From the BiggerPockets Blog

 BiggerPockets Blog »

Jump to Forum View All

Click a category below to view different forum categories.

BiggerPockets

General Info

BiggerPockets Q&A, Site Questions, & Announcements

1514 topics, 14412 posts — Last Post 04/24/14, 05:53PM

BiggerPockets Exclusive PRO Area

117 topics, 841 posts — Last Post 04/23/14, 08:28AM

New Member Introductions

10994 topics, 86671 posts — Last Post 04/24/14, 05:49PM

Real Estate Success Stories

400 topics, 6221 posts — Last Post 04/24/14, 05:13PM

General Real Estate

General Real Estate

Buying & Selling Real Estate

6002 topics, 47284 posts — Last Post 04/24/14, 06:01PM

Renters

651 topics, 5873 posts — Last Post 04/24/14, 03:20PM

Get Foreclosure Help - Help Stop Foreclosure Forum

317 topics, 2561 posts — Last Post 04/23/14, 08:28PM

Home Owner Association (HOA) Issues & Problems Forum

238 topics, 1611 posts — Last Post 04/23/14, 04:02AM

Do it Yourself

660 topics, 6333 posts — Last Post 04/24/14, 02:46PM

Reviews & Feedback

Real Estate Deal Analysis and Advice

3716 topics, 29811 posts — Last Post 04/24/14, 06:00PM

Real Estate Guru, Book & Course Reviews and Discussions

1140 topics, 11615 posts — Last Post 04/24/14, 05:04PM

Ask About A Real Estate Company

743 topics, 7348 posts — Last Post 04/24/14, 03:12PM

Real Estate Investing

Real Estate Strategies

Wholesaling

5647 topics, 44005 posts — Last Post 04/24/14, 06:00PM

Rehabbing and House Flipping

3354 topics, 31117 posts — Last Post 04/24/14, 06:02PM

Real Estate Development & New Home Construction

554 topics, 4695 posts — Last Post 04/24/14, 06:22AM

Innovative Strategies

705 topics, 6044 posts — Last Post 04/22/14, 04:06PM

Tax Liens, Notes, Paper, & Cash Flows Discussion

869 topics, 6703 posts — Last Post 04/24/14, 06:01PM

Rent to Own a.k.a. Lease Purchase, Lease Options

700 topics, 4961 posts — Last Post 04/24/14, 11:26AM

1031 Exchanges

143 topics, 1063 posts — Last Post 04/24/14, 11:10AM

Foreclosure Investing

General Foreclosure & Pre-Foreclosure Forums

1692 topics, 11317 posts — Last Post 04/22/14, 09:26PM

HUD, VA, and Tax Sales

416 topics, 3103 posts — Last Post 04/23/14, 02:29PM

REOs

1217 topics, 10604 posts — Last Post 04/24/14, 07:13AM

Short Sales

1539 topics, 13154 posts — Last Post 04/23/14, 08:25PM

Landlord & Tenant Forums

Landlord & Rental Property Questions

7259 topics, 71276 posts — Last Post 04/24/14, 05:44PM

Mobile Homes & Mobile Home Park Investing

639 topics, 5146 posts — Last Post 04/24/14, 05:13AM

Investor Basics

Starting Out

7739 topics, 60719 posts — Last Post 04/24/14, 05:30PM

Investor Psychology

434 topics, 6131 posts — Last Post 04/24/14, 05:58PM

General Real Estate Investing

4732 topics, 37336 posts — Last Post 04/24/14, 02:34PM

Real Estate Investor Marketing

1740 topics, 14165 posts — Last Post 04/24/14, 05:08PM

Commercial Real Estate

Commercial Real Estate Investing Forum

1414 topics, 9022 posts — Last Post 04/24/14, 04:12PM

Multi-Family and Apartment Investing

1124 topics, 9411 posts — Last Post 04/24/14, 05:56PM

The Business of Real Estate

Real Estate Technology and the Internet

Real Estate Technology, Social Media & Blogging

645 topics, 4913 posts — Last Post 04/24/14, 12:21PM

Business Basics

Goals, Business Plans & Entities

835 topics, 7595 posts — Last Post 04/24/14, 05:56PM

Real Estate Finance & Legal

Financial, Tax, and Legal

Tax, Legal Issues, Contracts, Self-Directed IRA

2803 topics, 20142 posts — Last Post 04/24/14, 05:04PM

Property Insurance

312 topics, 2059 posts — Last Post 04/24/14, 10:22AM

Personal Finance Discussion

330 topics, 2754 posts — Last Post 04/22/14, 12:06PM

Loans, Mortgages, Credit Lines

Private & Conventional Lending Discussion

2853 topics, 19851 posts — Last Post 04/24/14, 05:15PM

Creative Real Estate Financing

1221 topics, 8870 posts — Last Post 04/24/14, 03:19PM

Crowdfunding Real Estate

35 topics, 463 posts — Last Post 04/19/14, 06:24PM

Real Estate Professionals

Real Estate Professionals

Real Estate Agents

1218 topics, 8051 posts — Last Post 04/24/14, 01:43PM

Bankers, Lenders, and Mortgage Brokers

442 topics, 1931 posts — Last Post 04/23/14, 09:04PM

Contractors

268 topics, 1689 posts — Last Post 04/24/14, 05:05PM

Local Real Estate

Local Real Estate

Local Real Estate Networking & Recommendations

2023 topics, 11775 posts — Last Post 04/24/14, 05:28PM

Americans & International Real Estate

162 topics, 572 posts — Last Post 04/24/14, 03:31AM

Foreigners Buying in the USA

62 topics, 409 posts — Last Post 04/10/14, 06:27AM

Canadian Real Estate

66 topics, 440 posts — Last Post 04/24/14, 05:54AM

Marketplace

Real Estate Marketplace

Real Estate Marketplace

15097 topics, 54165 posts — Last Post 04/24/14, 05:17PM

Real Estate Events and Happenings

169 topics, 2622 posts — Last Post 04/24/14, 05:42PM

Off-Topic

Off Topic

Off-Topic

2909 topics, 32450 posts — Last Post 04/24/14, 05:32PM

Housing News & Real Estate Market

922 topics, 8397 posts — Last Post 04/24/14, 02:57PM

BiggerPockets Real Estate Investing Summit

97 topics, 1752 posts — Last Post 04/23/14, 04:51AM

BiggerPockets Resources

Forums » Wholesaling » Structure of wholesaling!!!

Structure of wholesaling!!!

27 posts by 13 users

Signup

Real Estate Investor · Stroudsburg , PA


Hi everyone;
I found BP about a month ago and have been on it since then almost every night for at least an hour. I am a beginner wholesaler like alot of poeple who are just starting with real estate investment.

Since this section has the most information in BP regarding wholesaling, I spend most of my time here and can't help but notice that a lot of people ask very similar questions without really looking up to see if it has been asked or answered before.

So from what I learned from BP and other sources I wanted to create a step by step structure of a wholesaling deal from beginning to the end.
I am not doing this because I believe I am an expert wholesaler (not even close, I am working on my first deal) but my goal is to have this list analyzed by experts, and investors, gurus, coaches here in BP and tell me if I misunderstood something, if I am missing a point, if I am not ready yet or etc. So hopefully it will help me and beginners like me to create road map to be successful in this venture.

Please, please correct me if I misunderstood a step, and missing the correct information

Here it comes;

1.) Educating your self about wholesaling and choosing your geographic area to focus on.

2.) Build your buyer's list and Power team (RE agent, title company, Lawyer).
I am not going into the details of how to do that since there are alot of great posts about that in the forum.

craig's list
facebook
bandit signs (where they are allowed)
preforeclosure lists
calling the number on "for rent signs"
networking, REI groups etc.

3.) Marketing materials

Business cards
car magnets
bandit signs
flyers
yellow mails

4.) Finding the property and being able to analyze it
a.)Finding the property:
online (craig's list etc)
auctions
distressed properties
house for sale by owner signs
pre-foreclosures

b.) Analyzing property:

How much for repairs?
what kind of repair?
Clear title?
how long to close?
ARV?
FMV?

5.) Negotiating the price and putting it under contract;

After doing above due diligence, negotiating the deal down to a price where you can add your assigment fee and still have the end buyer make money from the transaction.

-Be able to explain to the buyer who you are and what your intention is as a wholesaler.

-take a lot of pictures of the property

-have the buyer sign a option to purchase contract.

-Send your earnest money to your title company.

6.) Finding the end buyer.

Blast an e mail or call your buyers about the house.

If the interest is high, have an open house where you can have them come in the same day, (bidding war)

Have the buyer sign the assigment contract.

Try to collect a portion your assigment fee at signing the assigment contract.

Have the owner sign a purchase and sale contract with option to assing.

Send it all to the title company,

7.) Get your assigment fee at closings.

Any comments, criticism, or corrections are highly welcomed??????

Sorry for taking this much space.



Wholesaler · Irving, Texas


Hi @Ozzie Konar,
I read this post and was going to just let this go (because you're right, there are many such posts, and likely the reason you haven't gotten much response), but one thing stood out to me that I have to comment on.

Originally posted by Ozzie Konar:

If the interest is high, have an open house where you can have them come in the same day, (bidding war)

Any comments, criticism, or corrections are highly welcomed??????

Sorry for taking this much space.

Don't do this. Don't ever do this. It's the quickest way you can alienate your buyers (besides wasting their time with junk) Let me qualify though: don't ever do this with your wholesale cash buyers. If you're selling sub to, or wholetaling, then you are in fact trying to reach the retail market and the laws of supply and demand will apply.

But if you're wholesaling, don't risk pissing away your cash buyers for the sake of a few extra bucks. What you're actually doing is erasing the profit from the equation.

Instead, know your numbers...know where your Buyer's price points are at. Ask for what you want and let the first person to put a non refundable deposit in your hand be the "winner". Make time rather than money be your deciding factor.


Small_untitledJerry Puckett, New Refined Images LLC
E-Mail: [email protected]
Telephone: (214) 699-7565
Website: http://marketlikeawholesaler.com
I help Investors buy wholesale | Direct Mail & Internet Marketing


Real Estate Investor · Stroudsburg , PA


Thanks Jerry. These are the kind of comments that help newbies like me make fewer mistakes on my road to success in wholesaling.
I am seeing 3 properties this Saturday, planning to put at least one of them under contract.



Wholesaler · Irving, Texas


@Ozzie Konar
Way to go man! Keep us updated and let folks know what works and what doesn't. As always, if you have questions along the way feel free to ask. There truly is nothing new under the sun.


Small_untitledJerry Puckett, New Refined Images LLC
E-Mail: [email protected]
Telephone: (214) 699-7565
Website: http://marketlikeawholesaler.com
I help Investors buy wholesale | Direct Mail & Internet Marketing


Real Estate Investor · Stroudsburg , PA


Let me give you some details about the houses i will be seeing so maybe one of the people who have done it before like you would catch something i haven't caught.

Properties:

1.) It's three partners who are planning to seel this 3 family house.
Their estimated repair for the house is about $50,000. They woul'd like to sell it for $10,000. Their estimated ARV is $90,000.

So I printed my rehab repair cost form and I will walk around the house to see what my estimate will be. Then I will talk to my re agent to pull me the comp in that area.
I will also see if they allow me to take alot of pictures.

2.) This is half of a double with three floors. Single owner asking for $7500 cash, and says that the house needs to be gutted out, needs new roof and everything else.
I havent done a thrill researh but the ARP value in this area seems to be around $40k to $50K.

3.) Single owner half of a double asking for $10,000. I dont know much about this, i will find out on Saturday. the owner hasn't confirmed the time yet.

And i told all of them that i might buy the property but if it doesnt serve my needs, i will work on finding a buyer through my investor friends.



Wholesaler · Fort Worth, Texas


@Ozzie I agree with Jerry there is is nothing new under the sun. You are on the right path just follow the steps you are learning, make sure the numbers make sense and make an offer! Keep in mind people love doing business with people they like, they can believe and comfortable with. So make sure to build a rapport with your clients. This will take you a long ways!!

Best of luck! : )



Wholesaler


Thanks for sharing that information



Real Estate Investor · Stroudsburg , PA


All right people!!!!!. Here are the results of the first day on the battlefield.

House #1
The owner of the house was also an investor, he said that he got the house from Tax Sale (not sure what that means, but will look up in bp). The house was totally gutted out, needs a new roof, rewiring of electricity, the only thing the house had standing was the 2 by 4s. But the structure is solid. Estimated repair is between 40K to $50K.
His asking price is $10,000. He agreed to put it under option the purchase contract for $5,000.

House #2

This is a 2 family house, the owner said it can be converted to 3 family. This is also a tax sale. Estimated repairs on this is about $45K to $55K. He asked for $15K, I negotiated it down to $6,000.

House #3

Another Tax sale. Estimated repair is about $25K, he asked for $7,500, negotiated down to $6,000.

They all agreed for me to try to sell the property for them. So that was a big surprise for me !!!. Maybe I am missing something, but not sure what it could be at this point. But they were all investors who would buy home from tax sale and either sell him to make a couple of thousand dollars or fix it up and sell it.



Real Estate Investor · 30906, Georgia


I love it. I am so glad you know good deals when you see them. Let us know what type of profit you make from these.



Real Estate Investor · Audubon, Pennsylvania


Originally posted by Ozzie Konar:
...
The owner of the house was also an investor, he said that he got the house from Tax Sale (not sure what that means, but will look up in bp). ...

Pennsylvania has several types of tax sales. There can be lingering title issues depending on the specifics of the tax sale at which the property was purchased. In certain situations, there can even be a redemption period. Some tax sales in PA are of mobile homes, where the tax sale does not give title to the "vehicle" (that must come from the DMV). Ask the sellers about the particulars of the tax sale, and then go and verify the information you get.


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Real Estate Investor · San Antonio, Texas


where are you??!

my guys are bringing me $40k cash w/$22k costs along w/bad comps.



Real Estate Investor · Stroudsburg , PA


Brandi;
I wish you are near my area, but you are too far away unfortunately. I am PA.

Steve;
I asked the owners if the title is clear, they all verbally verified it is. I am waiting for my option contract to be signed and sent back to me. It's one of the contengincies in the contact that it needs to be clear or I am out.



Real Estate Investor · Lawrenceville, Georgia


Ozzie, Congrats. wow on finding all those tax sales investor properties. Correct me if I am wrong - Tax sale properties are bought from non payments of back property taxes and auctioned off at courthouses. The only thing wrong with title is unpaid taxes ( for the most part ). Usually bought as is with title / tax problems. And that is cleared up when bought at auction.

So it is amazing that you found investors that got the properties cheap enough and you all make profit. And the fact that you did OPTIONS on all 3 is great!



Real Estate Investor · Audubon, Pennsylvania


Originally posted by Barbee T.:
Ozzie, Congrats. wow on finding all those tax sales investor properties. Correct me if I am wrong - Tax sale properties are bought from non payments of back property taxes and auctioned off at courthouses. The only thing wrong with title is unpaid taxes ( for the most part ). Usually bought as is with title / tax problems. And that is cleared up when bought at auction.

...

Pennsylvania is "different" when it comes to tax sales. Being from PA myself, I am familiar with this. My previous post in this thread is just a short list of possible issues with Pennsylvania tax sales - title is not guaranteed to be clear of all other liens and encumbrances. It truly depends on the terms at the specific tax sale where the purchase was made.


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Real Estate Investor · Stroudsburg , PA


Thanks for the detailed explanation Steve. I have one question though, how often does these kind of tax sale auctions take place? i couldnt find that information?



Real Estate Investor · Audubon, Pennsylvania


Originally posted by Ozzie Konar:
Thanks for the detailed explanation Steve. I have one question though, how often does these kind of tax sale auctions take place? i couldnt find that information?

See if there is a county Tax Claim Bureau; if there is, then they should be able to tell you when they have their sales. Some tax liens are also sold at sheriff sale, so that typically is once per month in most counties in PA; these typically will be in townships (or whatever municipality) that have elected to not use the county's Tax Claim Bureau to handle tax sales.

Then there is Philadelphia that does its own thing ... since it is both a City and a County, it has some special treatment in the state legislation.


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Real Estate Investor · Stroudsburg , PA


Steve;
You were 100% right. I found out that the county has a Tax Claim Bureau, and tax sales take place there. I found a PDF in their website explaining when the next tax sales will take place, where it is and the conditions of it.
It seems like in this county, there is no redemption period, tax liens are sold "FREE AND CLEAR of all tax and municipal
claims, mortgages, liens, charges and estates of whatsoever kind".

do you think it's a good idea for me to be there when the sale happens so i can talk to the buyers immediately about me wholesaling their properties, and also it will help me build my buyer's list?



Real Estate Investor · Audubon, Pennsylvania


Originally posted by Ozzie Konar:
Steve;
You were 100% right. I found out that the county has a Tax Claim Bureau, and tax sales take place there. I found a PDF in their website explaining when the next tax sales will take place, where it is and the conditions of it.
It seems like in this county, there is no redemption period, tax liens are sold "FREE AND CLEAR of all tax and municipal
claims, mortgages, liens, charges and estates of whatsoever kind".

do you think it's a good idea for me to be there when the sale happens so i can talk to the buyers immediately about me wholesaling their properties, and also it will help me build my buyer's list?

The Tax Claim Bureau operates under the Pennsylvania Real Estate Tax Sale Law Act 542 of 1947. If you research that, you will find that all sales have to go through a progression, and that there are no redemption rights. First, the property must be offered for what is called the "Upset Sale" - the "Upset Sale" leaves all encumbrances in place except for the specific taxes being paid, so mortgages are not wiped out. Should a property not be sold at "Upset Sale" (usually because it has a big mortgage or it is a mobile home or because it is vacant land), then the property is to be exposed for sale in the next "Judicial Sale"; the "Judicial Sale" is the only sale where all encumbrances are wiped out, and payment of the taxes gives you the property free of all other encumbrances of record. If property is exposed to the "Judicial Sale" and fails to sell, then it becomes part of the repository; property in the repository can be bid on at any time, and the taxing authorities can determine whether or not to accept any bid on the repository properties. Repository properties have been exposed to "Judicial Sale" already, so they come free of all other encumbrances (but there may be a requirement to pay all current taxes and municipal fees).

Now, there have been issues in the past (many court decisions) where tax sales have been overturned. So it is quite common to have "quiet title" actions performed on any property purchased from the Tax Claim Bureau, in order to remove any claims a prior owner would have.

Now, to answer the question you posed. Would being at the sale give you an opportunity to meet buyers, so that you can add them to your buyers list? Probably so. Would they let you wholesale the properties just bought at tax sale? Hard to say, since that would depend on why they bought the property in the first place. Some people actually want to hold onto the property for a variety of reasons, so those properties won't be available for any sale. Some will be rehabbers who want to get maximum profit out of their acquisition, and wholesaling a property might not do that.


Steve Babiak, Redeeming Properties, LLC
Telephone: 6109082183
...


Homeowner · Philadelphia, Pennsylvania


Ozzie, thank you for starting this conversation/post. I am inspired and ashamed at the same time. I look forward to reading more of your future successes and hope to duplicate it in my own efforts.

Congratulations!



Wholesaler · Saint Amant, Louisiana


Yes, this is a good read for sure. Been monitoring this topic since I started here the other day. Thanks Ozzie!





Sign up