When Lenders become a headache

Question

Well I am doing virtual wholesaling for properties in Detroit, Michigan and I have managed to get access to a decent deal but now the owner of the house is looking for an initial deposit to confirm that I will certainly not waste his time as I look for a cash buyer. I reached out to lenders for help, all of them have complex processes that are not possible for me on this side. If there is any lender who just trusts that the money will be returned, reach out. If you are an investor loving risks, reach out we discuss the next steps.

James Wise · Answer

If you need a lender for an earnest money deposit it's clear that you will be doing nothing but wasting the seller's time.

Stuart Udis · Answer

If you care to understand the reach and influence of social media guru types, look no further than this post. A few years ago someone would have never thought lenders were the issue when they struggled to borrow unsecured  funds to satisfy a wholesale EMD. It's a fascinating world of real estate transactional participants we now live in....

James Wise · Answer

I don't even know where to begin. The phrase "you don't know what you don't know" seems applicable here.

Side note, the business you are trying to engage in, is actually illegally brokering real estate. Should you ever succeed in closing one of these transactions you will open yourself up to government fines for brokering real estate without a license. Something I recommend you look into.

Corby Goade · Answer

The lenders are't the issue here- you're asking people to take all of the risk on the transaction when you have none, no skin in the game. Why would anyone do that?

If you are confident you have a good deal and can help the seller, put up your own EMD.

Drew Sygit · Answer

@Jason Nderitu we are all assuming that you are looking to borrower the Earnest Money Deposit (EMD) , that the seller is requiring from you to put their property under contract with you.

This will effectively remove it from the market and if you do NOT sell their property, they are out "time on the market" - during the best time of the year to sell.

Typically, EMD is about 3-5% of the contract prive, but as already pointed out, many wholesalers get properties under contract for $0 EMD or less than $100.

No mortgage lender is going to lend you the EMD.

Your best options are to find a partner, cash advance a credit card or take out a personal loan.

If you do not qualify for any of that, it implies you are either a bad credit risk or you don't think you should put any of YOUR money at risk.

So then, why would anyone lend you a penny?

James McGovern · Answer

A wholesaler who doesn't have enough of their own money to make a deposit should quit immediately

James Wise · Answer

Agree. Ain't nothing wrong with working 2 jobs and driving Uber while you save up enough money to do your 1st deal.

Chris Seveney · Answer

I recommend you just wholesale the deal the way it is and reach out to people and say i hvae this deal and hope they pay you a fee. No different than you asking them for money for a potential deal.

Jason Nderitu · Answer

Your point makes sense. I will put in the EMD

Jason Nderitu · Answer

Thank you very much for this. I will surely keep it in mind

When Lenders become a headache

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