Horsham, PA · Member since 2015 · 1 post · 0 votes
Hello, my name is Seth Raio and I am currently looking to get involved in Real Estate investments. I am looking at flipping properties, but I also want to get involved with small income properties. I am having a hard time figuring out how to get started and I was hoping someone out there would be able to help point me in the right direction. Thank you for taking the time to read this!
Find a property and create an option to purchase for X with seller, create a document to make sure everyone on the same page and good with you marketing to sell on your site, etc., then list at Y (whatever you want to target as sales price), go find a buyer & voila! Then you get to sell to buyer at Y, pay seller X, and keep the profit in the middle.
Sure, a lot more goes into it than that but that is the big picture. I do these types of deals when I don't want to tie up a ton of cash or I am not really thrilled about X price but willing to put a property out there and see if it sells.
Find a property and create an option to purchase for X with seller, create a document to make sure everyone on the same page and good with you marketing to sell on your site, etc., then list at Y (whatever you want to target as sales price), go find a buyer & voila! Then you get to sell to buyer at Y, pay seller X, and keep the profit in the middle.
Sure, a lot more goes into it than that but that is the big picture. I do these types of deals when I don't want to tie up a ton of cash or I am not really thrilled about X price but willing to put a property out there and see if it sells.
Joe if you're doing that with WAN and your option when you're quoting the title and you're flipping the lamb of a problem with that if it's not a residential property
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
Bombed with mentions, LOL.
The type of property is irrelevant, it is relevant if you finance the option price.
When the intent behind your contract is to assign it and not perform as the contract sets out, you can put yourself in an agency relationship, there are two aspects, one is with "agency" as a state RE commission may define it and the other is under the uniform laws of agency. Agency can be "specific" or "implied" it is also determined by your actions, the result of how you are doing a transaction. Most wholesaling defaults to an agency relationship.
Investors and operators need to understand the phrase "being in the business of" something. That takes you from acting as an individual in some transaction to being a dealer in that activity. If you have a business entity acting in a transaction and that activity is significant to the income generated by that entity, you default to being a dealer.
A dealer in real estate acting on behalf of others, facilitating transactions will usually require a license.
And, where should you start? By learning real estate before trying to deal in real estate!
If you had the money, would you open a shoe store without knowing much about shoes? That would be pretty foolish now wouldn't it? :)
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
10y
@Will S., don't worry, there are lots of "Wholesaler police" here at BP ready to shoot down those who try to justify it in States that forbid it, (but also to shoot down blanket condemnation of the same activity where it IS allowed)!...
Investor · New York City, NY · Member since 2015 · 388 posts · 563 votes
10y
Hi Seth,
Finding a good no-money down investment requires tons of effort. And often, those deals run afoul of HETPA(Home Equity Theft Prevention Act) or of practicing real estate without a license in the case of wholesaling. I've bought two properties from wholesalers, and I know what they made in each instance- the first wholesaler(I'll call him "Bob," because that was his name,) made approximately $15k on a sale of $145k for a decrepit ten unit. I've since rehabbed the property, it's fully occupied with a net cash flow of about $40k-$50k per year, and is worth $400k- my inputs were only $100k. Bob told me the closing process was so difficult, he had panic attacks and heart palpitations. The second wholesaler made $5k on a lousy, decrepit, two family house that I couldn't resist picking up for $12k. That one's worth $100k today, has decent cash flow, and I put in about $60k to make it all work. Don't try the shortcuts some people recommend, you'd be much better off building your real estate investments in a sane and rational way- in other words, get rich slowly.
Add the time and the legal issues of wholesalers/no money down deals, and in my opinion, it is easier and more lucrative to skip the no-money down investments in exchange for the low-money down investments.
If you're a first time home buyer, you may be eligible for a Fannie May or Freddie Mac loan(government loans,) which can require as little as three to five percent down. Buy a two family, for instance, with such a loan, live in one unit, rent out the other, and live there for as long as the mortgage requires- it might be a year or two- all the while saving up some cash to do it all over again. When you move out of your first property, rent the unit you've left behind. Buy another two family, rent out the second unit, and repeat the process until you're a real estate mogul.
Are their any wholesalers on BP concerned about practicing real estate without a license?
I don't really think so Will, they've already drank the kool-aid and most, being new, don't know any better, the rest probably don't care. The ones you need to watch out for are the "How To" guys, some are just dangerous. :)