NEW SUCCESSFUL WHOLESALERS!!!

17 Replies

Anyone just start out this year in wholesaling want to share any successful deals they did in their first year? Any tips, guidance, dos and don’ts? I’m new to this and want good information. Thanks for the feedback!

Using contracts to circumvent licensing law is illegal. Brokering without a license is a 3rd degree felony although the first offense usually results in a cease and desist.
There are only TWO ways to legally "wholesale" in FL
1. own it
2. be licensed

These people were using contracts to broker..and here is what happened to them:
https://www.myfloridalicense.com/sto/unlicensedact...
https://www.myfloridalicense.com/sto/unlicensedact...

The people that are now brokering without a license have to hide in the shadows. Note the few on BP that often give NO contact info. Why is that LOL!

When you say be licensed you mean get your brokers license right?

Before you start, seek legal advice on what you can and can’t do. It’s worth it! I think there are some on BP that feel it’s their duty to police everyone without being fully educated.

Originally posted by @Brandon Phillips :

When you say be licensed you mean get your brokers license right?

 You would start with a sales agents license. After two years, you could sit for the broker exam after passing the required education. 

475.42 Violations and penalties.—

(1) VIOLATIONS.—

(a) A person may not operate as a broker or sales associate without being the holder of a valid and current active license therefor. Any person who violates this paragraph commits a felony of the third degree, punishable as provided in s. 775.082 or s. 775.083, or, if a corporation, as provided in s. 775.083.

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@John Thedford You mention that there are two ways to legally "wholesale" in FL.  And one of those ways is it own it.  In your opinion does Florida not allow double-closing.  In which the deal you sell is actually owned by you, albeit only for 5-10 minutes.  However you do go on Title prior to selling it to the end buyer.

Originally posted by @Joshua Hardy :

@John Thedford You mention that there are two ways to legally "wholesale" in FL.  And one of those ways is it own it.  In your opinion does Florida not allow double-closing.  In which the deal you sell is actually owned by you, albeit only for 5-10 minutes.  However you do go on Title prior to selling it to the end buyer.

 Yes..that is LEGAL. However, the problem is 475.43 which states that ADVERTISING properties you do not own is BROKERING. 

OCCUPATIONSChapter 475
REAL ESTATE BROKERS, SALES ASSOCIATES, SCHOOLS, AND APPRAISERS
View Entire Chapter
475.43 Presumptions.—In all criminal cases, contempt cases, and other cases filed pursuant to this chapter, if a party has sold, leased, or let real estate, the title to which was not in the party when it was offered for sale, lease, or letting, or such party has maintained an office bearing signs that real estate is for sale, lease, or rental thereat, or has advertised real estate for sale, lease, or rental, generally, or describing property, the title to which was not in such party at the time, it shall be a presumption that such party was acting or attempting to act as a real estate broker, and the burden of proof shall be upon him or her to show that he or she was not acting or attempting to act as a broker or sales associate. All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.

Then you have 475.42 which states brokering without a license is a 3rd degree felony:


475.42 Violations and penalties.—

(1) VIOLATIONS.—

(a) A person may not operate as a broker or sales associate without being the holder of a valid and current active license therefor. Any person who violates this paragraph commits a felony of the third degree, punishable as provided in s. 775.082 or s. 775.083, or, if a corporation, as provided in s. 775.083. SO---THE FRAUDS AND SCAMMERS that use contracts to broker are unlicensed broker criminals. They MUST hide their actions to avoid getting in trouble with the state.  They advertise on BP and CL--providing as little info as possible. They hide addresses believing they can get away with it (they can't). Anytime you have to worry about getting in trouble, you ARE doing something wrong:)  I have some of these idiots emailing me, arguing, etc...because they HATE the fact that I am providing FACTS---Florida statutes...which proves they are the FRAUDS AND SCAMMERS I have alleged they are. 
Everyone will operate as they wish...and some of these guys, because they were taught WRONG, are operating illegally. Others just don't care and believe they can break any law they don't agree with. There are so many GREAT ways to make RE work...I have always maintained it is easier to make sure and stay legal. Will the state come arrest someone that is brokering without a license using contracts? Odds are NO--not the first time. Once they get a cease and desist, if they continue to play games, the state very well MAY file 3rd degree felony charges. You will find some great advice on BP, some poor advice, and illegal advice, some unethical advice, etc. Check EVERYTHING before you take advice to make sure it is where you want to go. Good luck. 

@John Thedford  Thank you for for citing your sources for the Florida Statutes.  In my layman reading of 475.43 I was struck by the sentence, 

"All contracts options, or other devices not based upon a substantial consideration,... ...however, this section shall not apply to... ...to options based upon a substantial consideration" 

I wonder what the definition of substantial consideration is in the eyes of the court.  Is it possible that one could pay the seller a small non-refundable amount to put the property under contract, therefore satisfying the substantial consideration and then begin to market/advertise their equitable interest in the property?  

@Joshua Hardy

If you read it again, it states OR....so having substantial EM does not allow one to broker without a license using contracts to circumvent state law. Note the part that states 
"or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.".
That clearly states that contracts used to circumvent licensing law are VOID AND INEFFECTIVE.
Really there is no way around it if you want to act lawfully. Note the part that states "advertising" properties one does not own. These guys were using contracts to broker without a license by advertising. EMD has nothing to do with it.
https://www.myfloridalicense.com/sto/unlicensedact...

Note that part that states "title was passed"...
These are those that may NOT like the facts...but this is statute. This is why the unlicensed broker criminals (it is a criminal offense to broker without a license) HATE me educating people on this. They want to sucker in new people that don't know any better, hoping to further their illegal schemes. 

I got a call a couple weeks ago from a FRAUD AND SCAMMER that was advertising properties they do not own. They were outraged that they are now being investigated by the state for unlicensed brokering. I politely pointed out state statutes and they responded they have the "right" to do so. Wrong. They posted a nice little thread on BP calling me "unethical" and then went on to state they are being investigated. The state found the complaint "legally sufficient". One of the responses was something to the effect that if the OP is in trouble, it didn't sound like I was the one acting improperly LOL. BP deleted the thread but personally I didn't care if it was or not.
Here are SIMPLE solutions:
1. get on title
2. get licensed

If this means that much to someone go for it. I have found the best wealth, SUSTAINED income, is buy and hold. 

Note this "teacher" or "mentor"--whatever they want to call themselves, "educating" people on how to "wholesale". Note their COMPLETE LACK OF RESPONSE to my post. They want your money, but if you get in trouble, too bad. I highly doubt they would step up to the plate and defend you. On top of that, once a complaint is filed, the state is the one that makes a determination, not some "teacher".

https://www.biggerpockets.com/forums/93/topics/139480-contract?page=1#p2975023

p.s.--equitable interest is NOT title interest (ownership).

@Joshua Hardy

I am closing on a rental tomorrow. I have it under contract at about a 25% discount and it needs nothing. Great area, hot market, desirable property. I COULD legally advertise it because I am licensed. I could EASILY get a minimum 20K-probably more, by assigning it. My question is: WHY would I want to take 20K---give away 30K...and walk? That 20K is ordinary income, taxed at the highest rate. The other option, which I am taking, is ownership. I can sell it later and that profit can be deferred indefinitely by using section 1031 of the tax code. This property will put over 10K a year in my pocket after expenses. I only need to hold it two years to make what I could make assigning it. After that, look at the difference, 10K each and every year as long as I own it. The "deals" many of these "wholesalers" offer, even if licensed, are not what they claim they are. If you want to give away 30K, call me:) I am here to help!

The wealthiest and smartest investor I know owns over 600 SFR. He doesn't waste his time giving away HUGE profits.

@John Thedford I like your energy.  

It does seem as if a lot of gurus sell snake oil, and it is a shame.  "Wholesaling" I think attracts a lot of 'fly-by-night' operators who just want to get rich quick.  However, I do think there are quite a few wholesalers who do a good service to people who want to move quickly off a property, and then of course they are able to provide inventory to rehabbers and also buy-and-holders.  

Regarding strategies for building wealth, I agree with you whole-heartedly... buy and hold for sure. My plan is to enter the wholesaling game to learn more about deal flow, and increase my network.  My preference is never to actually 'sell' the property, but rather to partner with others.  I heard it said a few times on BP now, 'Your network is your net worth.'   Sharing a deal seems like a great way to make friends, and increase my network.  

Originally posted by @Joshua Hardy :

@John Thedford I like your energy.  

It does seem as if a lot of gurus sell snake oil, and it is a shame.  "Wholesaling" I think attracts a lot of 'fly-by-night' operators who just want to get rich quick.  However, I do think there are quite a few wholesalers who do a good service to people who want to move quickly off a property, and then of course they are able to provide inventory to rehabbers and also buy-and-holders.  

Regarding strategies for building wealth, I agree with you whole-heartedly... buy and hold for sure. My plan is to enter the wholesaling game to learn more about deal flow, and increase my network.  My preference is never to actually 'sell' the property, but rather to partner with others.  I heard it said a few times on BP now, 'Your network is your net worth.'   Sharing a deal seems like a great way to make friends, and increase my network.  

If you partner with people operating illegally and you get caught is great as long as you know the risk. The easy solution is to purchase the property and then resell and you don't even need a license to do that. 

@John Thedford I think you may have mis-understood what I meant about partnering.  I was  referring to partnering with the end buyers.  Instead of wholesaling the deal, partnering up and becoming a part owner.

@Brandon Phillips it seems that in Florida they are very much against the typical wholesaling model.  Perhaps instead of advertising the deals, which seems from my layman perspective to be against the law in Florida, to partner with a cash buyer.  If you can find a cash buyer who you trust and trusts you, then you may be able to not actually wholesale as is typically thought of, but rather be paid a 'finder's fee'.  Or you may have to try a different market, one that is more conducive to wholesaling, or get your license.  Whatever action you take, don't give up.  Continue to move forward!

Originally posted by @Joshua Hardy :

@John Thedford I think you may have mis-understood what I meant about partnering.  I was  referring to partnering with the end buyers.  Instead of wholesaling the deal, partnering up and becoming a part owner.

 OPM can make you rich.

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