Made $16k in my first Wholesale Deal

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Made $16k in my first Wholesale Deal

Ramon Cuevas
Liberty Hill, TX · Member since 2016 · 85 posts · 96 votes

Hello BP,

Today I closed on my first wholesale deal and wanted to share the experience with you guys and also hope to encourage others who are getting started to continue their journey and not give up!!!

The Deal: My brother-in law is a realtor and recently sold his house via owner finance. The next door neighbors had asked him to help them do the same thing with their property but instead him and I got the property under contract and sold it cash for $16k more than the contract sales price. We split the assignment fee.

There are some many people who I would like to thank but unfortunately cannot tag anybody lol,

@SeanTerry, @JoeMcCall, @MichaelQuarles, @matttheriault, @benleybovich and of course Josh and Brandon Turner. You guys have all inspired me to do what I do and keep going every day.

My advice to all the newbies out there is to educate yourself, listen to podcasts, attend your local REIA and meetups, find a mentor and last but not least, talk to everyone you meet and tell them what you do because you never know where that first deal may come from.

23Reply
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Pratik P.
Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes
9y

@John Thedford There's no need to comment negatively on every single post related to assignments.

If he had double-closed on it the same day for a 16k profit, would it still be taking someone's equity? Do you know the property's condition and what the seller's motivation was? Ramon and his partner did this deal as investors and not agents, so yes they can split the profit. It's not a commission split.

22Reply
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  • Scott Harper
    Investor · Longwood, FL · Member since 2015 · 221 posts · 130 votes
    9y

    Did they offer the owner finance to your buyer?You said that they asked you to help them do the same

    1Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    So the owner had no clue you guys took 16K of his equity? Is it legal for a licensee to pay a non-licensee in Tx?

    3Reply
  • Pratik P.
    Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes
    9y

    @John Thedford There's no need to comment negatively on every single post related to assignments.

    If he had double-closed on it the same day for a 16k profit, would it still be taking someone's equity? Do you know the property's condition and what the seller's motivation was? Ramon and his partner did this deal as investors and not agents, so yes they can split the profit. It's not a commission split.

    22Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    Being a Realtor, hopefully your brother made all of the necessary disclosures

    7Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    If an agent lists a property the seller knows what he is paying for the services. Transactions like this are not transparent and this is why lots of agents are now playing these games. OP never did respond if the seller knew they gave away 16K. I wonder why. Posts like this glorify underhanded tactics to steal equity and also promote unlicensed brokering by the masses.

    2Reply
  • Ramon Cuevas
    OP
    Liberty Hill, TX · Member since 2016 · 85 posts · 96 votes
    9y

    @Scott Harper The owner finance was an available option to the buyer but he was able to pay cash.

    @Pratik P. Thank you for your post. The property was a mobile home in need of extensive repairs. The seller was not in a position to make repairs to the home and had already purchased another mobile home on some acreage. The ARV was probably around $110k, seller was happy to get rid of the property without having to do any repairs or trying to figure out how to deal with a child support lien and abstract of judgment that came up during the title search. Buyer was all in for about 70% of ARV minus repairs. In my opinion a win win for everyone @John Thedford Seller was aware that we were going to sell the property for more. I am curious about what Hard Money goes for these days? 2.5 points and maybe 10-11%? Do you educate your clients on the benefits of getting a loan at a bank or borrowing private money from friends or family versus borrowing hard money? I am pretty sure you don't and the reason why some people would borrow money from you is because they are not in a position to get traditional financing. You are not forcing them to get a loan from you right? The same way a wholesaler is able to buy a property from a motivated seller and sell it for a profit.

    25Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    @Ramon Cuevas

    No doubt you are tired of people questioning your deal.  However, the more information you give, the more concerns arise

    You can't just sell without addressing the child support lien and the judgement.  The judgement might not attach if this was his homestead.  The child support lien does not just go away and could cloud the title of the investor that purchased it.  How was the CS lien dealt with ?  Was an SOL filed for the mobile home ?

    0Reply
  • Ramon Cuevas
    OP
    Liberty Hill, TX · Member since 2016 · 85 posts · 96 votes
    9y

    @Greg H. Thank you for your post. I had seller contact child support and request a payoff. There was not a balance owed but we needed to get releases filed with the county which the title company(Austin Title) was able to get done for us. We also obtained a payoff from the District Clerk in Round Rock in regards to the AJ and paid it off at closing. I am not aware if an SOL was filed for the mobile home but I think if one was needed, it should have been the responsibility of the title company to make us aware of the fact. I can ask.

    2Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Ramon Cuevas

    Actually I charge more than what you stated:)
    You can find lots of posts by me telling people HML is EXPENSIVE and not meant to be a long term proposition. I have some VERY savvy investors that routinely borrow from me. They know EXACTLY what it costs..they are willing to pay my rates...and everything is in the contract. I have had other potential borrowers choose not to take my funds and that is fine. It is no different than me shopping for something and making a decision based on price/perceived value. Now, how many unlicensed brokers or even licensed agents disclose how much equity they are ripping from the seller. As I said in my previous post...if it was a listing the seller would be able to determine what they are paying. In your case, did you inform the seller of the assignment fee?

    0Reply
  • Ramon Cuevas
    OP
    Liberty Hill, TX · Member since 2016 · 85 posts · 96 votes
    9y

    @John Thedford I had seller sign my assignment of contract and also provided them with a copy of the closing statement at the title company. As @Pratik P. mentioned I could have double closed the deal and kept everything from both buyer and seller. I understand this is a hot topic here on BP and I respect your opinion. It is not illegal to wholesale properties here in Texas. The seller had the option to list the property with an agent or sell it themselves but they chose not to do it. At the end of the day, seller is happy, buyer got a pretty good deal and I have no regrets :)

    8Reply
  • Pratik P.
    Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes
    9y

    @John Thedford

    We definitely hear the points you make and understand that your intentions are good (to protect sellers). People like me will say that there is a right way and wrong way to wholesale or anything else for that matter. But that's the part you disagree on, you think wholesaling in any form is wrong. Which is fine, that's your opinion.

    But there's a point where you have to ask yourself "Is it really worth my time to bash on every post about wholesaling?" Do you think because of your comments here, Ramon is going to give the seller a check for 16k and say "sorry, here's your equity"?

    9Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Pratik P.

    No I know that won't happen. My point is if the seller is informed and knows what it is costing them that is good honest open business. I make offers on properties below FMV but the seller is always informed of FMV. If they want a quick out, I can do that. If they want FMV I could list it or it might already be listed. If already listed, the seller should have some idea of FMV. Like it or not, there is a lot of dishonest practices by unlicensed brokers. There is plenty more to go around by dishonest agents. Personally, I don't care for either.

    5Reply
  • Doug Woodville
    El Cerrito, CA · Member since 2015 · 257 posts · 129 votes
    9y

    @Jim Kent Why would it matter what he made? If you're getting it for a price that works with the numbers you crunched then great. If not, then don't buy it?

    14Reply
  • Scott Harper
    Investor · Longwood, FL · Member since 2015 · 221 posts · 130 votes
    9y

    Ramon, it sounds like verybody was happy. 16 k seems fine. You said your buyer bought at 70 percent of ARV. Your seller got what he wanted and your buyer did too. When, I first read the post, I wondered about the ethics of your brother in law not listing it. I thought, if they contacted him as an agent , that would be a little tricky. However, if everybody disclosed their intentions it seems like a great deal for everybody. Good thoughts from everyone.

    4Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Jim Kent

    IMO agents should be wholesaling if certain disclosures were made. Some of my suggestions include statements such as:
    1. agent is representing themselves with a profit motive
    2. agent may attempt to assign the contract for a fee
    3. seller is aware of market value or has waived their opportunity to research its value.
    This way a seller would understand that even though they called an agent for help, that agents motive is money for the agent and not the seller. All these unlicensed brokers make BS claims about transparency, etc but that could not be farther from the truth. These sellers probably have no idea what was taken. Add that with the claims that the buyer got a "deal" and one would wonder how much the seller truly lost. 

    0Reply
  • Andrew Martin
    Fort Walton Beach, FL · Member since 2017 · 38 posts · 28 votes
    9y
    Woww lol I never realized there were so many haters in this community. I don't see any reason at all why the buyer would be upset with what you made, of anything maybe impressed. The buyer, I'm sure, sat down and ran the numbers and made a conscious decision that this deal fit the criteria required for him to invest in it. The seller was obviously motivated enough to just want out from under this property and did not care to go through the whole process of reaching out to a realtor and listing it. Ramon, good job and thanks for sharing I found this story as a great motivational piece! I hope someday I can say that I made 16 on a wholesale deal.
    14Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y
    Originally posted by @Andrew Martin:
    Woww lol I never realized there were so many haters in this community. I don't see any reason at all why the buyer would be upset with what you made, of anything maybe impressed. The buyer, I'm sure, sat down and ran the numbers and made a conscious decision that this deal fit the criteria required for him to invest in it. The seller was obviously motivated enough to just want out from under this property and did not care to go through the whole process of reaching out to a realtor and listing it. Ramon, good job and thanks for sharing I found this story as a great motivational piece! I hope someday I can say that I made 16 on a wholesale deal.

    Most including myself are asking legitimate questions regarding the information that was provided in the original post. That is in no way "hating". Obviously, you did not read the entire thread as the seller did reach out to a Realtor who became a Principal in the transaction. That requires additional disclosures are requirements from NAR, TAR as well as the Texas Real Estate Commission

    3Reply
  • Dimitri Lopez
    Austin, TX · Member since 2017 · 30 posts · 26 votes
    9y

    If I ever do a wholesale deal good luck finding out about it BP, Haha! Is rough in here to wholesalers. I honestly don't see anything wrong with what they are doing. If you are angry at them then I guess you also hate sales persons, they buy low and sale high all the time, sometimes they only hold a product before they sale it to you for a profit. The American way! I love it. It is definitely better than the Cuban, dictatorship way.

    8Reply
  • Andrew Martin
    Fort Walton Beach, FL · Member since 2017 · 38 posts · 28 votes
    9y
    @greg h. I understand the issue of the seller reaching out to a realtor as being somewhat questionable. What I am referring to as 'haters' are all the people who are attacking the OP for coming out ahead in this transaction 16k and almost seems they are also attacking wholesalers everywhere as ripping sellers off by getting a piece of the pie. I completely understand what you're saying and I'm not necessarily going after you. it's the people who feel they are mightier than the rest and try to put down wholesaling as a means of income that has me interested in putting my two cents in.
    2Reply
  • Lauren Lockett
    Investor · Arlington, TX · Member since 2015 · 200 posts · 61 votes
    9y

    Congrats @Ramon Cuevas! Thanks for sharing your story and success with us! Can't wait to hear more! 

    3Reply
  • Erika A.
    North Shore , MA · Member since 2016 · 26 posts · 7 votes
    9y

    @Ramon Cuevas thanks for sharing! I hope to one day get a great deal like this one!

    3Reply
  • Michael Long
    East Stroudsburg, PA · Member since 2016 · 52 posts · 41 votes
    9y

    Congratulations. The hate is crazy. I wouldn't care if I made 100k. If the seller wants to sell it at this price. And the buyer wants to buy it at that price, why does it matter what I make. The seller always knows they have the option to list with an agent. I always tell the seller that they should check with a realtor or get an appraisal. If they choose to still go with my cash offer am I wrong? As far as the buyer is concerned, this is the price I am offering. If you want it cool, if you don't that's fine as well. At no point is a gun held to anyone's head and forced them into a deal. There are so many saints on BP. So is it cool to buy a property and force a tenant to move out and disrupt there life? Where's the concern for that. Realtors and brokers hate because we can make those big spreads off negotiations. Where they are capped. They are the only ones I see bashing wholesaling. I can lead a horse to the water but it's not my job to make em drink

    15Reply
  • Pratik P.
    Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes
    9y

    @Jim Kent

    I think you're missing the value of wholesaling. If the person never found the deal and brought it to you in the first place, you would have 0% of that deal. My market is smoking hot. So when I find a deal, I'm going to try to sell it for a good profit. I recently sold one and made a 32k profit. The investor I sold it to didn't care one bit because he turned around and sold it for almost 40k with barely any work. If he was so worried about what I was making, he would not have that 40k profit. I don't know why there's this underlying tone that wholesalers are supposed to make less than the flipper. What you make depends 100% on your skills. If I wanted to get paid a "customary" wholesaler fee, I would go back to working my W2. No one likes to be told how much their time and effort is worth. 

    14Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Andrew Martin  as an aside  for an agent to not disclose they are a principal in a transaction is a very serious offense.. so they don't want to be doing that.

    I have been buying distressed assets as a broker since 1975.. one simple line in the contract is all you need.

    " Buyer is a Licensed real estate broker in the state of _______________and is buying the property as a principal and for profit or loss"...

    this has served me well over the years.. NEVER once had an issue.. although to be fair I close on everything I aim at.. do something with it then resell..

    Only exception is raw land when I run a plat through entitlements and flip to lennar or Horton.. but those deals I usually have 60 to 120k of my own risk money up in the way of engineering permits etc.. getting the property into a position DR or Lennar will close.

    And I always have the powder avalaible to close if they back out.. You don't close their land AcK guy could come right behind you and buy the property in a heartbeat.

    Just like with wholesalers if they bring me a property that does not work but I like it.. I simply make a back up offer to the owner.. IE>. I send the owner a contract with my price and let them know if for some reason the current contract does not close I am here to buy it.. I get a few that way every year.. I call it reverse wholesaling ..

    @Doug Woodville  I what you saying what do you care.. and for sure like when I am building new construction.. the buyer really does not know if I am making 200k on a home or I have to write a 20k check to get it off my books... nor do they care.

    But in the wholesaling environment its a tad different.. wholesalers is not vested like a builder they only have small EM up and a contract.. other than their time. 

    and for sure If I see  a huge spread in a deal for a wholesaler I won't close.. I feel the seller should share in that .. not rip the sellers equity.. mainly because I see grandma and grandpa or your mom or dad as the seller and would you want them treated that way.. there is a reasonable wholesale fee and their is gouging.. NOw if a wholesaler has some fat deal. I strongly suggest they close on it.. then at that point they put real skin in the game and are free to market it for whatever they want.

    I have hit a few dousies in my time.. LOL... but I owned them .. Especially buying timber land or land that I got the zoning changed on.. talking 500 to 2 million dollar profits when they go the right way.

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    4Reply
  • Larmon Cummings Jr
    Flipper/Rehabber · Chicago, IL · Member since 2013 · 319 posts · 153 votes
    9y

    @Ramon Cuevas

    From what I've read from your original post and your comments, it seems as if you and your brother in-law provided an adequate amount of disclosures and you made a great profit on the deal--thats great to hear!! With that being said, I don't know the specifics of the deal, nor do the people who have commented on this post, so we can all only go off what you have stated, and like I said, it appears you all approached this deal in the correct manner. Now for all of the negative comments made on the post such as "you made too much money", "you stole equity from the seller", etc etc, I personally wouldn't even pay much attention to any of them. It just amazes me how people troll any post mentioning not only the topic of wholesaling, but Lord forbid you have any type of successful story to share, then you just get folks from everywhere ready to tear you down. As a wholesaler, licensed agent in IL, and also a rehabber myself, as long as you follow the appropriate guidelines and legal requirements in your state, who has the right to determine how much you make on a deal? Thats insane. Its like me taking on the risk of buying a distressed property, rehabbing it and dealing with all of the mess that comes along with doing this, and selling it to a retail buyer and making a profit, then having the retail buyer come back dictating to me how much they "felt" I should have made--the thought is ridiculous. Even on wholesale deals that I do, my buyers that I have a relationship with can careless how much I make on any deal, same as I can careless how much they make when they do whatever they decide to do with the property--I was always taught to never count whats in another man's pocket; its just none of your business. As long as everyone walks away from the closing table with a smile on their face and satisfied, then that should be the only thing that matters. Keep sharing your successes and just know that it will inspire someone, somewhere, and I hope you keep crushing it and building your business into something great. Great job and keep up the good work champ. Stay blessed

    7Reply
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