mobile-profits/dp/B0006S1ZJG"]Amazon.com: Deals on wheels: How to buy, sell & finance used mobile homes for big profits and cash flow: Lonnie Scruggs: Books[/ame]

 

[nickCR]

Guys it's a thread from last year bumped because of a bot

 

[danke]

I have a slightly unrelated questions. Neither I nor my bro have a lot of idea about the real estate market. We only know that the real estate market is not hot and the prices seem to be at an all time low.
So my brother has been looking for a house/condo in the silicon valley. The problem is that he hasn't been able to close a single one. He makes very good money (6 fig), good stable Job and I have written a letter saying that I can lend him good money too. Financing is not a problem. He has excellent credit score too.

But all the property that he sends a proposal to, well they don't go through. Now he is looking at goood looking properties, all within his budget though...

What do you guys think could be the problem? The last property he wanted, his agent told him that the seller had 3 cash offers... but still... Is this a common phenomena when you hunt for a house? that good houses are hard to come by?

What should he do? How should he present his case or offers?
Should he change his agent?

1. You don't find the best deals with an agent.
2. You don't want to buy good houses. You want to buy the absolute shittiest house in an okay neighborhood.
3. You're talking about buying a residence in Silicon Valley. We live in Merika where most home buyers aren't fighting w/ cash offers over a condo without beach access.


--------------------

Update:
Didn't do the wholesaling thing, never got around to the bandit signs and what not.
Started subbing out contracting work. Totally legal? A little gray hat.
Preparing to start subbing out HVAC work in another part of the country.
Never did the junk cars stuff. But, I did end up running into an old friend that's doing import/export of luxury cars to Asia. Playing with the idea of adding that to the list of hustles.

 

[cheshire]

IM made me rich, Real Estate made me wealthy. Fuck everything else in this market. Buy, Hold, Rent. Rent them for twice the mortgage, then sell 'em when the market becomes hot again for double what you paid.

 

[Beach Affiliate]

Amazon.com: Deals on wheels: How to buy, sell & finance used mobile homes for big profits and cash flow: Lonnie Scruggs: Books

I can't help but wonder if you were serious about that link or not. Because that looks like some pretty interesting passive income. (no redneck)

 

[cheshire]

Beach_affiliate: Mobile homes are extremely profitable, its dealing with the clientele that sucks.

 

[Beach Affiliate]

Beach_affiliate: Mobile homes are extremely profitable, its dealing with the clientele that sucks.

I figured as much. I may look into it even so, though. I'm currently in the South so there's no shortage of potential clientele.

With some research on how to keep 9 out of 10 of properties acquired from becoming meth labs or crack houses, this may be worth my time.

 

[cheshire]

I use a little trick to gain access to my rentals every month just to make sure they aren't screwing things up.

In the lease contract it states that once a month I will enter the property to change the HVAC filter. This has 2 advantages.

1. I know the (expensive!) HVAC system is being properly maintained
2. I get to go inside and make sure nothing is broken. If it is I make them pay to fix it immediately.

I make sure my tenants know I do this (I point it out in the contract) and I do it on the same day every month so it's not a surprise.

 

[Beach Affiliate]

I use a little trick to gain access to my rentals every month just to make sure they aren't screwing things up.

In the lease contract it states that once a month I will enter the property to change the HVAC filter. This has 2 advantages.

1. I know the (expensive!) HVAC system is being properly maintained
2. I get to go inside and make sure nothing is broken. If it is I make them pay to fix it immediately.

I make sure my tenants know I do this (I point it out in the contract) and I do it on the same day every month so it's not a surprise.

Very nice. You can damn well believe I just scribbled that down to remember.

Have you ever considered a property manager or use a management company for things like that? Or would that eat into net revenue a bit too much?

Do you run credit checks & employment verification? Call references?

I imagine with some of these cases (low income) things can get complicated ("my brudda wanna live hurr too and wit his check and mah check together we be payin dat rent") I'm being a bit facetious but you know what I mean. I imagine the headaches can be substantial.

Still very, very appealing since the barrier-to-entry looks cheap and there is NO SHORTAGE of cheap land and mobile homes within a 100 mile radius of me.

 

[blogspotter]

1. You don't find the best deals with an agent.
So how do go about it then? How do you buy a house without an agent?
He is not the kind who likes to do a lot of research.. He likes to outsource and then go look.

2. You don't want to buy good houses. You want to buy the absolute shittiest house in an okay neighborhood.
You mean, renovating and shit will be more cost effective? He won't do anything himself.. He just isn't the kind who would even assemble an Ikea desk. Give him computer parts and he will happily assemble it though. He works and works and works and then work some more...

3. You're talking about buying a residence in Silicon Valley. We live in Merika where most home buyers aren't fighting w/ cash offers over a condo without beach access.

Then what exactly happened with all his deals? These houses were just close to his office, and good neighborhood.

Please give me some tips.. He is really not into this real estate thing. And I think he is doing it all wrong...