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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Most Popular Reply

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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  • Dallas Trufyn
    Investor · Edmonton, Alberta · Member since 2017 · 94 posts · 72 votes
    9y

    Wow, two people make quick, easy money and one of them is supposed to be wrong?? Mind boggling to me...

    When I had my bookstore and I sold books at retail, even though I paid wholesale price to buy them. This wasn't disclosed to every customer that walked through the door. I must have done something wrong? 

    6Reply
  • Shawn AckermanPro Member
    Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
    9y

    @Ramon Cuevas Congrats on generating money to feed your family!!!  Many people sit very high on their horse on BP.  And many are Dinosaurs who started investing in the 1930's LOL! You know who you are.  Continue on your path to generating wealth my friend.  Just laugh it off.  I salute you!!!!!!!

    14Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    There are lots of victims of this type of transaction. Some like to label others with names like "haters" but cannot stand the fact that there are some very valid points made. It is easier to deflect from the facts with posts like that than look at it objectively. I have met many victims of these operators and I will continue to speak out. Fortunately, FL has closed the loophole with 475.43. Now they need to address requiring disclosures so that sellers understand who is representing who. Why did the state write 475.43? Because of frauds and scammers brokering without a license. It has been and still continues to be a problem. I have reported dozens of them and will continue to do so. Most of these people are either poorly informed OR they have an entitlement mentality that they can break brokering laws (this has been taught and promoted on BP although the gurus NEVER mention state laws). The only thing the uninformed know is they can make a ton of money with no education, no license, and no money. Too bad that isn't true:)

    As to the 16K fee: if this was a 100K deal..that would make the "brokerage" fee 16%. If the price was less, the "brokerage" fee is even a higher percentage. If it was listed, I would be curious about the average listing fees in that market...and can reasonably be assured they are nowhere 16%. So, what WAS the sales price...and how did this benefit the owner versus an honest agent giving them a FMV estimate and listing it?

    0Reply
  • Ralph C.
    Real Estate investor professional · Suwanee, GA · Member since 2016 · 233 posts · 81 votes
    9y

    @andrew martin, I don't think there's any vibe of hating at all, it's really about being professional, ethical and disclosing all upfront, especially if you are a licensed real estate agent.

    But Overall, Kind of sounds like a real motivated seller ( not sure he knows what was made on Assignment fee for middle man unless it was all disclosed at closing)  and a buyer that was willing to pay the assignment fee since that's what this transaction really was, an assignment of contract. If it were a wholesale deal transaction would have been double close.

    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Michael Long

    You don't know what you are talking about. A broker can charge any fee they desire and the seller can agree or walk. Now, promoting the typical assignment garbage, the fact is sellers are NOT informed and have NO IDEA how much the person is ripping them off for. There is NO disclosure NOR transparency in these deals. Why? The seller would tell the "buyer" that is assigning to hit the road. One unlicensed broker went to far as to claim they would never "explain" what is going on to a seller because the seller would not be smart enough to understand. WHAT BS. The seller would be smart enough to tell them to hit the road and never come back. I love the way most of these frauds and scammers twist their stories trying to make the way they operate honest, a valued service, etc. Some of us can read BS from a mile away.

    0Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y

    @Jay Hinrichs

    In my opinion, since the brother who is an agent was first contact about selling the house, he is subject to an even higher standard. I tried to find whether it was from NAR or TAR(Texas Assoc of Realtors, but while surfing through my continuing education class online. the agent now needs to provide the seller with a CMA and net sheet in cases where they are contacting regarding a potential listing and then become a principal

    For the record, I have no problem with the OP making 16K.  Hopefully for all involved, it was done the right way

    2Reply
  • Asad Hashmi
    Houston, TX · Member since 2017 · 10 posts · 11 votes
    9y

    I am not a whole-seller but in my opinion if you are a home owner than you should have enough brains to know what your house is worth and what a person is offering you. I am not saying whole-sellers should take advantage of people but rather Seller Beware!

    As for an investor buying from a wholeseller, it's quite simple, either take it or leave it. If it fits in your criteria as an investor and you find out the whoeseller made a lot of money maybe you should think to yourself that I need to stay in touch with this wholeseller because obviously they are good at what they do.

    I am a sales person who works for a worldwide corporation in construction and I feel proud of myself when I can make the company high margins and in turn get paid better commission checks. I deal with a lot of competition in my field but I always educate the client on how working with me is going to be beneficial long term for their projects. I don't win them all but I'm proud of the ones I do win because I work for it.

    2Reply
  • Matthew Kelly
    College Station, TX · Member since 2016 · 8 posts · 3 votes
    9y
    Wow man, way to go!
    0Reply
  • James Green
    Wholesaler · Waldorf, MD · Member since 2015 · 459 posts · 245 votes
    9y

    @John Thedford what about the "motivated sellers" that DON'T WANT TO SELL via a realtor. I always ask the seller this question, "..why aren't you selling through a realtor?" The answers I usually get are: a)I tried; b)I did but I didn't get any showings; c)it takes to long; d)I DON'T want to.

    I know you know this but many times the homeowner doesn't have the money to put into the house to make it more "sellable" or they don't have the time they might need to sell the house, case in point a house in pre-foreclosure, or the seller is moving & needs to sell asap.

    All I'm saying it's not always about these "wholesalers" stealing the homeowners equity. You also have realtors that don't treat all of their clients as if they are million dollar houses. Most realtors aren't going to work to show & sell a 30k house (+ the house needs repairs) the way the would work to show & sell a 500k house.

    I have this statement in all of my contracts:

    ".....Seller is aware that Buyer intends on reselling the property for a PROFIT...." - this is actually how it looks in my contract, PROFIT is in bold.

    I also explain that I will be assigning the contract & I do explain what assigning is. A motivated seller doesn't care as long as they can go to closing to get out of their situation.

    5Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Greg H.

    Those are good statutes. Hey, if a seller doesn't mind paying 16% and knows what they are paying then they made an INFORMED decision. Simply playing the assignment game in FL is now over unless a licensed agent. I am pushing for more disclosure. I have had sellers come to the table with over 50K of THEIR money to sell a property to me. Were they informed? Absolutely? Did they give me a deal? Absolutely. There are always reasons people want out fast. They can list with an agent at a low price, or take a low offer. Nobody should have a problem with that IF the owner was an informed seller. Screwing grandma out of 50K or 100K doesn't fit into that mold. There are good and honest agents and lousy dishonest ones. There is one person currently attempting to get licensed while at the same time lying to a seller, dragging people through the house representing them as "inspectors", etc. I hope they DO NOT get licensed. With this level of ethics demonstrated how do you believe the public will be treated? They now are having a case opened against them by the state for unlicensed brokering. BTW---the state investigator stated the two most common groups of people victimized by the frauds and scammers playing the assignment game are THE ELDERLY and people with a poor grasp of the English language. These evidently are some of the state investigator's findings. Oregon is closing the door on unlicensed brokers as well. There will be more states amending their statutes to deal with the flood of these operators. Why do brokers and agents dislike the practice? They watch all these people skirting laws to broker real estate.

    0Reply
  • Iverem Rose
    Real Estate Agent · Brooklyn, NY · Member since 2014 · 250 posts · 60 votes
    9y

    @Ramon Cuevas

    Congrats on closing your first deal!! Hopefully it will lead to more deals for you in the future. Are you planning on strictly wholesaling or are you open to different strategies once you are able to build your capital?

    0Reply
  • Chris Purcell
    Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    9y

    Interesting convo ITT

    0Reply
  • Kenny Engel
    Mayfield Heights, OH · Member since 2016 · 20 posts · 3 votes
    9y

    I honestly don't see the problem. If he closed the contract himself, would it be any different? It was a win, win, win, and the fact that everyone came to terms and agreed that it was a fair deal doesn't seem like there's room for speculation. There shouldn't be a profit cap since it doesn't matter how much the person made, as long as the buyer and seller are happy. Sounds like semantics to me, but I guess the issue is transparency and/or full disclosure, correct? I'm new and basically just trying to learn, so correct me if I'm wrong. On the other hand, congratulations on your success!

    0Reply
  • Lesley Rodriguez
    Miami Lakes, FL · Member since 2016 · 22 posts · 7 votes
    9y
    Congrats on your first deal @Ramon Cuevas
    1Reply
  • Michael Long
    East Stroudsburg, PA · Member since 2016 · 52 posts · 41 votes
    9y

    @John Thedford

    So why you always crying about how other people handle their business? You don't know what's discussed when people are talking, you're not there. You and a few others on here swear that you are always the smartest people in the room. I wouldn't care if it was your grandma. If she wants to sell cheap and knows she has other avenues which could bring her more money and she still decides to take to quick cash that is her decision. Nobody's listening to you. We're wholesaling bro. And as long as my state allows it, I will continue too. And you're right I don't know what I'm talking about with brokers license. Cause it doesn't concern me. There's an old saying, what you eat don't make me **** brother. Good luck with all you endeavors 

    2Reply
  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    9y
    Shame on you. You were "helping them out because they don't know much about real estate" and they don't speak English well. They lived in that dilapidated trailer for a decade and you got 16k for convincing them not to go the MLS route????? In a market as hot as Round Rock???? Shameful. 6% of 65k is what they should have paid a realtor if they had asked a true "neighbor/friend" for help. Not 15% of 50k. And had full market exposure vs a sign out front, they might have gotten more from investors who never saw the place.
    2Reply
  • Kevin French
    Real Estate Investor · Weatherford, TX · Member since 2015 · 34 posts · 15 votes
    9y

    I'm confused. What part is that bothers yall? The fact that he reached out to a realtor, but ended up doing a cash wholesale?

    0Reply
  • Tim Hall
    Flipper/Rehabber · Tallahassee, FL · Member since 2014 · 463 posts · 237 votes
    9y
    Well done Ramon, good for you. When did making money in the US become such a bad thing? I gave up Facebook because of the hate spued up from the election. Seems like a bunch of mean girls have taken over this play ground and they keep moving the goal posts. Wholesaling is illegal without a license, wholesaling is illegal with a license. Who made up the term wholesaling? Assignment of contract is not illegal. That's what everyone is talking about. It's been here for decades and it's not going away. I know of no one who has got arrested for it. Show me proof or shut up. Oh and how a hard money lender can talk about ethics and morals is absolutely hilarious.
    2Reply
  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    9y
    math correction: 23% of equity of the 65k deal went to wholesaler and the rest went to the owner.
    0Reply
  • Marian Smith
    Real Estate Investor · Williamson County, TX · Member since 2011 · 1k+ posts · 961 votes
    9y
    The problem I have with the deal is that a realtor who is asked for help by a neighbor should advise him as a professional... which is MLS is full market exposure and 6% commission is the industry standard. I would have expected a neighbor to lower the commission a tad. Bbut because he was uneducated and spoke English as a second language he got taken advantage of. That is the problem I have with the deal. And the sellers were not by any means affluent. Quite the opposite judging from their cars and the state of the mobile home they sold.
    1Reply
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    9y
    Originally posted by @Kevin French:

    I'm confused. What part is that bothers yall? The fact that he reached out to a realtor, but ended up doing a cash wholesale?

     DISCLAIMER:  I have no idea whether anything improper took place in this transaction.  

    So my answer is more of an illustration as to how wholesale transactions, especially those where an agent is involved, can be predatory.  

    Keep in mind, most people are involved in a Real Estate transaction a handful of times in their entire life.  They have NO idea how the process works.  BP is a real estate investors site, the knowledge level here is 100X higher than the masses

    Wholesale deals involving agents, especially in this case where the agent was contacted initially about providing services, deserve the utmost scrutiny.  An Agency relationship was create at this point and the agent is required to provide certain services at this point. Just disclosing that they are an agent is not enough:

    -Did the agent provide a market analysis of the true market value of the property? A true picture including all the options needs to be presented by the agent

    -Why did the brother do the wholesale deal instead of his agent brother ?  Was their disclosure made that the brothers split the assignment fee ?  I think we can all agree the Agent here can have tremendous pull to steer the transaction in one way or another

    -The OP mentioned that the seller did not want to deal with a Child Support Lien and a Judgement.  Was the seller informed that any title company would help negotiate these issues at no extra cost as part of the transaction ?  I think we can see how the fear of this could lead to selling for a much lower price

    I can understand the response from many wholesalers to my concerns.  Yes I am a Broker and flip houses.  Yes, I get great deals.  However, I do not for the most part solicit private sellers.  95%+ of my purchases have been foreclosures.  Real estate is just not personal to me and I prefer it not be personal to the other party as well.  I have always had a problem offering the number that I need to buy the property at to a private seller as I tend to feel that I am taking advantage at some level.  

    5Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    Awesome.  Keep the momentum going.

    1Reply
  • Alexander Carrasco
    Real Estate Broker · Fayetteville, NC · Member since 2016 · 21 posts · 26 votes
    9y
    The only way a wholesale deal works is if your transparent the whole time. I hate hearing "does the seller know your walking away with this much?" All this is negotiated, all a wholesaler wants to do is make a win/win situation so if everybody is happy it doesn't matter what the wholesaler made. Some real estate agents get so fussy hearing about wholesalers when they should be working with them. The real estate agents that I know who work with wholesalers close 3x as many deals as the agents who don't.
    3Reply
  • Bhekizwe M.
    Bulawayo, Zimbabwe · Member since 2015 · 1k+ posts · 253 votes
    9y

    Congrats @Ramon Cuevas. way to go for the first deal

    1Reply
  • Alex W.
    Long Beach, CA · Member since 2017 · 23 posts · 6 votes
    9y
    Originally posted by @Marian Smith:

    Shame on you. You were "helping them out because they don't know much about real estate" and they don't speak English well. They lived in that dilapidated trailer for a decade and you got 16k for convincing them not to go the MLS route????? In a market as hot as Round Rock???? Shameful. 6% of 65k is what they should have paid a realtor if they had asked a true "neighbor/friend" for help. Not 15% of 50k. And had full market exposure vs a sign out front, they might have gotten more from investors who never saw the place.

    This has been a very interesting conversation. I learned something.

    0Reply
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