Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
So... I've got this apartment building under contract. I've advertised it to the two local REIA groups we have here and I have it posted on Craigslist. I've called several people in my network to let them know. I've had some interest, but people aren't currently breaking down the door to get it. I'm realizing that this might not be as quick and easy as I initially thought.
I've told the seller it's a cash deal. I didn't volunteer the fact that I plan to assign the deal, so she thinks I'm buying it. I put March 15th as the closing date... so it might be rough to find a cash buyer who can close by then.
So my question is, what are some strategies to sting this out. She has already told me that she would like to close by the end of the month because she's going out of the country. What can I say to her so that she won't be upset. I guess I have to give her some excuses.
I was thinking about telling her that my "partner" is out of state. He hasn't seen it yet and he has to approve it. But then that will only last for so long. I don't want to lie, but then I don't want her to get upset either. I'm wondering if it would be best to be completely upfront and tell her that I'm looking for an investor to assign the deal to and explain that I have a lot of networking connections.
I'm sure others have been in this situation. What have you done?
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
12y
Andrew, if you're going to pursue wholesaling in this manner.....coming on a forum and plainly asking people what kind of lies and excuses you can give to "string along a seller" you have under a contract whom you made think you are buying their property for cash.....go ahead and give up your license now. This way you won't end up with fines and possible jail time when you do lose it.
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
Tax assessment is $301k. You can easily look that up in the tax records. Roof is 10 years old, and in good condition. Because they are smaller units (about 650 sqft each), the HVAC consists of floor board heating and AC units. They are all functional and relatively easy to fix or replace if they break. The two units that are vacant are vacant because the original owner, the one who was most involved with the property, died and left it to uninterested heirs.
But Mark, I suspect your motives are something other than any type of interest in qualifying or disqualifying the building for purchase.
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
Just got done showing the property to a couple of experienced local investors who I've worked with in the past. They're very interested but need to get financing lined up, which they're working on. I've also just sent a commission agreement to an agent who has a client who's also very interested in the property. Should hear something back from him later today or tomorrow. Not too bad considering that I've only done marketing to a limited market for a couple of days now.
I find the vast difference in feedback and opinions between my local network and colleagues and those of you who are responding here on BiggerPockets concerning the value of this property incredible! It must be that virtual world phenomenon. Kind of like how nobody can post a video on YouTube without someone out there making some kind of rude or insulting remark.I have the Director of Commercial markets at my brokerage encouraging me to increase the price and then I come on here and everyone just wants to crap all over it. I have the president of the local Tidewater Real Estate Investment Group, who's also a local HomeVestors, Great Clips, and Jackson Hewitt franchisee telling me that's it's a great price. I've yet to talk to anybody locally that hasn't told me it's a really good deal. But none of them (other than my prospects) are in a position to buy at this time. And that, I believe, is why it can take time to sell such a deal (even if it is a very good deal). Fortunately, the only price opinion that really matters is that of my local and colleagues, and even more importantly, prospective buyers.
It's not a virtual world phenomenon on one side anymore than the other. I look at pro forme for plenty of local buildings that are rose coloured as well.
It is unfortunate you feel a degree of persecution presenting your deal here. Keep in mind this is business, not personal and you are presenting to a critical crowd who are evaluating the property exclusively on the information you provide.
In the future, if you were to take the time to present the critical information on the property in your initial post, then all the cards are on the table and folks here will evaluate and either move-on with their day or follow-on with you. While enthusiasm is good, if your initial presentation is more marketing than fact and folks need to tease the information from you, you will be met with much more skepticism.
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
Well Roy, if you go back and read my initial post, you'll see that I asked for advice on a specific situation. I was not trying to market this deal to anyone nor was I asking anyone's opinion on price or value. But instead of people wanting to answer my questions, I get people who immediately want to bash the deal. Like this comment, for example, which came PRIOR to me providing ANY numbers, "Tell me about the "deal" and I'll tell you why no one is interested." WTH? Where does that come from?
I have people telling me there's no interest in it, when I DO have interest in it. Why would anyone do that? I even said in my original post that I have some people interested in it.
The intent of my original question was to do some contingency planning. Like, how am I going to handle this if it doesn't sell right away? But people want to take that question, twist it around, run with it, and immediately jump straight down the rabbit hole. Oh, if he thinks it might not sell right away then it MUST be a BAD deal, he MUST be an idiot, and we MUST put him in his place! Seriously?
You're absolutely right, this is business from my perspective, but I'm getting mostly non-business-like responses. When people disregard the original question and then provide irrelevant critical feedback that's based on assumptions rather than facts, that's neither business-like nor is it professional.
I'm new to BiggerPockets, but I'm certainly not new to real estate and this post was an extremely education experience. BiggerPockets can be an extraordinarily valuable resource, but like most other social networks, it has it's drawbacks. I will take what I've learned from this post, which sadly, is much more about the people who use this site than it is about my original question, and adjust it to use the site in a much more appropriate way.
You're absolutely right, this is business from my perspective, but I'm getting mostly non-business-like responses. When people disregard the original question and then provide irrelevant critical feedback that's based on assumptions rather than facts, that's neither business-like nor is it professional.
The biggest problem is your original question was what is the best way to lie to and deceive a seller to buy yourself more time without the seller realizing you haven't been up front or honest about your negotiations and intent to purchase the property. How is that business like or professional?
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
Well, that's actually more on subject, Patrick and EXACTLY what I was looking for advice on.
The basic premise of wholesaling is that you get a property under contract and ensure that you always have an out clause to protect you in case you can't move the property. Many could argue that that process, in and of itself, is unethical if you never have any intention of purchasing the property for yourself. There's NO need to do that, since you could simply enter into an option to buy the property. But the reason why wholesalers don't use that strategy is because they know they would lose more deals than they'd get. Wholesalers need a way to protect all of the time, effort, and cost of marketing that they put into finding this seller and finding this deal. And they do that through entering into an assignable purchase contract rather than and option to purchase.
I don't know of ANY wholesalers who use option contract, yet, that would be the MOST ethical way to do business as a wholesaler. Yet, that simply won't work.
The intent of a wholesaler is to provide a win-win-win situation. They want to put money in the seller's pocket or get them out from under a bad situation, they want to be able to offer good deals to cash buyers who don't have to the time to do all of the required marketing, and they want to put some money in their pocket at the same time. As a wholesaler, do you tell the seller every detail about the entire process? No. But I don't see that as unethical if your intention is to solve the seller's problem and you absolutely believe you can do it.
How is it any different as a real estate agent? If someone wants me to sell their property as an agent, I will tell them that I am confident that I can do it (if I didn't, I wouldn't get many listing). But I'm not being entirely honest, because there's no way for me to know that for sure. Yes, I am confident and I have to portray confidence. And of course, I will do everything within my power to get it sold. Sure, there's a chance that it might not sell. But do I focus on that? No way! Some would argue it's unethical, but I disagree.
Maybe wholesaling shouldn't exit at all. There are many who believe that, but I'm not one of them. I think they provide a valuable service to sellers who would have little to no option otherwise. Sure, it's a fine ethical line, but I look mainly at the intent and probable outcome. If they match and neither party was outwardly deceived and everyone is happy in the end, then I think it's a valuable service.
So Patrick, how do you wholesale? Do you use a purchase agreement (which by definition, is an intent to purchase) or do you use a option to purchase?
I will say that I'm afraid this is a topic that's too much like religion and politics. It can become a long, drawn out, time wasting process of splitting hairs. So forgive me if I don't engage extensively, but I have to get to work getting some more marketing out there!
So... I've got this apartment building under contract. I've advertised it to the two local REIA groups we have here and I have it posted on Craigslist. I've called several people in my network to let them know. I've had some interest, but people aren't currently breaking down the door to get it. I'm realizing that this might not be as quick and easy as I initially thought.
What have you done?
Offered the seller less or be more realistic on how much of a wholesale fee I could get out of it. If you are dragging your 'deal' all over town and nobody has written a check yet, then it isn't a deal. Regardless of what you think, you are asking too much. And as far as 10% cash on cash being a good return, it probably is for a person who doesn't really know how to invest or is buying a very expensive property. To only get 10% on a property priced below $500K, I wouldn't even consider it. I can double and even triple that on a single family house and not have 5 other tenants to deal with.
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
Thanks for the feedback Aaron. But like I've mentioned, I do currently have interest, so I think the price is pretty good. As they say, the buyers will tell you how much it's worth. And, of course, there are many different types of buyers who have many different interests and levels of sophistication. Not many deals will appeal to all buyers. I'm very confident that I don't have to go back to the seller concerning price, but I may have to go back concerning time.
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
And the reason I don't have to go back to her on price is because my price with the seller is so good that I will buy it for myself if I can't get the assignment fee out of it that I want. But even then, I have several other options to pursue. Again, time is my biggest concern right now.
So Patrick, how do you wholesale? Do you use a purchase agreement (which by definition, is an intent to purchase) or do you use a option to purchase?
I am an investor, I buy rentals and I buy properties to fix and flip. I also encounter great deals on properties that I either don't have the time or desire to keep for myself so I do "wholesale" those. For those properties I don't want to keep for myself I close on the property with my own money and put them on MLS.
If it's truly a great deal then there's no risk of me putting my own money on the line to close it vs putting $10 down on an assignable contract (as many wholesalers do). As others have said if you truly have a great deal on your hands you will have multiple investors ready to write a check to grab it...if you have to spend a month shopping for a buyer it's not a killer deal.
I don't understand why so many wholesalers feel the need to lie to the seller in order to get the deal. If you're honest and the seller is still getting the price they want then I don't see why that wouldn't work. It's not the way I would want to operate my business and it seems like it would cause an undue amount of stress to always be lying to everyone and trying to cover everything up.
Real Estate Agent · Charleston, SC · Member since 2013 · 424 posts · 99 votes
12y
You, my friend, are a fool and a liar. You give us genuine wholesalers/investors a bad name and should be ashamed not only of what you are doing, but what you have done. You have some nerve to come to BP and essentially ask us how you should go about continuing your lie to your seller. Obviously when testing for your license you skipped over the ethics section. If it were up to me you'd have your license revoked by the end of the day! That goes for your "partner" as well...ha.
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
I certainly don't disagree with you and emphatically agree that the best way to wholesale, from an ethics perspective, is to buy it outright. Unfortunately, it's a very costly and inefficient method, and in this area, at least, it's a romantic idea. The problem with it is the closing fees involved, and your not just paying those fees once, you're paying them twice, both on your purchase and on your sale. And if you put it on the MLS, take 3% right off the top (assuming your licensed yourself, otherwise it's 6%). Sometimes those fees can outright kill a deal if the seller is refusing to come down a couple of grand to cover closing costs. But if you were able to offer a little more by entering into an assignable contract, thereby avoiding those costs altogether, you may very well now be making a deal where before, there was no deal. The seller would be happy, you'd be happy, and your buyer would be happy. It may require that you not provide a detailed explanation of how the whole process works because, let's face it, it's complicated and complications scare people. Scared people don't like to sign things. And perhaps some people feel that's not ethical, BUT, you've been able to solve everyone's issues. I think you can debate about the ethics endlessly, but the outcome is for the greater good.
The other aspect you bring up is pretty obvious. If it's a good enough deal, people will buy it. And yes, that sounds very good. However, in practice, there are many elements that make it much less simple than you make it sound. There are many, many variables that go into the value of a property. Some tangible, some subjective, some obvious, some subtle. It's not difficult at all for even the most experienced wholesalers to misjudge a property's value, for the whatever reason. I have done it myself and I have personally witnessed the president of our local real estate investor's group do it. It just happens! And then there's the fact that wholesalers spend a lot of time, money, and effort trying to find a deal. Some even pay franchise fees (HomeVestors). Sometimes (whether this is right or wrong) they get desperate because, as with many businesses, they may be experiencing a cash crunch. Desperation often leads to logic-defying behavior, such as trying to market and unmarketable deal. And then, of course, unless you're an experienced and certified home inspector, it can be difficult to know exactly what a good deal is if you're unaware of some obscure issues with the house. Unless you want to pay $300 for each and every one of your potential wholesale deals, which is just not feasible. So yeah, it's easy to say, just get a good deal and people will want it, but that's not always easy to do.
Investor · Waldorf, MD · Member since 2013 · 21 posts · 3 votes
12y
Andrew,
can I get the numbers on this property? I invest in the VB area. PM me the P& L statement, and rent roll.
A good wholesaler will always close on a property they put under contract. Of course it needs to be a true wholesale deal.
So if you are putting a property under contract with the intent of wholesaling it, you either need to have the cash to buy or the financing in place just in case
1) Your buyer backs out.
2) You cant find a new buyer.
This way you are never deceiving the seller and you are performing on your part of the contract. YOU ARE BUYING the Property! I dont think sellers care what your exit strategy is as long as they sell on the terms both parties agreed to.
If I dont have the cash in place and Im doing financing, I would write the contract with a financial continginey letting me back out if the property doesnt appraise or if I cant get the financing.
Wholesale is a service, and you must treat it as such.
Wholesaling is NOT a scheme to tie up someones property, and then sell it for a quick buck.
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
Hey Jason:
I could stoop to your level of name-calling, but I'll take your age into consideration and just chalk it up to immaturity. Did you run out of YouTube videos to make fun of? Good luck finishing your schooling son.
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
Jeffrey! Ah!!! Love your post! So refreshing to have good, constructive feedback and advice with some semblance of intelligence and logic. I was beginning to thing that didn't exist on this site.
Yes, I agree that what you describe is the best process. I do intend to purchase this property if I don't find a buyer that will pay what I think is a good price. Of course, my price is better and I'm definitely willing to pay that, but my preference would be to collect the assignment fee.
As I've said, I do already have a couple of buyers looking, but no guarantees that they will pan out. So I'll send you the information. Let me know if you have any interest.
I could stoop to your level of name-calling, but I'll take your age into consideration and just chalk it up to immaturity. Did you run out of YouTube videos to make fun of? Good luck finishing your schooling son.
Age is just a number. It's a made up concept, just like this deal you are preaching. If you think it reflects maturity, intelligence, or wisdom then I am right, you are a fool. I don't need luck, thanks. I've got skill. Only wish I could say the same for you.
Virginia Beach, VA · Member since 2013 · 33 posts · 0 votes
12y
Yes, age is just a number, but it can be an extremely good and useful point of reference for one's maturity level. You may not agree now, but that's only because it doesn't currently work to your favor.
Now, I came on to this board to request advice. If anyone wants to question my integrity or ethics, that's your call and you're certainly welcome to your opinion. I'd be willing to discuss it in a mature, professional manner. But I'm not going to get into name calling and cursing. There's simply no point.
And as far as the POF, I'm not in the habit of sending such information to complete strangers, especially when they tell me that they know I'm a liar and think that they can dictate my use of this site. You guys were shooting me down from the very beginning. No matter what I say, it's wrong. Even if I send you a POF, you're just going to come back and say I Photoshopped it.
This is a obvious a battle that I can't win so I choose not to fight. Like I said, I learned a lot about this experience and will adjust how I use this site accordingly. One of the best adjustments I can make at this point is to discontinue monitoring this pointless discussion and focus on real business.
For those of you who were actually helpful (Jeffrey, Aaron, James, Barry), thank you! You're the guys that add value to sites like these and your input is greatly apprecaited!
Yes, age is just a number, but it can be an extremely good and useful point of reference for one's maturity level. You may not agree now, but that's only because it doesn't currently work to your favor.
Now, I came on to this board to request advice. If anyone wants to question my integrity or ethics, that's your call and you're certainly welcome to your opinion. I'd be willing to discuss it in a mature, professional manner. But I'm not going to get into name calling and cursing. There's simply no point.
And as far as the POF, I'm not in the habit of sending such information to complete strangers, especially when they tell me that they know I'm a liar and think that they can dictate my use of this site. You guys were shooting me down from the very beginning. No matter what I say, it's wrong. Even if I send you a POF, you're just going to come back and say I Photoshopped it.
This is a obvious a battle that I can't win so I choose not to fight. Like I said, I learned a lot about this experience and will adjust how I use this site accordingly. One of the best adjustments I can make at this point is to discontinue monitoring this pointless discussion and focus on real business.
For those of you who were actually helpful (Jeffrey, Aaron, James, Barry), thank you! You're the guys that add value to sites like these and your input is greatly apprecaited!
You're a very special kind of person. You very specifically told us your lie from the beginning, and asked which lie you should follow up with to buy yourself more time, but you are disappointed in us for calling you a liar. I call it like I see it, guy. Always have. As for the photoshop thing, I would appreciate you not putting words in my mouth.
