Hi everyone, hope your holiday went great. I am just starting out in wholesaling, I have a partner in another area of the state, so we will be working two areas in Northern California to find properties. I also have another partner so to speak, who will be doing the negotiating for me on the buying and selling of my properties for a 20% fee. My question, is related to articles I've read on wholesaling where it is recommended that after I contract the property, then open title on it. I would prefer not to be on title or involved with this process for obvious reasons. How can I set up my business to keep things as simple as possible and yet not get burned in the process? Is doing property inspections, title searches and repair estimates a necessity for me as a wholesaler? I appreciate your advice and suggestions ahead of time. Thank you very much. -Timo :violin:
By opening title, you won't necessarily be on the title. Opening title merely means that the title company will begin to search the title to make sure it is clear and can be legally transferred. This process is completely necessary in order to sell any property. It must be proved that the title is clear and normally insured that it is clear or any buyer is not going to want to purchase it. Imagine paying a $100,000 for a house only to find out that the person you bought it from wasn't really the legal owner.
Now property inspections and repair estimates are a service that some wholesalers provide to their clients. I personally don't get property inspections, but I also have extensive experience in construction, maintenance, and rehabbing. You need to know what's wrong with the property, that or get it at such a ridiculous price that it doesn't matter what's wrong with it. :D I've seen wholesalers that will rely on experienced rehabbers insight when the rehabber looks at the property to buy it, but its good to find out the most about the property before you put it under contract. It might be worth 50K under normal pretenses but you didn't know it needed a new gas line and that the sewer line is collapsed. That just knocked another 4 or 5K if not more off of its value.
I always like to give my investor buyers the most information I can. I want them to feel like they got a good deal and that there weren't any surprises. I do this by getting and giving the most information I can about the property. I normally factor and communicate the ARV, my repair estimates and what they include, and the possible rent. Now some buyers think they have it all figured out and don't care what I think and that's fine. Just as long as they close. The more experienced investors will ask me what my numbers are on it. I have one investor that doesn't even do his own numbers on the property. He trusts my numbers that much. He's bought probably 10 houses from us this year.
I am also wondering, if you are not figuring repair estimates on the property when you are looking at the deal, then how do you know if its a good deal or not?