Won't be able to get started for a while, but...

Starting Out
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Won't be able to get started for a while, but...

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Member since 2008 · 19 posts · 0 votes

Hey everyone. I hope all is well.

I've been reading as much as I can (which isn't as much as I'd like, but school comes first) here on the boards, and I've learned a good bit in that time. I would like to outline my basic plan for getting into real estate on this board. Hopefully, some of you seasoned veterans will either affirm my strategy or critique my methods.

I'm a 20 year old real estate appraiser, working for my dad. I've been in college for two-and-a-half years so far, but I've switched my major so many times that I still have 2-3 years left no matter what I choose. However, since I've gotten into real estate appraisal (I've been on my own for about 6 months), I've come to realize that I love the real estate industry. This realization helped me finally to decide to transfer to West Georgia University and pursue a degree in real estate. My current college doesn't offer a real estate degree, and I seem to have developed a subconscious hatred for this campus... I guess my years of confusion and indecision here have caused me to associate this school with hell.

Anyway, I have to take one accounting class before I can get into my real estate-related coursework. Once I get two RE classes out of the way, I'll be eligible to take the Real Estate Licensing test. Once I have my RE license, I hope to continue appraising. Hopefully by this time, I will have met an established REI that is willing to "take me under their wing", and teach me the ways of the millionaire.

Within the next three or four years, I hope to have enough saved up to buy my first deal (I want to have a large down payment available, so the loan-to-value ratio will be that much smaller). Initially, I would just like to buy a rehab house and rent it out. My first deal will be more about the experience than the profit itself, though more profit will obviously be welcome.

Sorry for such a long post, but I just wanted to get the basics of my plan out there for you all to read. Being a 20 year old college student, I don't have a lot of money and no credit to my name with which to get into the game as of yet. However, I do have something that lots of newbie investors don't have: time.

Please leave comments with any critiques you may have, as well as additional advice that you may want to give. Thanks a lot ahead of time!

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  • Account Closed
    Real Estate Investor · London · Member since 2008 · 3k+ posts · 74 votes
    18y
    Originally posted by "El Kabong":

    So basically you have your license, and work independently? Are you collecting the Realtor commission from the original seller of the house?

    Only if the state allows a person to run their own brokerage. This normally requires more testing, some experience and other conditions before you can operate independently. Otherwise you need to hang your license under someone other broker's license.

    Check the specific state laws.

    Originally posted by "El Kabong":
    When you wholesale, do you collect your money when your buyer buys the house, or on the closing of when they sell it?

    Lets be practical.

    You are not going to collect two commissions if you are the agent representing the seller. In that case it could be a liability nightmare to buy and then wholesale as you did not protect your seller's best interest. Net listings is another way to think of the above. Either by convention or by law net listings are considered a bad idea unless you can absolutely prove the seller knew that they were giving up more money than a straight commission.

    If you are buying a property that is already listed with another agent and you will be collecting the buyer's side of the commission as the buyer, all the power to you. More than likely the price is close to retail as there are normally not that many MLS listed properties that are significantly discounted. Most wholesale investors find their deals before they property is ever listed.

    If you did find such a deal and you were the buyer and you did collect a commission, great. If you then can sell it as the owner and make a wholesale profit even better. Note that most people who wholesale deals are selling at significant discounts to the ARV price. Most deals are wholesaled to investors as you need a cash buyer. They are not sold at retail prices to a retail buyer.

    So, the law does allow an agent to benefit more than once if they happen to find the right deal. The ability to find the right deal where the original seller is paying a commission is very limited. A wholesaler can also find that deal and though there will be no commission they can get a lower price from the seller.

    Get a license for lots of reasons. Do not assume that having one will help an investor gain an edge.

    John Corey

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  • Robert FeolPro Member
    Specialist · Memphis, TN · Member since 2008 · 41 posts · 34 votes
    18y

    We have found that the MLS can contain many good deals but one has to know how to find them. Of course, as an agent you have to disclose everything, the more the better. My partner and I purchase things from the MLS and receive a commission for acting as our own buyer's agent, then aagain to resell the property as a collapsed closing to an end buyer.

    Don't think that all opportunities on the MLS are overpriced: Robyn Thompson says that she finds tons of great deals on the MLS, and does MLS searches daily. Also, all I am saying is this particular model works for my partner and I. I am not really qualified to discuss generalities that are more theoretical in nature - I am only describing a system that works for us, and we live in Memphis, which may be different from other geographic locations. I never suggested that you can get both sides of a realty commission. We buy lots of houses from the MLS and resell them as true wholesale deals(read: 70 cents on the dollar and below after repairs) and then repeat the process.

    Just my two cents.

    Robert Feol

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  • Account Closed
    Real Estate Investor · London · Member since 2008 · 3k+ posts · 74 votes
    18y

    Robert,

    As you are buying for yourself and the seller has their own agent it is pretty clean. As you more or less acknowledge you immediately declare that you are there as a buyer or buyer's agent and not there to talk with the seller about listing their property.

    I happen to buy from the MLS. Mostly REOs. I know a few agents who make it a point of not taking commissions when they buy. They want to accomplish two things when they buy.

    1. Make it very clear that they are not acting as agent and are not representing anyone other than themselves.

    2. More important is they want the agents to bring the good deals. If they have made it clear that there will be no commission splits then the seller's agent gets both sides. That will bias the seller's agent to contact the buyers where there is no risk of a commission split. Maybe not the best way to expose the property to the full market but that problem is between the seller and the seller's agent.

    John Corey

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