Wholesaling in Texas?

Question

Howdy!

Currently trying to get into wholesaling and have the basics down. There's a couple of edge cases I need help with though (i.e. A good assignment contract specifically for Texas laws, what to ask for in a contract from the seller's agent if doing Direct-To-Agent wholesaling, what specific Texas laws do I have to watch out for).

Does anyone know of anyone offering mentorship (that isn't a genuine scam/*guru*) or a place to find other wholesalers in Texas (preferably San Antonio). I've already tried my local REIA, but everyone is either a full-time investor or wanting to do get into wholesaling... there's no middle ground lol.

Justin Vogelgesang · Answer

Hi @Jacob Quintero, I think you landed in a great place to be asking for advice. Read through as many forums here and soak up as much knowledge as possible. I came into this industry after pursuing other careers that didn't provide all I had hoped for, and if I had to pass on a few pointers to others coming in, this would be it:

1) Invest in yourself primarily and get a real estate license. Texas is a non-disclosure state with regard to property sales, so not all sale prices will be available to non-licensed individuals. Third party websites that non-licensed wholesalers use to run comps, will not have the most accurate data as a result of this. Many wholesalers (especially beginners) will find difficulty here in determining a true ARV for a deal, that more experienced/licensed individuals will not see eye to eye with. Dropped contracts happen here, lower conversion ratios, last-minute renegotiations, and it will make this already competitive industry, far more challenging. Also, if you're planning to do deals with agents (which you definitely should) it will help to come from the same playing field, so you know as much or more than who you're negotiating with. Licensing courses aren't very expensive, and they will provide you with the knowledge to complete contracts, correctly value properties, and ensure that you stay between the legal lines along the way.

2) Get familiar with rehab numbers and what margins investors are purchasing at in your operating area. Be mindful of specific locations, level of distress, current market conditions, etc. as they will be key factors in a buyer's decision to purchase and calculate their desired ROI. Be one step ahead of your targeted investor audience, by seeing all of the rehab that needs to be completed and a close estimate cost to get it done. Now you have a deal that investors want and not one that you're trying to shove down anyone's throats per se. If you know any contractors, I'm sure they'd be happy to share a bit of free knowledge.

3) It seems like you may already know this one but be cautious with the self-proclaimed gurus.  I'm sure there are good ones out there, but those who have stepped back from real estate investing and simply just profit from pricey courses nowadays, are showing you exactly how they make their money now and that's not the ideal place to learn from. Learn from fellow investor-friendly agents and the real estate investors who are friendly along the way. You'll end up in front of the right people eventually.

4) Keep going to those meet-ups and be a regular face there, not another "here one week and gone the next". More experienced individuals will begin to open up as they see this, and those networking events may begin to have a different turnout for you. I'm in the DFW area, so this one is a bit speculation as I'm not familiar with your local REIs*

Hopping off my soapbox now! Feel free to reach out if you need any advice or questions answered. Welcome to the show!

Juan Cristales · Answer

Use the TREC. It gives you legitimacy, especially when starting out. (Not legal advice) Contracts are assignable in Texas unless they explicitly say that it cannot be assigned (happens in commercial more often than people think).

You're looking for two types of property:

1. Physical distress: pretty obvious these are busted houses

2. Financial distress: late on mortgage, behind several months, back taxes, etc.

You are a problem solver for these situations.

Whatever method you use to find these people, stick to it, stick to the same method for at LEAST 6 months. It's doable. It's not easy. Practice your pitch. You'll get tired of your pitch before people do. It's the price to pay to get started my friend.

Let me know if you have any other questions.

Jacob Quintero · Answer

@Bo Smith Currently having trouble finding deals. I know it's a numbers game but some of the places I'm seeing seem to need too much rehab vs what they're asking for it to be close to even considering it a deal.

I'm not too concerned about finding a buyer as long as I run my numbers correctly and have the 7 day option period to cancel the contract without issue.

I'll be sure to let the agent know beforehand that there's a chance I'd need to renegotiate the contract during that period if my investors notice something I didn't see before.

Bo Smith · Answer

Texas is tricky with the attorney review periods and earnest money rules. One thing that saved me early on - always have your end buyer lined up BEFORE you go under contract. Don't rely on finding them during your option period. Also for direct-to-agent deals, make sure you're crystal clear about your assignment fee upfront so there's no surprises at closing. What's your biggest challenge right now - finding deals or finding buyers?

Kerry Baird · Answer

You will also get agents telling you it cannot be done, so prepare for that.  My best advice is to get financing lined up so you can buy all cash quickly and sell on again.  My next suggestion is to ask at a local title company.  They can do all kinds of closings and have the documents, or can prepare them.  Find an investor friendly title agency.

Wholesaling in Texas?

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