All Forum Posts by: Art G.

Welcome fellow wholesaler! I love this job. Complex puzzles, working to help people, making money, and have fun! Good times.

Some advice for you... Read this book, Inspecting a House by Rex Cauldwell. This book will teach you how to look at a home to see its problems and therefore you can easily estimate the amount of repairs needed. You will never again see a house without noticing its flaws.  This allows you to get the house under contract for the correct price. Investors are conservative with their money, and will have a higher repair estimate than you, unless you are ready. And it could be embarrassing if you are showing the house and you never even saw a problem that is costly. Estimating repair work is the second most important part of our job, it gets the deal sold in the end, and gives you the leverage you need to have seller accept a lower price. Which allows for the first most important part, getting the signature.

Last piece of advice, you should NEVER go to a property alone.  Always take a male, if you must, a female.  I always bring my female assistant with me.  This is important for a number of reasons, your safety first and foremost, but the other simplest reason is the balance of energy to the group dynamic at the meet.  The female brings one aspect which is complimented by the male aspect. Typically the female brings a calm and friendly vibe, while the male brings the strength and business tone to a meeting. We all have fundamental view points depending on the sex of the other person that effect our interaction. A seller is no exception to this.  It is important for your safety as well as the overall effectiveness of the meet.

Good luck and congrats on your first deal already! That is amazing.  If you need advice or to have someone double check your deal numbers do not hesitate to reach out.

Michael, You MUST read this book, The Wealthy Code by George Antone. It changed my life and will change yours too. It is the single most important book you will ever read in real estate. It explains deal structure in a very simple way (the new words make it complex at first, but easy once you absorb them) and it shows you how to structure any business deal to maximize profit and minimize risk.  When you read this book, and its short and sweet, you will see why your plan of attack is the absolute wrong choice. You will learn that you NEVER 100% a deal. You will learn what an equity partner is and why that is the correct decision for you. Also, you will learn how to analyze deals and present the numbers in a way that partners and banks will be asking you. Have you worked out your: NOI, Cap Rate, Loan Constant, Spread, ROI, BRE, DCR and ascertained volatility? Are those results within acceptable ranges? After you read this book, you will answer those without hesitation.

 When you come to them with the deal numbers already worked out, you show them its a good deal and that you are competent. 

You have just brought up a scenario that invokes one the most rarely used and most often misunderstood laws in the nation. It is so complex that courts have ruled attorneys are not liable in a law suit regarding it, bc no one understands it. But, in the terms you just stated it clearly is a violation.

The Rule Against Perpetuities states, an obligation by its terms must be able to be completed within a life in being plus 25 years.

This is one of the most complex things to explain in the law. Look at a new born baby this morning, imagine it living to be 115 years old, add 25 years to it. Can a 200 year mortgage be completed in that time frame? Nope... you just violated one of the most difficult rules in the law to violate.  Just means the promissory note would be unenforceable.  But here is the catch... it must be able to be completed by its terms within that time period. So if you include a no prepayment penalty clause, then by its terms it could be completed inside of a life in being plus 25 years.

Its so rare to actually see this law come up, thanks for the unusual chance to point it out ;)

and to compliment my brethren above's geographic coverage, I have the north end of the county covered on wholesale deals ;) Reach out and let me know your deal parameters and I will add you to the list.

I can tell you with certainty, that finding wholesale deals in Ventura County is super difficult. We are all just a lil too crazy up here and know our land in in VC is worth twice as much as our neighbors! 

We aggressively market VC through a variety of methods, and deals are just not around these parts.  They are few and far between.  So, if you come across a deal in the Valley or somewhere reasonably close to drive to and from daily to oversee, do not pass it up. It might be the best thing you see for a while.  Happy hunting. Be patient and keep the faith ;)

I had asked my mentor, When do you absolutely not wholesale a deal? He said, When you have preserved a tremendous percentage of equity, and if you can owner finance.

You have the chance to let a renter buy a property for you. In 10-20 years that will be worth many more times the 10k for a fee, and will cost you nothing but oversight and some reserves for vacancy. Most certainly keep that deal for yourself!

It depends on a number of things... the market is pretty high right now, you could sell it off and both take your profits and invest in your own projects. Plus as you are still married but getting divorced (assuming its not final) you both benefit from the $500k tax free profits from the sale, (250k/person).  So if you bought low and have a lot of equity, I would agree with my colleagues above and sell. 

@Penny Clark is totally right, that was my first thought too, you never know what the future will bring. Divorce is emotional, and you have intense emotions right smack in the middle of your business partnership.  My ex-wife and I are truly best friends. I go and hang out with her husband even.  But we had a dark patch out of nowhere once when she finally admitted an affair years after the divorce.  So you just never know...

Now those two issues aside, you will likely have to change title too, not a biggie, but you would want to confirm with your attorney.  Likely you would want tenants in common, not joint tenancy. I am pretty sure the divorce judge will make you do this regarding title if you do not plan to divide the asset as part of the dissolution. 

I get where you are coming from, you already both made the commitment on the house, you both can make a few bucks a month, but most importantly you have long term appreciation to consider. And letting that go is letting go of hundreds of thousands of dollars. 

One last thought... concerns of both of you effecting each other's credit by having a mortgage already, so you cant get a new home with the new family (staying optimistic here). Maybe talk to the bank and ask them if you were to form an LLC partnership, would they allow you to transfer the note to the LLC. If not, look into the LLC taking out a new loan to pay off old one. Clears both your names from a mortgage, and properly and legally structures the business arrangement between you both.

 Here is a really great video about business entities and tax consequences by an attorney, the last one he talks about is the form of LLC for rentals. Its not long and very educational, or just skip to the last 1/4 of the video to hear about the LLC for rentals.

@David Dey solid advice my man! I liked how you blended the two approaches. I had noticed that on occasion the soft and friendly approach wouldnt quite get the convo going.  It was pretty obvious to me they were embarrassed about admitting they were behind on payments.  I am going to use your method as a backup plan of attack if I sense the too embarrassed to talk situation. 

Love the text trick you use too. I am definitely going to meld your ideas into my bag of tricks, and send a screen shot of your words to my assistant right now!

the letter is fine to send, just keep it short and sweet.

I am looking to buy another house and saw potential in yours? Ever think about selling? Let's talk and work out the details, no obligation. (phone number)

Doll it up just a touch, but not more.  Mine are so genuine I get people calling me to say, I am so sorry but we dont want to sell.

Oh and find a good handwritten font on the computer to use. Looks more personal than typed.

People respond to people, not to businesses. Keep it real. Keep it human.

I had heard once that property taxes in NJ are the highest in nation. Go down to county and ask what the taxes would be. They can give you estimate. And yes to needing to get it appraised. As well as good idea to get it rented first, but after appraisal so you know if you are in the ballpark to get it refi'd