Property under contract and tenant won’t allow showing
Rental Property Investor · St Augustine, FL · Member since 2019 · 74 posts · 47 votes
Property under contract and tenant won’t allow showing
Most Popular Reply
Alex KhanPro Member
Specialist · Southeast Michigan · Member since 2015 · 300 posts · 244 votesThe only option you have is to Partner up with Mister Thedford for a 19.99% hard money loan to whole-tail the property or else you’re committing a felony and going to jail pal.
134 Replies
- Wholesaler · Atlanta · Member since 2020 · 3 posts · 2 votes6y
@Jacob Kline it’s crazy how stubborn people can be. I’d say definitely contact the owner and let them know the situation as I’m sure they’ll contact their daughter. Especially with it soon about to be foreclosed, she can’t stay there too long. I hope she budges and you get this deal but I’d definitely say please don’t let this be the only egg in your basket right now. Good luck
- Rental Property Investor · Western NC · Member since 2019 · 41 posts · 41 votes6y
While the responses are entertaining, I think the bigger picture here is someone ambitious tried to pull the trigger a bit too early. After realizing he was over his head he naturally tried to capitalize on his efforts. Last I heard, mistakes are great lessons.
- 6yMike HayesPro MemberInvestor · Member since 2019 · 18 posts · 39 votes
@Jacob Kline So, to give more proactive advice...I don’t have enough experience to give you advice. But, what I have seen seasoned wholesalers do in this situation is pay the person who is not cooperating for their troubles. If there’s enough in the assignment, I think it’s worth considering. Usually people in these circumstances really need money, and their cooperation can be bought cheaply. Offer to and include in your agreement with the buyer that they will not kick them out immediately, and pay the daughter to let you show it. It’s worth $300-500 to get the deal done.
And, would post your question on wholesaling houses elite, Max Maxwells Facebook group, to get some real advice from people who live and breath wholesaling and won’t threaten you and try to tear you down.
Hope you close this deal and wish you success in your real estate career!
- Rental Property Investor · Navarre, FL · Member since 2019 · 913 posts · 640 votes6y
Can we have an intermission? Popcorn.....and proceed.
- Investor · Cleveland, OH · Member since 2012 · 145 posts · 39 votes6y
Damn I thought predator lending was outlawed...
We need to fill the jails with those greedy bastereds who solicit such rates!
- Rental Property Investor · Lancaster, CA · Member since 2015 · 103 posts · 55 votes6y
If you were in California your only option would be a 3 Day Notice to Quit. Then file for an eviction. If they get a non profit lawyer you'll be in a cash for keys situation or go to court and the property is tied up for months. I'm going through this right now. So far they have accepted a 4k buyout with 1/3 going to the non profit. Basically it's just like the mafia. Hope this works out for you. Get a lawyer before you go any further. You need to cross all your t's and dot all you i's or it starts over again.
- Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes6y
Originally posted by @Muhammad Abdullah:
Damn I thought predator lending was outlawed...
We need to fill the jails with those greedy bastereds who solicit such rates!
In FL usary is 18%. However there are exceptions. I have owned business that charged 264% APR and 304% APR." ONLY IN FL" as the saying goes:)
- Rental Property Investor · St Augustine, FL · Member since 2019 · 74 posts · 47 votes6y
@John Thedford @Muhammad Abdullah
Must be a felony, jail em! I’m reporting you!!!!! Lol
- Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes6y
How do you have 6 people interested in putting in offers on a property you haven’t marketed to anyone? Are you asking this tenant to make her apartment (you don’t know her rental status) available for 6 “showings”? I don’t blame her if her father told her the house is under contract and now she has to continue to show it to “buyers”.
- Member since 2018 · 433 posts · 208 votes6y
When I wanted to start contract wholesaling my attorney informed me it was not solidly within the law in my pennsylvania. I abandoned that ship. I believe Florida has a stricter law in that regard. The difference between brokering and selling your own property is highlighted in this situation. If you actually had an ownership stake to sell, you would have landlord rights with the tenant. The fact that you don't tends to show that you are not an owner. Actual wholesaling on the other hand would mean you bought it and are her new landlord, then you would sell it to the next buyer. This typically requires to sets of taxes paid. Two separate transactions.
- Rental Property Investor · Charlotte, NC · Member since 2017 · 298 posts · 232 votes6y
@Jacob Kline I think the biggest takeaway you should have from this is that you need to step back and rethink your approach. I know that FL has passed laws making it much more difficult to operate as a wholesaler because of unethical practices by unscrupulous wholesalers who have no intent to close their own deals. As far as the state is concerned, and many would probably agree, wholesaling is nothing more than an attempt to skirt licensing laws. You would probably benefit from at least taking a licensing class even if you ultimately decide not to get licensed.
My personal opinion is that wholesalers should not sign contracts on deals they wouldn't close themselves. Many of the wholesalers I receive deals from overestimate ARV, underestimate repairs, and barely leave any meat on the bone for the end buyer so they are screwing two people. The seller when they can't find a buyer and the buyers who are inexperienced investors desperate for a deal and insufficiently educated on how to identify a good deal.
While I believe @John Thedford is being a little too aggressive trying to turn in every wholesaler he runs into he is not wrong that you are indeed acting as an unlicensed agent, regardless of how upfront and honest you have been with your seller, and could face serious legal repercussions for doing so if you don’t stop and find a better way of doing things that doesn’t break the law.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
Originally posted by @Jacob Kline:
@John Thedford so what would be considered marketing? Listing on MLS? For sale sign?
I’m assigning to one of my buyers who are in my personal network.
Seems a little thin to be accusing someone of felony and I don’t appreciate it. There are tons of people out there who assigning contracts and not “playing games” by your words. I’d call it solving problems and earning a living.
If you have actual advice, I’m all ears but otherwise you’re wasting time here.
Read my post, where I clearly defined marketing. You can't just make up your own definition as an excuse to break the law.
Marketing
The act or process of buying and selling in a market.
Marketing is ANYTHING in the sales process. Showing a property is marketing. Telling someone you have a property for sale is marketing. Even if they are on a "private buyer list", also known as customer list, that is still marketing.As far as your comment about assigning contracts, let's think it through. If you are ONLY selling the contract, then you should ONLY show the buyer the contract. Showing a property is blatant activity of brokering the property. You are literally doing a realtors job without a license.
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Alex Khan:
Originally posted by @John Thedford:
Originally posted by @Alex Khan:
The only option you have is to Partner up with Mister Thedford for a 19.99% hard money loan to whole-tail the property or else you’re committing a felony and going to jail pal.
LOL...you trying to build my HML business? Actually...those rates are a LITTLE high..but not off by much:)
What’s crazy and news to me is that people will actually pay 12.99% +
I have several private investors that are More than happy with 5-7%.
After seeing people pay 12%+ I’m tempted to start a Hard Money Business myself lol5 to 7 % are bank rates if you can cobble a maybe 5 million together at those rates you will make far more as a HML than trying to be a buy and hold drip investor. remember the 12% is just the rate you add points and most of us make 15 to 20% apr not 12.. you borrow at 5 and make the delta.. you have a golden goose and probably don't know it..
now if these are small mom and pops with just 50k and the grand total is 200 to 300k available to you.. then no that wont cut it.. but 5 million that's a nice start to the HML gig..
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
Originally posted by @Dan H.:
Originally posted by @Joe Splitrock:
I don't think wholesalers realize what "marketing without a license" means. Marketing is any act of sales, advertising or promotion. Showing the property to buyers is marketing. Advertising the property is marketing. E-mailing a buyers list is marketing. Telling anyone you have a property for sale is marketing. It is impossible to sell a property to someone without marketing it.
There is two options, get a license or buy the property before selling it.
The daughter living in the property is a tenant and has tenant rights. You don't need a lease to be a tenant. Only the the owner, her father, can evict her. Maybe his plan is to sell the property with her living there and let someone else be the bad guy. Figure the cost of eviction into your asking price.
@Jacob Kline make sure what you are doing here is legal.
Not a lawyer ... I believe a tenant must pay rent. Without paying rent, I believe they are a guest. Guests do not have same rights as tenants. Only issue is the owner is likely the only one that knows if the daughter is a guest or a tenant. Unless the OP is informed otherwise, they should assume the daughter is a tenant and has every tenant right of that state including minimum time to terminate a month to month lease (in CA, tenants over 1 year must get 2 months notice). This needs to be factored in on any purchase (not just a wholesale). If the law is similar to CA and the daughter is a tenant and has lived there over a year, they would be allowed to stay 2 months after notice even if the RE has been sold. This could make the RE hard to wholesale.
@Jacob Kline Have the father deal with the daughter. Learn the laws of the state with regard to what is allowed in selling of a RE. My own view is it is unethical (and possibly illegal) to represent to the seller that you are buying the RE if you only intend to buy it if you find a buyer. The seller could be relying on the sale. Wholesalers get a bad reputation. Not all wholesalers deserve the bad reputation.
I have read countless stories of people who never had a lease and never paid a dime of rent, but had to be evicted. Some cities have gone as far as saying squatters have the same rights as tenants. Generally, police won't force-ably remove someone who claims to be a tenant. They will tell the landlord it is a civil matter and take them to court. If police could remove anyone, then they would be acting as judge and jury. I am not saying a landlord will not win the eviction, I am just saying usually even a squatter needs to be evicted.
This case is even worse because it is the owners daughter. Unless the father takes action, there is nothing a third party can do. If a wholesaler walked into the property without her permission, he would be trespassing. Good luck explaining to police what you are doing there. He is not licensed, so he can't say he is a broker. What is he going to say, "I am selling a contract" lol.
- Investor · Crystal Lake, IL · Member since 2019 · 8 posts · 5 votes6y
@John Thedford
In Illinois, even if you buy and sell more than certain number of properties it requires a license. You can’t even do that.
Requiring a license is for the purpose of protecting public (people without real estate licence and knowledge) from getting misrepresented by individuals without the knowledge (wholesalers without a license).
If you are planning to do this seriously go and become the broker. It’s not a rocket science and it doesn’t cost a fortune. But states will start chasing people fir doing this without a license, and you don’t want that to happen to you. Illinois is doing the same, just FYI!
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Mike Hayes:
@Will Barnard and @John Thedford. Any reasonable adult besides a licensed real estate agent knows he's not going to get into trouble for wholesaling. There are a lot of laws on the books that are outdated and are not enforced. You've probably broken some and not even known it. I also take marketing to mean putting on MLS and other things but not talking to a handful or even a 100 investors you know. Bigger Pockets podcast and website is a big proponent of wholesaling and have featured many wholesalers who make millions. Following your logic, the same website you support supports and illegal activity? Not likely
while this statement might be true in some markets in many its simply not.. State of Illinois just made wholesaling illegal without a license and clearly changed the laws.. OHIO comes down on folks hard. Texas clarified their laws with full disclosures .. so all good their with proper disclosures..
So I got a little frustrated personally on what the state I work in a lot thought of this so I forwarded a wholesalers e mail I got to the state and asked for clarification.. below is the response I got. They opened an investigation and wrote an order at the end of it giving this person a pass on this particular event but if he was going to continue he needed to be licensed. So they were nice for first offenders this person is now licensed and following the rules.. So on BP its just like anything else its generic information does not make it right just because its on BP.
see below.
Hello Jay,
Thank you for getting back to me. The advertising copy you attached to your email came out perfectly and will be very helpful. Thanks!
The Agency is well aware that unlicensed “wholesalers” are rampant in our jurisdiction. Addressing the problems is like trying to put out small individual fires in a forest that is burning. The Agency’s investigations are complaint driven, so we rely heavily on the public, and our licensees to bring these individuals to our attention.
Thank you again for the information, if I have further questions for you during the investigation I will certainly reach out.
Best regards,
Frances Hlawatsch | Financial Investigator
State of Oregon - Real Estate Agency
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Mike Hayes:
@Will Barnard and @John Thedford. Any reasonable adult besides a licensed real estate agent knows he's not going to get into trouble for wholesaling. There are a lot of laws on the books that are outdated and are not enforced. You've probably broken some and not even known it. I also take marketing to mean putting on MLS and other things but not talking to a handful or even a 100 investors you know. Bigger Pockets podcast and website is a big proponent of wholesaling and have featured many wholesalers who make millions. Following your logic, the same website you support supports and illegal activity? Not likely
Just a PS the laws are not outdated they are not clearly defined leaving loop holes .. which is what the states are cleaning up.. its not getting easier its getting harder.. the answer is and we are big wholesalers if you will .. but we close on everything before we remarket. that's the answer in a nut shell.. Or as Will mentioned forming partnerships with a few buyers and staying in the deal or getting taken out at closing but the end result is Your entity is buying the house period.. not remarketing it.. we all know the intent and regulators aren't stupid.. if it looks like a duck its a duck.
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Joe Splitrock:
Originally posted by @Dan H.:
Originally posted by @Joe Splitrock:
I don't think wholesalers realize what "marketing without a license" means. Marketing is any act of sales, advertising or promotion. Showing the property to buyers is marketing. Advertising the property is marketing. E-mailing a buyers list is marketing. Telling anyone you have a property for sale is marketing. It is impossible to sell a property to someone without marketing it.
There is two options, get a license or buy the property before selling it.
The daughter living in the property is a tenant and has tenant rights. You don't need a lease to be a tenant. Only the the owner, her father, can evict her. Maybe his plan is to sell the property with her living there and let someone else be the bad guy. Figure the cost of eviction into your asking price.
@Jacob Kline make sure what you are doing here is legal.
Not a lawyer ... I believe a tenant must pay rent. Without paying rent, I believe they are a guest. Guests do not have same rights as tenants. Only issue is the owner is likely the only one that knows if the daughter is a guest or a tenant. Unless the OP is informed otherwise, they should assume the daughter is a tenant and has every tenant right of that state including minimum time to terminate a month to month lease (in CA, tenants over 1 year must get 2 months notice). This needs to be factored in on any purchase (not just a wholesale). If the law is similar to CA and the daughter is a tenant and has lived there over a year, they would be allowed to stay 2 months after notice even if the RE has been sold. This could make the RE hard to wholesale.
@Jacob Kline Have the father deal with the daughter. Learn the laws of the state with regard to what is allowed in selling of a RE. My own view is it is unethical (and possibly illegal) to represent to the seller that you are buying the RE if you only intend to buy it if you find a buyer. The seller could be relying on the sale. Wholesalers get a bad reputation. Not all wholesalers deserve the bad reputation.
I have read countless stories of people who never had a lease and never paid a dime of rent, but had to be evicted. Some cities have gone as far as saying squatters have the same rights as tenants. Generally, police won't force-ably remove someone who claims to be a tenant. They will tell the landlord it is a civil matter and take them to court. If police could remove anyone, then they would be acting as judge and jury. I am not saying a landlord will not win the eviction, I am just saying usually even a squatter needs to be evicted.
This case is even worse because it is the owners daughter. Unless the father takes action, there is nothing a third party can do. If a wholesaler walked into the property without her permission, he would be trespassing. Good luck explaining to police what you are doing there. He is not licensed, so he can't say he is a broker. What is he going to say, "I am selling a contract" lol.
YUP they are called squatters..
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Mukhtar Ali:
her signature is on the post.. with the division she works in.
- Investor · Lewisville, TX · Member since 2016 · 8 posts · 2 votes6y
@Jay Hinrichs my bad, I meant to type Frances Hlawatsch. Thanks!
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes6y
Originally posted by @Victor S.:
Would double-closing this transaction appease Liam Neeson (aka John Thedford)?
If you are double-closing on the same day, then you are still marketing the property before you own it. It is impossible to close, find a buyer and close again in the same day. It just comes down to state laws. It has nothing to do with John Thedfold. He has no authority to prosecute anyone. You can mock him or ignore him. (Although as a mod I should remind everyone that personal attacks are prohibited on BP.)
I think the disconnect is people are confusing "I won't get caught" with "it is legal". Or it is just ignorance of the law? This is the reason so many states require licensing in a variety of professions. Licensing means you go through education that teaches you the law and professional ethics. In most states you need a license to do something as simple as cut hair. Why is it unreasonable to ask the same of people transacting tens or hundreds of thousands of dollars?
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Joe Splitrock:
Originally posted by @Victor S.:
Would double-closing this transaction appease Liam Neeson (aka John Thedford)?
If you are double-closing on the same day, then you are still marketing the property before you own it. It is impossible to close, find a buyer and close again in the same day. It just comes down to state laws. It has nothing to do with John Thedfold. He has no authority to prosecute anyone. You can mock him or ignore him. (Although as a mod I should remind everyone that personal attacks are prohibited on BP.)
I think the disconnect is people are confusing "I won't get caught" with "it is legal". Or it is just ignorance of the law? This is the reason so many states require licensing in a variety of professions. Licensing means you go through education that teaches you the law and professional ethics. In most states you need a license to do something as simple as cut hair. Why is it unreasonable to ask the same of people transacting tens or hundreds of thousands of dollars?
When I sat down with the Oregon investigator.. I asked about double closing and she said same thing you did.. And they did not agree with the Guru's version of equitable interest.. equitable interest is not 100 dollar down on a contract. At least to this regulator.. I personally have not sold real estate at the street level in 10 plus years.. so I could give a rip.. other than to have a level playing field and try to follow the laws.
I think were an unlicensed wholesaler would have some major issues is if a deal goes wonky and sellers are harmed. then it might not be a slap on the wrist.. there is a Case in Denver right now.. were the relative of the seller is some sort of politician and his relative was talked out of a few hundred thousand of equity.. so he is fired up.
- Member since 2018 · 433 posts · 208 votes6y
Originally posted by @Mukhtar Ali:
Eh... He's a real estate agent. I can see the frustration. He spent the time and money getting licensed only to have people who didn't doing the exact same job. While I'm generally anti license for anything, where the license exists it's frustrating to see those without breaking the law and reaping the benefits. Like stalking a buck all year waiting for season to open and having some poacher shoot it pre season. - Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes6y
Originally posted by @Shane H.:
Eh... He's a real estate agent. I can see the frustration. He spent the time and money getting licensed only to have people who didn't doing the exact same job. While I'm generally anti license for anything, where the license exists it's frustrating to see those without breaking the law and reaping the benefits. Like stalking a buck all year waiting for season to open and having some poacher shoot it pre season.
I have seen and met the victims of these operators. They are a plague. BTW nobody is talking about this "buyer" failing and leaving the seller screwed. If that happens the OP would never admit it and just move on to their next victim.
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