DO YOU MAKE THESE MISTAKES IN WHOLESALING?

13 Replies

Hey, BP!

Hope all is well. 

I'm fairly new to BP & I've been doing due diligence on how to do simultaneous closings. I've been reading through your posts & looking at your recommendations.

Here in FL there are a plethora of leads available which could be a fairly large amount of profit for an investor.

I'm a marketing consultant so with my background I could get investors a 2100% or more ROI. I'm very much interested in actually closing my first deal & I'm looking for some insight.

I've got a plethora of cash buyers at hand & an investor friendly title company.

What I'd like to know is there a specific contract that you use & do you have an example? Second, is it a necessity to use transactional funding?

I'm asking because I was previously told that no hard money lenders would be interested in loaning me the funds without actual experience.

Last but not least, if I want to use my end buyer's funds to close the transaction & the title company won't allow it would it be possible to use a RE Attorney?

Any feedback would be much obliged!

All the best!

Why do you want to do "simultaneous closings"?  If you need to use the buyer's funds, why not just do a (purchase or option) contract assignment?

I'll send you examples of purchase & assignment agreements, plus give you our 3-video Wholesale Accelerator course for free if your send me a colleague request here in BP (include your email address).

Little known secret -- Hard money lenders only lend money to people with significant cash reserves and good credit scores, and they will only loan a portion (e.g., 80%) of the transaction so you always have to have your own $$ to do hard money.

And last, if your title company is telling you you can't do something, that's a huge red flag.  Ultimately, it's their job to make sure the transaction is conducted legally.  We refer to the transaction by sides - A (seller) to B (you), then B to C (cash buyer).  A to B must occur BEFORE B to C can occur.  I believe you will find that you cannot use the funds from B to C to fund the A to B side of the transaction.

@Jeremy Cohen Unless you are in a current foreclosure or bankruptcy. Also what is considered a significant amount of cash? I require borrowers to have enough for down payment which will be about 20-25%, closing cost and at least 3-4 month reserve to make payments. I do agree with previous post if title company is saying no more than likely it's illegal. If you don't have the funds just write purchase & assignment agreements.

No need for hard money, or any money if you're wholesaling only. Put a property under contract, find a cash buyer, assign the contract to them, and let them close on the property and collect your check.

@Jeremy Cohen I know it may sound a little to simple but what @Chris Piper is telling you is the simplest way. When I first started, so many gurus made this stuff sound so complicated but your ability to establish great relationships with the buyers is what gets you past the dilemma of how much your going to make. Go establish your "fantastic five" which are your closest cash buyers who could care less about how much you are going to make because they understand the game. Be fair, give them great numbers and a great spread and plenty of room for the "uh oh" in the flip. Have a great time doing it and build a great rapport with all involved, best of luck!

@Jeremy Cohen - I very rarely assign contracts...Only if there's not enough money for any profit if I were to do a double closing. I also never use BC's funds to close the AB. 

Transactional funding isn't expensive...I think it's well worth it. So much smoother than trying to introduce a third party into your original contract, especially since now the buyer and seller will both see how much you are making in the transaction. I know a few people who have lost tens of thousands of dollars when they tried to save a couple thousand bucks in closing costs by doing an assignment...They lost the deal once the seller and buyer saw how much more they could make/save by circumventing the wholesaler. I think that's especially relevant here in South Florida - so many shady people. 

And I'm not just saying that because I happen to provide transactional funding here in South Florida...I think most local wholesalers would agree with me...

Every contract I ever get - I also cloud the title.  It keeps me in the game even of my buyer tries to go behind my back with the seller.  If my buyer goes behind my back I still make money. My rule of thumb is <10k I can almost always assign without issue. >10k It's a smarter move to double close and use transactional funding.  It's one thing to maximize your profit on every assignment, its another thing to blatently assign super tight numbers to your buyer while you make more than 5k(in general).  Remember that you are also building relationships with your buyers and you want them to buy from you again and again.  

Thanks for all the feedback thus far. 

It's been an invaluable learning experience for closing my first deal.

The biggest ordeal I have as of right now is actually knowing what the contract consists of.

I have a plethora of leads here in FL & I'm looking to connect with anyone who could possibly assist me.

I'm an interdisciplinary designer & marketing consultant & I'd be more than glad to show you how to increase your ROI through branding & increase your advertising effectiveness.

Also I am not sure if anyone noticed the links I provided specifically this post: "Hack" of 9/29/14- How to Wholesale a HUD Deal Without A Double Close

Once I have the contract how long does it actually take to close out the deal?

Can anyone provide me with specific examples from their first deal?

I would be grateful if you could share your experiences!

Cheers!

Originally posted by @Ceasar Blackman :

@Dev Horn could i get in on that offer as well ??? :)

You are referring to this offer I made above:

I'll send you examples of purchase & assignment agreements, plus give you our 3-video Wholesale Accelerator course for free if your send me a colleague request here in BP (include your email address).

Yes, I do that for all my BP colleagues, so it's an open offer.  Over 500 BP's have taken our Wholesale Accelerator course for free!  There is zero advertising or promotion in this offer, just education and sample contracts!

Originally posted by @Ceasar Blackman :

@Dev Horn could i get in on that offer as well ??? :)

You are referring to this offer I made above:

I'll send you examples of purchase & assignment agreements, plus give you our 3-video Wholesale Accelerator course for free if your send me a colleague request here in BP (include your email address).

Yes, I do that for all my BP colleagues, so it's an open offer.  Over 500 BP's have taken our Wholesale Accelerator course for free!  There is zero advertising or promotion in this offer, just education and sample contracts!

Hi @Jeremy Cohen I can say as a hard-money lender who's been in business for 25 years, we love new investors.  Just because it's your first deal, doesn't mean you can't have success from the beginning.  Just like an investor who has been doing this for years may not "win" on every deal.  If the numbers work, then any reasonable lender would want to do the deal.  And if the numbers don't work, you want a lender that will tell you this, not one that will set you up for failure, so always be alert...good luck!

Thanks a lot for the feedback, Gregory. I am an entrepreneur who is also an interdisciplinary designer & marketing consultant. Virtually every business I've ever looked at -- and I've looked at more than 10,000 -- has between $10,000 and $1 million of assets sitting on the table that they really aren't seeing. It has to do with an interesting aspect of leverage that not one in a thousand business owners, CEOs or accountants ever recognize -- and those are the intangible assets. 

That means the advertising, marketing, good will, customer relationships, distribution channels and expertise that a company possesses -- and ways they could more effectively and productively use them to their advantage. I'd love to actually speak with you further & am looking to connect with other likeminded members here on BP especially in FL.  With your permission I could show you how to grow your income, taking the elements of uncertainty and disappointment out of your plans. Let me know your thoughts. Perhaps I could help increase your already impressive momentum!