All Forum Posts by: Sekelle O.

@Kent Harris So when wholesaling, assigning means assigning the purchase contract to an end buyer for a fee. There is only one closing, where the seller and the end buyer closes and the wholesaler gets paid. Since you have already closed on the house and taken title to it, what you would be doing is a double-close, where you take title to the property and then sell it to the end buyer (in your case the GC). 

Your GC can purchase the property outright with cash or a hard money loan but it sounds like your GC may have cash flow issues that prevents this. To help out, you could offer the GC a loan for the repairs and/or closing costs, so he can get the hard money loan for $150,000. You would then sell it to him for $150,000 and loan him the rest of the money needed and secure the loan with a second mortgage. With an ARV of $205,000 though, this deal may not qualify with most hard money lenders.

OR... You can seller finance the property to the GC. This means putting a mortgage on the property for the amount of the purchase price plus the amount you are lending him for repairs. You would be the bank and your GC would be the borrower. You would both go to closing and the GC would get title and cash back at closing, you would get the mortgage. If you are worried he might spend it all at once, you can do a draw schedule for the release of funds. I would work with a title company familiar with seller financing to close. But in this scenario, you don't get your $121k back until the property sells anyway, so you might as well just keep it and hire the GC to rehab it for your.

I think you should run your numbers including all your hard and soft costs, to make sure you understand the true profitability of each option.

This what I would do if I were in this situation. Take it for what it's worth.

@David Faulkner Thank you for clarifying your opinion. 

It's funny; the way other RE investors talk about wholesalers reminds me of the way homeowners talk about RE investors. I had a homeowner today say we were all a bunch of scammers.

@Cory Ratliffe You asked for success stories and I have one. I could not afford the expensive guru programs, so I learned wholesaling by googling it and reading up online (shoutout to BiggerPockets). I also got a lot of advice from experienced investors at my local REIA, especially after I got my first contract (which took about 2 months).

When I started, I did not have money to purchase a list, so I combed through the online tax records and built a list of absentee owners. I then hand wrote about 100 yellow letters to send out. I picked my farm area based on everyone at my REIA group saying they were looking for properties there. I made some mistakes on my first deal, especially around estimating the repair cost. Fortunately, I had really good rapport with the sellers and I was able to negotiate down the original purchase price to the point where I could find a buyer. I closed and made $6k on that first deal. This is the lowest assignment fee I have ever made out of 9 deals over a 3 year period. I have had repeat sellers, repeat buyers, and a very skeptical title company lawyer tell me I should teach wholesaling to other wholesalers because for the 2 closings he did for me, both sets of sellers spoke very highly of me.

I have found to be successful as a wholesaler takes part hard work, part luck, part talent, part people skills, part perseverance, part integrity, part creative problem-solving, part continuing education, all by the grace of God. But the same could be said of any worthy endeavor. As for what to stay away from? Mediocrity. 

Bon chance!

Kent Harris Assigning the property sounds like wholesaling, where you get the property under contract, then assign the sales contract to an end buyer for a fee. Let's say you find a deal but all your capital or teams are busy with other flips. You can monetize the deal you found by assigning the contract. Is that what you are asking about?

David Faulkner Are you saying stay away from wholesaling in California or wholesaling in general? Why?

Beau Ryan any update on how this turned out?

Chris Smock if your LLC can get a car loan, it can buy the truck from you. I would talk to your bank where the accounts for your rentals are. And/or if you have good personal credit, you can try to get a couple business cards that don't report on your personal credit report (some do) and do a cash withdrawal to pay off the auto loan. Look for a card that has a balance transfer offer that lets you use a convenience check. You might pay a 3% fee but usually get 6 to 12 months 0% interest. If you try a credit union you might get one with no balance transfer fees. There is a way to do this if you can get business credit.

@Vanessa Blais I realize this is an old discussion but I found it because I am going through the same thing right now. The SEC is the body that regulates raising capital for your business. As a business getting a private loan that is secured against business profits or business assets, the note is considered a security. So you have to look up the SEC rules. In my state, you can't just advertise for private lenders or private investors without filing a SCOR disclosure with the state SEC. I wouldn't advise trying to do anything with private money without the help of a securities lawyer. It's expensive but so is getting investigated by the SEC.

@Paul Defngin I want to do wholesale deals, rehabs and rentals. My rehabs will be funded by a combination of private money and hard money loans. For rentals, I am thinking private money for the acquisition and then refi to permanent financing from a bank. My interest is in residential real estate. I would like to get into apartment buildings at some point but that is in the future.

I am looking for a RE friendly local bank in the Howard County/Baltimore area to start a new banking relationship. Any recommendations?

When I refinanced my house, the appraiser used a comp that was in my neighborhood but the sale was more than 12 months old. The underwriter said FHA would not accept it. My lender called me and asked me if I could find a different comp to use. I found one 13 miles away and sent it to the appraiser. The appraiser used it. It did not change his valuation but the appraisal met FHA guidelines.