Starting out Q's

BiggerPockets has been by far the best resource I've had for RE advice. I've got a few questions I'm trying to get the kinks out of before I go full force.

I'd like to get into pre-foreclosure / foreclosed homes. My capital is limited, so I figured I could wholesale some deals - and that would help me out getting my feet wet.

I know in wholesales, you must get the house under contract for a specific price, and then contact your list of investors to buy. I'm building my list of investors right now. Once you have the investors, and you start finding property... where do you get the contract from? RE Lawyer?

Also, I've heard that many title companies stay clear from dual escrow deals due to the high chance of fraud. Is this committing fraud by dual closing without a broker?

Here is my situation: I've got a pre-foreclosure on my hands right now thats got about $15k in equity in it, and they want around $87k to walk away. I'd love to jump on this because the area is great, and home values are increasing - but I have no investors in this city yet! Could I bird dog this deal and hook someone else up? Where could I go to do this?

Thanks in advance, I'm sure I'll have many more Q's. Tomorrow I'm heading to my 1st foreclosure auction - just to get a feel of things.

Nick Cifonie

Real Estate Investor · Joliet, Illinois

30 posts
1 award
50 influence

Jul 05 '10, 11:07 AM

Hi Danny...

I'll answer your direct questions 1st...

Q 1- "Once you have the investors, and you start finding property... where do you get the contract from? RE Lawyer?"

Send me an email or private message here with your email address and I'll send you a simple contract that would work.

Typically when you're wholesaling you use a simple contract rather than the local Realtor one, although you can. (there's a lot of "stuff" in those that's not needed)

You can use a RE lawyer if you like as well.

Q 2- "Is this committing fraud by dual closing without a broker? "

No, having a broker or not has nothing to do with it. "Fraud" can be a lot of things, and I can't write out everything we'd cover if we were on the phone, but the easiest and best suggestion I can give is be upfront with everyone and use common sense.

I'd suggest either working with someone who's had some experience, or consult an attorney who's handled flips in your area already, and have him step you through your 1st deal. (find one at a local REIA if you can)

Another thought is grabbing a program on flipping/wholesaling, although you can get almost everything you need from here or the web if you're patient and willing to seek it out.

Q 3- "Could I bird dog this deal and hook someone else up? Where could I go to do this?"

Sure you could bird dog it... I'd start by "Googling" in the area the deal is in to find investors. Try "sell my XYZ house fast", replacing XYZ with the city/state. You'll get a list of investors, start calling.

Another thought is to get a contract (or use a simple option) and market it yourself of Craig's List, etc..

When you're at the auction, realize the guys bidding are the REAL cash buyers in your area. Introduce yourself as a local investor/wholesaler and ask if you can call them at a later date to find out what they're looking for... I wouldn't go into it at the auction, they won't have that mindset.

Then a day or two later call and remind them how you met, and find out what areas they buy in, price ranges, etc.. They'll be great to put on your buyers list.

Nick

Tom Bukacek

Real Estate Investor · Austin, Texas

119 posts
12 awards
50 influence

Jul 05 '10, 12:44 PM

Sorry I don't have a pic of me giving thumbs up. I feel out of place.

Get the property under a contract with an inspection period and a various attorney approved contingency clauses. Then market the heck out of the property. If it's a good deal, you will find a buyer.

Also, don't worry about double closings. Simply have your attorney draw up an assignment contract and charge a fee for assigning the existing contract to the end buyer.

Delondon Dear

Real Estate Investor · 30906, Georgia

142 posts
3 awards
50 influence

Jul 06 '10, 01:27 AM

No happy go lucky thumbs up picture here either.

Danny, on that preforclosure, are you sure that they are set at that price. Pre's around here are giving out 35-55% equity. See if you can get that down some more. It is worth a shot.

Bill Gulley

Real Estate Investor · Springfield, Missouri

5,642 posts
13 awards
100 influence

Jul 06 '10, 01:44 AM

Nick, don't pay any attention to those guys, I know a car dealer that uses the same pose and he does very well!

As to the preforecosure, Tom hit on it, assign the contract from the owner. You can also buy the mortgage sometimes and perhaps use transactional funding and there is no seasoning requirement going that route. Good luck, Bill

Steve Babiak

Real Estate Investor · Audubon, Pennsylvania

4,267 posts
14 awards
91 influence

Jul 06 '10, 05:12 AM

Based on the numbers given: 15k equity plus 87k sales price = 102k value

87k/102k = 0.85

I'm not buying any investment properties at 85% of value, and I don't suggest anybody else do so; if you were going to live there, that might be acceptable.

And to those of you who think this is a good wholesale at those numbers - why don't you offer to buy it from Danny so he can make his assignment fee?

If you're gonna post advice on these forums, please be sure that you give REALLY GOOD advice before posting.

Danny Day

Rehabber · Houston, Texas

369 posts
3 awards
59 influence

Jul 07 '10, 04:41 AM

Thanks for the input. I really appreciate the follow up. I've been working on getting my main site up, and then getting a seller form site up as well.

Would anyone mind checking out my site? I'm trying to legitimize myself by an online presence.

I've got a few houses on the table, and some realtors from my area have contacted me about my site. I figure with my 1st sale I'm going to get my LLC.

Thanks for the contracts Nick.

Steve- I'll have full details today. Sounds like she wants to sell for $100k and try and make some money - doubt thats going to happen.

I'll keep you guys updated.... until then, let me know what you think [LINK REMOVED]

2 thumbs up!!!

Edited: 07/07/2010 at 07:46AM by Moderator : link in signature, please

Mark Updegraff

Multi-family Investor · Rochester, New York

Donor

858 posts
13 awards
62 influence

Jul 07 '10, 04:48 AM

The site is simple & it gets your point across. You could probably get some value add by incorporating PhP / MySQL to give the client a more personalized experience. You could also provide some content specific to the client that will keep them coming back (frequently with good content). Maybe add some statistics on the co's performance, what clients are saying, etc.

Best of Luck!
MC

Kyle C.

Real Estate Investor · Minneapolis, Minnesota

23 posts
50 influence

Jul 09 '10, 03:38 AM

hey Danny-

I'm in the same boat as you, currently. If you don't mind discussing, how did you find the house? how did the initial conversations with the homeowner go?

Nick- Do you think I could get the contracts sent to me as well? I will "follow" you and send you a quick message.