All Forum Posts by: Norberto Villanueva

There it is. Often interpreted as haterade, one of my pet peeves is the profits some wholesalers try to make. Here's why. Spoken in terms of average and median values, in most circumstances "the market", any market will only support so much sales price. With the difference between a property's sales price and the amount of its encumbrances being equity, eyebrows start to raise with so much as the appearance of skimming and/or other shenanigans, which the 2008 fallout brought us in the form of foreclosure prevention acts protecting homeowners against...operators with less integrity than others. :)

Regularly seeing wholesalers ask close to if not retail values for property, and/or other shenanigans, like advertising sub-to terms, a violation of the due-on-sale clause seen in most if not all mortgages, even the sale of property, considered licensee activity, when all they have is equitable interest in said property, at best. Now beginning to see municipalities regulate as in, requiring wholesalers to get licensed, I can't help but wonder what lines were crossed, who lost their life savings for that to happen.

Think of real estate as an eco-cycle. Everyone eats when everyone acts right. As a wholesaler, you'll need a network of flippers and buy-and-hold investors along with a, not so much "investor friendly" but, an investment-knowledgeable real estate broker/agent on your team. A rockstar who will be happy to provide sales and rental comps, a CMA, when the best you'll get from Propstream is an automated valuation (heck, I'll even provide census data!) in exchange for: the first dibs at buying if inclined or circulating a deal to their buyer/investor base before you even have to market it, or a listing appointment with those that fall out, especially because the seller needs more than your MAO allows and, you won't see this often because investors feel they have to play the field but, marry them! Yes, marry as in, sign an agency agreement because who do you think we call when we can't so much as walk the property to determine its value or put a sign in the yard because the Seller doesn't want or can't have showings!

Now, this may very well reduce $50,000 home runs to five $10k base hits but, like Michael said, operate with integrity and honor, lead in a spirit of service and reciprocity, and the rest will follow.

Hi Michael. I wish you all the best in your venture!

I'm having difficulty tracking. A landowner controls the equitable title to the land (and its improvements), which they essentially sell for cash at closing. Not on the title, a wholesaler may control its equitable interest in the form of an assignable contract, which may sell for an assignment fee at closing. Upon determining there's meat on the bone, whomever you hand the deal to will likely ask first and foremost, how you control it. As prescribed by state law, your process for transferring ownership will determine legality. Please tell us about that.

In Colorado, all licensees are brokers from day 1, and wholesaling is not illegal.

$115 a night? Seems reasonable, maybe even low to me! But at a $280k purchase, and factoring for the 20% max, when it can be as high as a 30% STR PM fee with just a 10% vacancy, it just doesn't pencil very well, not even down to a 10% PM fee! Am I missing something?

Let me see if I have this correct. You are a licensed agent and principal in an assignable purchase agreement that you may or may not actually fulfill. If I were your broker, I'd suggest transactional funding instead.

Hi Tiffany. I know we hear a lot about location, location, location and, not that it's not important but that it's at least equally, if not more important to consider "you" make money when you buy, which is just another way of saying it's all about the numbers, regardless of location. So, adjusted for the clientele as in, the target renter, make sure the following metrics are in-line and you should be fine long-term: Debt-service coverage ratio (DSCR) > 1.25, Return on Equity (ROE) > 7%, Internal Rate of Return (IRR) > 7% levered, > 6% unlevered, and your Operating Expense < 30%. A caveat on operating expenses is that you might be looking at a pie-in-the-sky opportunity if it's much lower than 20%.

Feel free to reach out. I'm always happy to help.

Hello, John! There are many useful resources for ARV like, Zillow and Trulia for starters. Many wholesalers love Propstream. The "problem" with these is their use of average $ per sq ft to set value, which is only a ballpark and less desirable than say, a quality CMA from the investments knowledgeable friend in real estate (agent/broker) you'll be sure to include on your team :). And, whatever you do, reciprocate. Make it worth their while by offering your friends dibs on the deal! Oh, and make sure to include the projected rental values (and metrics) buy and hold investors like for some reason ;), for which Rentometer does a good if not great job, at least in most MSA's, not so much in rural areas.

Loving a wholesaler concerned with quality repair estimates, I like and use Homewyse, quite a bit. All the best!!

P.S. - I'm always happy to help.