Minneapolis, MN 路 Member since 2016 路 1 post 路 0 votes
So i've met a real Estate broker here in MN who owns a real estate company in Woodbury, and i was told that Wholesaling in Real Estate in Minnesota is illegal and i can get finned, can trialed. I'm a Junior in college and looking to do some real estate on the side, and i thought about doing wholesaling until this news came up to me. My question is is anyone doing Wholesaling in Minnesota ?
Lender 路 White Bear Township, MN 路 Member since 2016 路 1k+ posts 路 1k+ votes
9y
I think you got bad information. I have been involved in the real estate market in MN for 14 years and I know of no law that makes wholesaling illegal. The broker is likely confusing some of the closing tactics that could be structured legally or illegally. I believe the act of wholesaling is not the issue it is how it's done that can be illegal in some cases. I recommend you do more research and look to a real estate investment club for ways to do it correctly.
China, ME 路 Member since 2014 路 3k+ posts 路 4k+ votes
7y
@Jacobus Rex There is a deluge of bad information on the web and in guru seminars. Much of it is just plain wrong and exposes their followers to all sorts of legal problems for heeding their bad advice.
Just yesterday, another BPer asked about starting up a property management business and pointed me to a website that insists that property managers need no real estate license in MA.
I spent a few minutes of searching and came up with a link to MA state law that says there are only three exception - the property owner, a salaried employee of the property owner and a hotel reservation worker. All others need a real estate license.
The link I dug up for you is the actual law in MN. No matter what a guru or a wholesaling company says, wholesalers need a license to sell real estate.
Yes, people break this law every day, and they'll get away with it right up until they don't.
I can promise you that if a relative or friend of mine got duped by an unlicensed wholesaler (which is the essence of the wholesaling business model), I and my attorney would rain down the fires of hell on them.
And in case you think that an LLC or S-corp is going to protect your personal assets from the lawsuit I'd bring, the corporate veil will not protect you against illegal activities.
@Charlie MacPherson Charlie my only point is that alot of people seem to do it here
Just because people do it doesn't mean it is correct. There is a LOT of bad tax advice on here from people who are "doing it" which is why I don't spend much time on those forums anymore.
Investor 路 Saint Paul, MN 路 Member since 2016 路 108 posts 路 83 votes
7y
I got to deal with the MN Department of Commerce on this because someone reported me for unlicensed real estate activity. It was a quick investigation that was closed within a day because I knew the law and was operating within it. They just asked me to make a few changes to my website.
Wholesaling is not illegal in Minnesota. It is not illegal to buy property at a lower price and sell it for a higher price in Minnesota. It is not illegal to assign a contract in Minnesota.
It is illegal to represent someone else in a real estate transaction or to market property that you do not have an equitable interest in. This would mean that you have an option on the property or a purchase agreement. You need a limited broker's license in either case (purchasing outright or assigning) if you conduct 10 real estate transactions within a 12 month period. It's like $120. DO NOT conduct more than 10 transactions without this license. The penalties can be quite severe.
Real Estate Agent 路 East Bethel, MN 路 Member since 2019 路 10 posts 路 4 votes
7y
This was all very helpful information. I have recently been looking into wholesaling and also live in MN. With most things you need a license so I found it strange that a wholesaler would not need a real estate license.
Looking forward to meeting a few folks and learning lots 馃枓馃枓
I see a lot of debate on this topic and I really want to get into the real estate market. However, I certainly don't want to do anything that is illegal. If it's true that wholesaling properties is illegal can just anyone else happen to have any advice on how to get started in dealing with real estate properties when you have little money and bad credit ? my family and I are barely making ends meet right now and I'm looking for any way that I can possibly get us out of this rut .
Just getting started, I am in the "education" part of my journey right now. I've heard a lot of the above is it legal or not. Your one safety net is a double close. You close on the property and then do an immediate second closing to sell the property. The catch here is that you may nee the money to purchase at the first closing. Depends on the title company some will work work with "contractual funds." (This is what I have heard- I have not done a deal like this).
Real Estate Broker 路 Minneapolis, MN 路 Member since 2011 路 5k+ posts 路 6k+ votes
6y
To clarify NO, wholesalling in MN is not illegal, not by any means, that includes doing more than 10, without a license. Yes, many agents will sing the song of "you can't do that without an agent" well how about all those FSBO's than?
Long story short, there is more than 1 way to skin a cat; how about contracting/purchasing a property in an LLC and than selling the LLC? You are in function selling the property, but by detail are selling a company that happens to own a property. There is dozens of similar examples and twists i can list but it all fits under the 1 same umbrella of a person has every leagal right to sell an equitable interest, and there are a lot of ways a person can facilitate such.
Lastly, I am not a lawyer and this is not legal advice, seek legal advice, blah blah blah disclaimer disclaimer disclaimer. Ok, that out of the way, my closing argument is I have done countless wholesales of more variations than I can recall and I am a-ok fine, I know many many others who are just the same and even a few who have hundreds and thousands of wholesales under their belt, all in MN, all without any problem other than the occasional person banging the "you can't do that" gong, well, their wrong.
It is key to knowing the laws, intimately, so just fact of uncertainty is a sign that maybe it's not a good market or strategy for a person at this time and to get a bit more knowledge first.
Now to head off the nay sayers please don't add or remove words to what I said, representing a client to facilitate their transaction is clearly acting as an agent and one must have a license, that is clear and we all know this, I am speaking specifically to wholesaling which is gaining an equitable interest in real estate and selling said equitable interest at profit. Maybe that is a key differentiator many need to recognize, wholesaling is not selling real estate, it's selling ones equitable interest.
And for any who are still feeling uncertain, feel free to send me all your MN realty deals, I am more than happy to accept those.