Hey fellow BP Members,
I have a long-term goal of investing in rental properties, however in the short-term to build cash quicker I want to dive into wholesaling. I've been reading and listening to Wholesaling Inc., other wholesalers, and I believe in myself to pull it off. I have joined the Houston REIA and the recently formed BP Houston Group - H.I.T (thanks to @Matthew Gullo ) where I already met many great people that are like-minded, and willing to work with one another to see each other grow in their investing journey. With all that being said, there are still questions I have regarding wholesaling that I can't seem to get answered. I always hear to just go for it, but I also want to make sure I am not getting myself into trouble. So here are the questions I still have unanswered that I need help with:
1. How do you get a Repairs estimate if you have no idea how to calculate? I want to be fair and forthcoming with the numbers with all parties involved and not give wholesaling a bad rep.
2. How can you have a "sell price" for the seller when they first call you without knowing the specifics? I hear and read how people just give them a number on their first conversation with the seller and am confused on how that happens without "knowing your numbers"?
3. What type of purchase and sell agreement should I use? I hear TREC forms are the best to use, but am not sure which one to use, and don't want to use if I don't understand the language.
4. If I tell a seller I will get the deal done in 30 days, but then end up for whatever reason going over that period, what happens then? Am I binded by the contract to buy the house myself?
5. I read that the law changed recently in Texas to where you must disclose that you are wholesaling and will make a profit off the deal. How can you go about disclosing this with a seller? Just be completely honest with them upfront?
Example: "Hey Mr. Seller, I want to make this an easy and quick transition for you and since I am legally obligated to tell you, it's likely for this transaction I will not be "purchasing" the house myself, but will be assigning the contract to a buyer for a fee by using the clause "And/Or" in the purchase agreement. In the end, I will get this house off your hands and everyone wins. How do you feel about this Mr. Seller?"
6. Does the seller end up meeting the actual end buyer at closing since they have to receive there check from the end buyer? I don't know how this doesn't seem awkward without disclosing the above beforehand.
@Charisma Dixon - wanted to add you on this as well to learn along!
1. You can search the forum and other places for an idea of what each repair item costs, or buy books on the subject, search the forum for suggestions
2. Many people ask me for a range before meeting at property - you need to know common costs for #1 above and what area their house is in to give them a rough range. You can tell them you'll look up the area and call them back, or come look at the property to get a better idea of work needed and give an actual offer. There is a lot of research involved beforehand if you want to know what you're doing
3. I use the TREC forms - it is legal in our state - google trec forms and the one to four family residential is likely what you'll need
4. Depends on the contract, but this is why it's important to be upfront with the seller, unless you want to promise you'll buy and then disappear if you can't find a buyer - that makes everyone look bad because the next person that finds them and says "I want to buy your house!" what do they think of
5. Not specific to your question but for wholesaling in general, many opinions on this. Seems to me most that are pro wholesaling seem to be wholesaling or planning to....
6. They wouldn't necessarily meet but if you do an assignment I believe the closing documents will show that amount unless you double close
Hey @Jordan Petty ,
1-That's a tough one, it will likely come with experience. To learn, you could go shadow another wholesaler to try and learn. You could also make friends with contractors.
2-Don't make an offer on the phone, try to get an appointment to see the house and meet the seller. You need to meet the seller to build rapport.
3-Trec is fine, some people use a two pager contract as it looks less threatening than the long Trec contract. Some people have both and offer the option to the seller.
4-Your reputation is on the line, if you say you will close by a certain date and you do not, well you're giving a bad rep to all investors and that's why wholesalers have such a bad reputation in general.
5-You cannot say that you are buying their house, you are just putting it under contract and assigning the contract to another investor for a fee.
6-You can arrange the closing so that the seller and the buyer come at different times, your title company will help arrange that. Another way is to do a double close which are less common I believe.
Hope this helps!
I would like to know more about the BP houston group HIT, do you guys meet every so often? I would be interested.
Great questions. I will use a one page contract I came across. I will tell them I can not give an accurate estimate until I come out. I do not have experience in rehab costs so I will get the help of others( The couple at the meeting with the Atlantis Construction company offered to help me w/ this) I even thought of shadowing some contractors for a few days to learn. I want to be as accurate as possible as well. So far as disclosing that I'm a wholesaler to the seller in the beginning I'm not going to do because I think it will unnecessarily complicate things. If they are truly a "motivated seller" they mainly care about getting a check that they are happy with. At closing it will come out but from others testimony ppl hardly ever have a problem. I want to strive at having a good reputation to give accurate estimates to ensure great deals to my buyers and find a comfortable payment for sellers to get rid of a property they do not want. To avoid not selling a home in 30days I'm only taking on homes I know i can give a great deal on. The contract will state it isn't binding until an accurate inspection of the property is done. I need to research the law about this so I can read the specifics on disclosing to sellers upfront that you are a wholesaler.
Thanks for going through and explaining. Yeah this meeting just started up with it's first meeting this past Wednesday night. Supposedly it will be twice a month, but with possibly once a month depending on how things go.
#4: CONGRATULATIONS YOU ARE BUYING A HOUSE--unless you want to operate dishonestly like so many FRAUDS AND SCAMMERS DO.
This is NOT investing. It is marketing, slight of hand, and borderline illegal. That doesn't take FRAUD BY INDUCEMENT into account. Investors put in CAPITAL. No--not the $20 (they borrowed that) EMD kind...but REAL investors with $500 suits AND underwear.
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