Washington DC, Washington D.C. · Member since 2011 · 25 posts · 25 votes
I wholesale deals in the Washington DC, Maryland, Virginia, Market, I enjoy doing deals and helping others get started. Just wondering if anyone is running into roadblocks starting thier wholesaling business. Lets start a discussion
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
13y
Even with an S-corp, this SET avoidance may or may not work, and may or may not matter.
If you make, say, $10K a year from your business, and a reasonable salary for the job you're doing would be $20K a year, then you won't get away with paying yourself $1 in salary and distributing the other $9,999 as dividends. The salary is subject to SET, but dividends are not.
OTOH, if you make $40K a year from your business, and a reasonable salary is $20K, you could distribute $20K as dividends and other $20K as salary and pay SET only on the $20K salary.
Yet another factor is there is a limit on the amount taxed for social security (the bigger portion of SET) of $110,100 in 2012. If you have a good day job, and make that much or more, you won't be paying the social security portion of SET on your RE income in any case.
My response in your other thread, Cara Smith was more general. New investors often get wrapped up in setting up LLCs, thinking up company names, building a "power team", designing business cards and other minutiae. Doing all that stuff makes you feel like you're accomplishing something. But it really doesn't mean squat. What matters is looking at properties and making offers. Get out there and buy something, or at least work toward making deals.
Jonathan E., if you're paying tax on your gross earnings, regardless of your entity structure, you need a new CPA.
Washington DC, Washington D.C. · Member since 2011 · 25 posts · 25 votes
13y
I do the same, I normally just make phone calls and send text messeges. (Im actually doing it right now) But this thread is intended for the brand new investor, who has never done a deal, nor has created relationships with pocket buyers yet.
Some have difficulty determining price on offers and its just an additional safety net.
Involved In Real Estate · Fort Worth, TX · Member since 2012 · 158 posts · 11 votes
13y
Hi @Bruce Duval, thank you so much for making this thread. It is so awesome that biggerpockets is full of genuinely good people that are willing to help eachother and that is why I enjoy reading and getting great tips.
Where can I get a list of high equity absentee owners?
I have began putting out bandit signs but they were quickly taken up and replaced by competition lol. I want to target different intersections perhaps put the signs up high on the telephone poles with my handy dandy tool I made.
Bloomington, IN · Member since 2012 · 23 posts · 2 votes
13y
Hey Bruce,
I need some guidance. I am new to wholesaling and I am in the process of trying to track down some cash buyers. Some of the posts I have read make is sound like people are getting houses under contract before getting a cash buyer. I could be understanding this wrong. If I had to guess they just mean that they already have a buyer and the property fits the profile so they just go ahead and get the property under contract. It also seems like some cash buyers just want a deal sent to them to look over? Seems like a big waste of time to send something over to a cash buyer without knowing first what they want. I want to make sure Im on the right path with what I want to achieve when I talk to potential cash buyers. My goal right now is to first find cash buyers, find out what they want and find it for them. Is this the correct process?
Also. in your opinion what is the best way to find serious cash buyers?
Bloomington, IN · Member since 2012 · 23 posts · 2 votes
13y
Does anyone have any suggestions on how to attract cash buyers via craigslist and some example of ads that you have used that worked. Thanks for the help.
Washington DC, Washington D.C. · Member since 2011 · 25 posts · 25 votes
13y
Randall Gillette. This is a good question. In a previous post, you referenced trying to go national with leads buyers, seller, etc. This very dilema is why I would reinforce my previous statement steering you away from that. You have to know your market like the back of your hand. Here's what has worked for me.......
While every buyer has certain likes and dislikes, what you'll find is that in each market there is a reletively standard "quality deal". this changes from market to market and your job is to find out what that quality deal is in your area. I speak with most of my buyers and find out specific likes and dislikes, But the main thing you'll want to know is what their exit strategy is. Are they planning to fix and flip the house, or hold it long term. Most fix and flip guys in my area want to make about a 30% profit once they sell. This means they will need to buy, fix, and hold the property spending no more than 70% of what its worth. As for landlords, they want minimal repairs and prices vary based on zip codes.
You can market for buyers on craigslist for fun but most of the folks on craigslist (at least in my area) are just other wholesalers with no marketing budget trying to find a deal. I add them to my buyers list but i don't count on them. The best way to find real buyers in your market is to ask a realtor to pull all the cash sales in the area within the last 90 days. Find out who bought the property, where and for how much. Look them up, contact them and have a conversation. You'll see patterns about buying locations and prices.
You should go to your local reia meeting and ask what investors are buying and for how much. Those folks will be happy to help you.
By the way, you'll never feel like you have enough buyers so don't let that stop you from finding sellers.
Bloomington, IN · Member since 2012 · 23 posts · 2 votes
13y
Bruce thanks for the feedback. I have plans to join the REIA however the town I am currently in does not have a group. I am starting locally in Indianapolis IN which is 60 miles away and a better market. Im certainly not letting anything stop me from finding sellers however it doesn't do me much good if I cant move the property. Right now I dont have access to a Realtor that can do that for me as far as the MLS. Would you or would someone that you could direct me to be willing to pull a list from the MLS of all the cash sales in the Bloomington and Indianapolis IN area within the last 90 days that shows who bought the property, where and for how much and any available contact information for these buyers.
This is something that would be very helpful to me.
Bloomington, IN · Member since 2012 · 23 posts · 2 votes
13y
Bruce I took you advice and contacted a realtor that I know "but not the well" I asked her if she would be willing to do what you requested and this is what she came back with. My gut tells me she isnt being upfront with me. Feedback or suggested response I should send her? Here is her response:
Well, if I had that information I would be the happiest person out there. :) Our MLS doesn't let us search on cash buyers and it doesn't provide the name of the buyer, let alone the contact info. I can tell you that the GIS has names and addresses on the sales disclosure that is signed at closing. You can't really pull sales by date ranges, etc but it has this information. It doesn't allow you to search for only cash buyers. The type of list you are looking for is something that many of us spend years working on. I have a great investor list but it doesn't isolate to cash investors and it isn't something I give out.
Fairbanks, AK · Member since 2012 · 1 post · 0 votes
13y
I am just getting started in Wholesaling and have prospective buyers / investors. I have targeted the locations and type of property for my buyers.
I have found the properties that the buyers want. How do I get the property under contract from 1 investor to sell to #2 investor? I have little to no cash and want to assign the contract.
I suppose I will just have to call them and tell them what I am looking to do....
Investor · Portland, OR · Member since 2012 · 266 posts · 128 votes
13y
Thank you for this thread! I don't plan to ever be a wholesaler, but I've found it informative and entertaining.
Here's a question from a different perspective. I'm a (future) buyer and hope to find a, or a few wholesalers to work with on a small scale in Portland OR. As a general statement, do wholesalers struggle to find buyers, or are buyer's especially in demand? Or, is the general struggle finding enough properties to meet the needs of their current buyer's list?
Real Estate Investor · Upper Marlboro, MD · Member since 2008 · 289 posts · 80 votes
13y
Wholesaling is a JOB, its a real estate job, but a job none the less. 85% of wholesaling is finding a motivated seller that is willing to walk away from equity for whatever reason it may be. If you have a killer deal someone will take it off your hands, "killer deals sell".
Washington DC, Washington D.C. · Member since 2011 · 25 posts · 25 votes
13y
You know, I'm not sure. For me its probably the deals since I don't flip Reo propertied or MLS listings. Honestly in my market there are plenty of both. I guess anything is easier to find if you know where to look.
Jacksonville, FL · Member since 2012 · 12 posts · 3 votes
13y
I know "killer deals sell", but here's a hypothetical that worries me, as I have not made a deal yet: lets say you get a deal under contract, you fax over your paper work to the title company, you send out a mass email/text message/phone call to all your investors. What if none of them want them, or you find one, but its after the contract has expired? what do you do about the title company that thought they were going to close on a house? do you have to pay fees for their "waste of time"?
Real Estate Investor · Upper Marlboro, MD · Member since 2008 · 289 posts · 80 votes
13y
If title company does a title search and you don't close or can't find an investor buyer to close then you will be responsible for those fees. In my area in MD fees are about $250
Bloomington, IN · Member since 2012 · 23 posts · 2 votes
13y
Question
When doing a deal. Once I get the property under contract what type of closing fees would I incur and how do I find out how much they would cost. Also who typically pays those, the buyer?
The property in question needs no repairs. I simply want to put it under contract and assign it to the cash buyer. I need to give my buyer an estimate of the closing costs. feedback is appreciated.
Specialist · Chicago, IL · Member since 2009 · 75 posts · 25 votes
13y
Randall Gillette, your closing fees are going to vary by state. And also, who pays 'what' closing fees can be negotiated. Nothing's set in stone, however there are certain fees that may be customarily covered by the buyer or seller.
Here is an example of some fees from one of my closings
30 -- Buyer Title Charges
40 -- Record Deed
450 -- Attorney Fees
90 -- Owner's Title Insurance Policy
38 -- Search & Exam Fee
90 -- State Policy Fee
2 -- Real Estate Transfer Tax
The property was bought for 1K and I covered all of the closing costs. And an attorney isn't absolutely necessary, but for me it was as I was out of the country during this closing.
I'd suggest calling up the title company that you plan to use and get some approx closing numbers from them.
Bloomington, IN · Member since 2012 · 23 posts · 2 votes
13y
Question, any help from anyone in this post is appreciated. I am close to closing a deal. I just want to make sure I am doing things in the correct order. As the wholesaler my name goes on the purchase agreement. I then have my buyer sign the assignment contract. (I will let my buyer see the purchase agreement and provide full disclosure etc) Once agreements are sign and obligations are met my buyer will deposit the money with the closing agent and fees will be distributed by closing agent to the appropriate parties. Cost of property to seller, closing fees to title company etc. And my assignment fee. Anything I am missing here? Quick feedback would be most appreciated. Thanks
Lake City, CO · Member since 2012 · 118 posts · 15 votes
13y
Bruce, you mentioned that you are building a website, what sort of website? I am also doing one slowly. I am no website builder for sure so it's a slow process and lot's to figure out. Thanks.
Lake City, CO · Member since 2012 · 118 posts · 15 votes
13y
Bruce you mentioned building a website, what sort of website? I am also building one and would be interested in possibly hooking up with you to discuss. If your interested let me know and I'll send you a PM with my email, thanks.
Silver Spring, MD · Member since 2013 · 42 posts · 5 votes
13y
Bruce,
Thank you for taking time out to answer all the questions in this post. This covered so many of the questions I had and gave me a good grasp on where my focus should be since I have yet to do a deal....finding motivated sellers (and what their motivation is) and finding cash buyers! Everything else can be done once I have some traction.