All Forum Posts by: Will Barnard

You can do it this way but you have likely violated real estate laws in your state. Unless you are a licensed agent, you are not permitted to charge or collect commissions, no matter what name you put to it.

This is the correct answer and beware of doing the deal without seeing the A-B contract FIRST. Never pay the wholesaler direct, only through escrow and never accept any terms stating you have to put up non refundable EMD before you ever see the A-B purchase and sales agreement. That is going in to the transaction blind. Would you cross the road on foot blind into oncoming traffic?

@Jennifer Freeland I doubt it. Most iBuyers are on platforms (brokers) who disallow any wholesalers. My brokerage has an iBuyer program and they specifically state that no wholesalers are allowed in the transaction. It is a direct purchase from seller to iBuyer.

 If you think you can find 3 contractors willing to walk a property you don't own or even have under contract to give you a full detailed bid for free, you are sadly mistaken. I know I don't work for free. If you don't own the property or have it under contract with ability AND intent to buy/close (at minimum), expect to pay said contractors for their time.

Better yet, learn how to estimate repairs. It takes time and lots of practice along with a spread sheet of pricing, but if you can find many of my previous thread responses on this topic over the years, you will find many where I lay out specifically how to accomplish this task. This removes your need to rely on others. Of course you also don't want to do a horrible job like so many do and provide false (intentionally or not) info to your buyers as it makes a bad name for you. In short explanation, once you know specific costs for specific line item tasks, divide the home up into sections (i.e. kitchen, bath, flooring, landscape, roof, HVAC, electrical, plumbing, doors/trims, windows, etc). Once you know the average cost of your kitchen for a standard say 12'X8' "L" shaped kitchen, when you walk into that 3+2 and do your inspection, you can begin to add up the room expenses in chunks and eventually, do it in your head. Obviously for more elaborate rehabs, you will need to put pencil to paper.

I suggest reading this thread, long, but well worth your time investment. 

https://www.biggerpockets.com/forums/93/topics/58383-the-truth-about-wholesaling-

What you proposed above is not legal and very difficult to accomplish. Get some education first on the topic, get knowledgeable in your local market, then get your buyer (not the deal). Your buyer will tell you exactly what they are looking for. Then partner with them, find the deal and let them complete the escrow. Doing in reverse (finding property then marketing for a buyer is brokering without a license. Having some financing in place does not create some magical legality for you in this process so whoever told you that was incorrect and should not be consulted in this arena again (just a word of advice).

Under these incredibly competitive market conditions, it can very well be easier to actually do your own flip as opposed to wholesaling. If the wholesale deal is a flip, then you must find a deal with enough meat on the bone for the flipper AND you. If you flip it yourself, less of a spread needed (from a general numbers perspective). That said, you need to also build a team of agents, construction crews, material suppliers, lenders, (a designer perhaps), escrow, title, etc. 

So many people are told that wholesaling is easy and no money or credit required. Simply not the truth and in these times, perhaps even more difficult. 

 I will point out that no local jurisdiction in CA may make any rule or regulation in direct conflict with the CA state assembly bills/state senate bills passed. So when you state some jurisdictions have made it more difficult, can you elaborate more specifically?

As an example, no jurisdiction can demand a minimum lot size, limit your max size below 850sf, or limit the square footage beyond the states laws, etc.

I cant speak to all partnership structures as there are many options, however, many can be set up easily using an LLC with managing partners and limited partners. The managing partners making the daily operational decisions and the limited partners typically having no say so, only funding the deal.

If the 2 or 3 partners are equal (or at minimum, all have operational input status, then a simple LLC with an operating agreement (herein after "OA") outlining each party's duties and responsibilities, as well as the OA stating the precise amount of each partner's financial contribution and associated shares of the entity. It is always recommended to have an attorney draft this OA to ensure all bases are covered and the OA should also include all the what if's like if investor A dies, what happens, if investor B needs out, what happens and what is the process. The OA is very, very important to get right. After that, it is a consult with your tax advisor to ensure you form the proper entity for your purposes.

As to your bid, how does this plumber know how much the repair will be if he doesn't yet know where the leak is? Leak detection should be at that price or less, as to the extent of the repairs, that is to be determined. My advice, get 2-3 quotes form licensed plumbers. Then get it fixed and move on. No way to cheap out on something like this.

Central HVAC should certainly add value, but your $60k cost seems extremely high for just 3 units. Not sure how many square feet the units are or how access is to duct everything (of course you can also use a ductless mini split) but your cost should be half that.

Window units look terrible and eliminate the use of that window (for the most part). Getting more energy efficient can also help your cause if you are paying utilities. I'm sure the added rental value could also help return the investment as well as the forced appreciation. That said, I don't know what market you are in and unless it is So Cal, I don't know your market. I am the owner of a licensed HVAC company so for cost and layout, that I am speaking from real world experience and not just opinion.