All Forum Posts by: Christopher Brainard

Hi Timothy and welcome to BP.

It may assist you in finding a mentor if you list some of your previous experience and/or skills which may be of use to your potential mentor. As for any general real estate questions, you can most likely do a search on the website and find a multitude of topics or podcasts that cover them.

Best of luck to you,

-Christopher

I guess I should note that I figured in 8.3% for Vacancy and 15% for CapEx/Repairs. These numbers may be different in your area, but have worked out OK for me on newer properties.

-Christopher

@Steve Lyman

Based on what you've presented here, looks OK with a Cap Rate is about 9.6% with about 2202 in cash flow a month. I'm not familiar with your area, but from what I've heard, you could probably do better in other areas of Michigan. However, the development of the balance of the land is an interesting add-on and potentially your value add here. 

With that said, I'm concerned about the property being in a rural area. Make sure you investigate and understand the local rental market, as (generally speaking) rural areas have smaller populations, fewer renters, and lower appreciation. Filling vacancies and improving the rent rolls may be difficult.

-Christopher

Did you even read what I wrote? 

You are claiming to 'own' the property based on equitable interest you acquired when you signed the contract. NRS 113.040 protects the buyer (you) in case the property is damaged or destroyed during the closing process and you have equitable title. I'm showing you how you don't have equitable title, because regardless of what happens, NRS 113.040 would not be needed and/or applied. You can always back out of a deal that has unfulfilled contingencies, therefore, no equitable title.

Maybe that is a bad example, let me try another. Let's say I apply at a bank and get turned down for a loan. I decide that I'm going to rob said bank in order to obtain my money. I purchase a toy gun. (why not use a real one? I'm curious - I mean, If you're gonna do it, do it right). I tell the teller to give me all her money and I won't shoot her. She hands over the money and I leave the bank, contract executed successfully. The problem is, until I manage to evade the cops (and later the BP Police), I don't own the equity (money), because the success of my bank robbery is contingent upon evading the police and not landing in jail. 

Is that easier for you to relate to?

-Christopher

I made a small word change to your post - Drug Dealing for Wholesaling. Do you still agree with your position? Just because other people are doing an activity and it can generate money, does not make it legal (or ethical). There is a right way and a wrong way to wholesale; The comments by many of the folks on this thread are highly inaccurate and you shouldn't assume that they're legal. 

-Christopher

*sigh* I hate this thread so much.

@Ken Graham @Felix Goldstein

The problem with your 'wholesaling' is that you assume you have equitable interest in the property. In order to have equitable title or equitable interest, you need to be subject to 'specific performance' in the contract. As stated in previous posts, the contingencies you are putting into the contract preclude you from having equitable interest in the property, until those contingencies are cleared and/or abandoned. Essentially what you're doing is creating an 'option' to purchase the property. If I find a buyer, I'll assign (buy) it. If not, tough cookies for the seller.

Lets look at this another way - Your theory is based on equitable conversion. Equitable conversion states that once I sign the contract, I become the equitable owner of the property, assuming no contingencies. It means that if the property triples in value prior to closing, I own that equity. This also means that, if a week later, the property burns down, I'm still on the hook for paying for it. This is why most real estate contracts have a clause to re-assign this type of loss back to the seller. In Nevada, this is covered under NRS 113.040.

Now, with that being said, lets pretend that your contract doesn't have 'Risk of Loss' clause. The house burns down and you're on the hook, but you have a contingency that states your 'partner' must approve the deal. Since the house burned down, your partner does not approve the deal, thus you cancel the contract and you are not subject to specific performance. Did you have equitable interest? No, you did not. This is why equitable interest is tied to specific performance. If I were going to try to simplify this, I think I would state that if you can't get your Earnest Money Back, you probably have Equitable Interest to the property. 

-Christopher

I haven't seen the video, I don't do Guru Stuff, but the 20% that the seller is going to carry will be your down payment. There are still closing costs to consider that need to be paid. Additionally, the number of sellers who will take back a 20% note are few in number these days. At a minimum, they are going to need about 30% equity in the deal to break even and be willing to collect that 20% over several years in monthly payments.

-Christopher

@Jason J.

Depends if you're doing the work or not. I did six live-in flips and did most of the work myself, but I didn't mind going slowly and living in a construction zone.  I was working a 60+ hours a week job and took me around 2 years on average to complete them, working most evenings and weekends. 

The challenge is time. If you're spending 40+ hours at your W2 job, that is time you aren't spending working on your flip. Most people also have some sort of social life, which distracts additional time from working. Fortunately, I don't have such issues! If you have money, buy a the right price, and know contractors that will do good work and are trustworthy, I'm sure you can drastically reduce the time you spend on the flip, but comes at the cost of profits.

-Christopher

@Shawn Connors

It depends on the seller and the type of listing agreement. If the seller is willing to pay the broker's fee, then there isn't any issue. If the seller is not willing to pay but the seller signed an exclusive right to sell with the listing broker, the seller will be required to pay the broker regardless of it being sold directly by the owner. Most people think they can wait until the listing expires, but most listing contracts have a broker protection clause built in and the seller needs to fully understand what it says. If the seller did not sign an exclusive right to sell, then the broker doesn't have a claim on the property or commission, if the owner finds their own buyer.

-Christopher

Well, you were screwed, but mostly by yourself.

The listing agent works for the seller, not you. While using the listing agent gives them an extra incentive to close the deal, they never owe any allegiance to you in any way, shape, or form. Legally speaking, if you sign the form for dual representation, you may get an impartial agent, but even that is unlikely. The bank provides numerous listings and is a constant stream of business - which is usually very alluring to an agent.

This is why buyer's agents exist. If you're new to the game, you should hire an agent that understands investments and understands your needs. Without one, the only person looking out for your best interests in the transaction is you.

-Christopher