All Forum Posts by: Christopher Brainard

@Felix Goldstein

You're not using the correct terminology and/or understanding its meaning. It doesn't matter how many contingencies you do or do not have, you do not own the house until the contract is executed. What you have when the contract is signed is an executory contract. This means it is capable of being executed. Once you fork over the money and the seller signs over the deed, it becomes an executed contract. Once this occurs (closing), you own the property and can do whatever you want with it. Based on your logic, you don't need to pay the sellers at all. Since you already own the house by signing a contract, why bother closing? Just keep writing contracts and you'll own all of Ohio in a week. 

I don't need to call the NRED - NRS 645.030 is very clear about what qualifies you as a broker and basically states the same thing as Ohio. To summarize, it says a “Real estate broker means a person who, for another and for compensation or with the intention or expectation of receiving compensation Sells, exchanges, options, purchases, rents or leases, or negotiates or offers, attempts or agrees to negotiate the sale, exchange, option, purchase, rental or lease of, or lists or solicits prospective purchasers, lessees or renters of, any real estate or the improvements thereon or any modular homes, used manufactured homes, used mobile homes or other housing offered or conveyed with any interest in real estate" 

This is black and white - if you try to sell a house you do not own, you are brokering. What the wholesaling debate is about is how to do this legally by selling what you own, which is the contract, and not the property. That is legal, however, you can still violate the law if you aren't careful. You are limited in what you can and can not do and people are getting busted for taking strolls across that black and white line in the sand.

-Christopher

P. S. You should read up on some contract law to understand how real estate rights are conveyed. Once you understand the basics, you will agree with me and see that your interpretation of contract law is incorrect.

P. P. S. You are still wrong :)

Well, back in 1999, I moved across the country (from Ohio to Texas) to move in with a girl I was "dating" online for about a year. You can heckle me for this all you want, I realize now what a dumb idea/decision this was, but I didn't know any better at the time. That fell apart in two or three weeks. I was in a new city, no job, no place to live, just had my car and a few hundred bucks to my name, but decided that I was going to stay and make the best out of the situation. 

Found a crappy job working for a temp service 16+ hours a day, slept in the park for a bit, found a better job, rented an apartment. Got interested in real estate, made my first purchase about a year later. Did a couple flips that didn't result in much capital, but I learned a lot along the way. Got my RE license, bought a few more, did much better. Ended up living in Europe for a few years (due to my W2 job) and moved to California when I came back to the states in 2010. Did a couple of live in flips in California and made a killing. I gave up my W2 job in January of 2014 and officially entered 'retirement' at 35. 

I'm on Chapter 3 of my life now. Doing nothing all day is boring, so I took my profits from California and moved to Las Vegas. I've purchased 5 rental properties so far and I'm looking to acquire 15 or so more in the next year and a half. My life doesn't spin like a "guru" story, but I'm young, comfortable, and free to do whatever I want for the rest of my life. 

-Christopher

I can't do cold calls - so I make my wife do them! ;) 

In all seriousness, find someone who doesn't mind doing it.

If you aren't willing to use the phone, there is always direct mail

... but if successful, they call you!

-Christopher

@Felix Goldstein

Well, since nobody else has responded to this nonsense, I suppose I will reiterate my previous points, for I fear that newer members to the website might read your dribble and think it has some merit. 

1) You do not own a property by putting it under contract. A contract is an agreement between a seller to sell the property and a buyer to buy it at a certain price in a certain time frame. No more, no less. Until you execute the contract (ie: Close & Convey Title) you have a piece of paper and a promise. It doesn't matter if you single close, double close, or triple close. Your entire theory is flawed because under no circumstance do you "own" the property until the contract is executed - this is why people are getting into trouble. 

2) You can not advertise a property that you do not own without being considered a broker. That's the definition of brokering without a license. Clearly, you are breaking the law. I don't care, but don't want you to lead others down that path. You even called the Ohio Board and they told you the same thing, you are in denial.

3) It is clear that you are not an attorney. I firmly agree on this point. You need to consult one as soon as possible so they can explain the finer points of wholesaling to you, especially in Ohio.

4) In no situation above have you acted as a principal, you need to own the property to be a principal. See point #1.

In closing, this website is devoted to helping people become better investors. It is so the new people can learn from the experiences that those of us who came before them have learned. You are welcome to ask any questions you want here and we will do our best to answer them with the best information we have, but please don't ask a question then tell us we're wrong when you don't get the answer you want. It is insulting and detrimental to the people who are here to learn.

-Christopher

@Zachary Gwin

While it is unlikely that you will get conventional financing through a bank, you may be able to secure some hard money, if the deal is good enough. The deal outlined above would not qualify with any lender I know and the margins look thin at best. Typically, you need to find a house that will be valued at 70% of the repair value after the cost of repairs is taken into consideration. So if the house above is worth $700k and the repairs are $80k, you should be looking to buy around $410k. Even at those numbers it may be a hard sell, as you don't have a track record or personal assets. 

The other option is to look for someone with money to partner up with - friends and family are usually the easiest place to look but often the hardest to work with. 

-Christopher

@Sara N.

If he still has time on his lease, you can't terminate without cause. Assuming his lease is up or he is on a month to month, you just need to follow your state requirements for lease termination, which here, is sending written notice 30 days prior. 

I would allow him to reapply after the renovations are complete, if he wishes, at the new rental rate. It doesn't sound like you would be interested in having him as a tenant, which is fine, just don't select him. I would not confront him or say anything rude or offensive, no reason to burn any bridges in business. After all, if you don't receive any other applications, his may not seem so bad after a few months of vacancy ;)

-Christopher

@Steven Story

As a former resident of Orange (wife is from Chino), I understand your situation pretty well. We did a couple of flips in California and made out very well, however, for a rent and hold strategy the market is just too pricey and doesn't cash flow well. We ended up moving to Las Vegas to pursue our retirement and investment careers. 

I did a lot of research and generally the midwest is great for cash flow, but you're unlikely to see much appreciation there. California is likely to continue to appreciate due to the limited space in the coastal areas, however, I don't think rents will keep pace.

I'm a big advocate of investing where you live, but its tough for California right now. Best of luck to you and your out of state investing :)

-Christopher

Hi @Tim Porsche and welcome to BP.

1) It is possible, but it will cost you. There are basically three ways to go - The first is hard money. It is expensive, but they look at the deal and if the numbers work, they will lend you money. Your ability to put money in or required credit will vary source by source. The second option is a FHA 203B loan. The down payment would be low, but from what associates of mine have told me, it can also be a pain to deal with the inspections and withdraws. The last would be to find a partner with capital. This would be the best option if you're just starting out, provided you can bring enough to the table to attract someone with experience to help guide you through the first few flips.

2) I'm not sure I really understand this question. Option A is the only acceptable scenario. Option B and C lead to certain doom for an investor. Buy at the right price, don't just buy something because you want to be an investor.

3) Depends - the six flips I've done have all been while I occupied the property, so I was in no rush to get done. There are tax advantages to living in the flip, as you can get a tax credit if you live there for 2 of the past 5 years. If you were not living in the property, time is of the essence, as the interest payments will kill you.

4) If you have contractors do the work, you just need to oversee things, therefore, you wouldn't need a ton of time. The down side is, you won't make nearly as much money. Contractors are expensive, even for the little things, and you can't trust them 100% to do the job right and on time. Finding good contractors is a challenge. 

5) You should do as much work as you possibly can if you want to maximize money. If you have tons of money, have contractors do the work, as your most valuable commodity is time.  Depends on your situation.

6) Education is key - Read and learn as much as you can. Learn as much as you can about DIY through you tube. even if you hire contractors, you need to know what is going on to talk intelligently about the situation and make sure you aren't getting ripped off. Flipping properties can be a great source of income but it is also high risk, especially if you don't know what you are doing. 

-Christopher

@Account Closed

Hi Josh and welcome to BP.

People sell for different reasons. Some retire, some don't enjoy the business. Some people realize that their investment is declining and want out. Some people just flip or wholesale and that's just what they do. Real Estate does take a lot of hard work to be successful and land lording can be particularly difficult due to crazy tenants. It isn't the guaranteed win that your post infers and some people aren't up for the challenge and want to take their cash and go. 

Appreciation isn't taken into consideration for valuation because that is speculation on the future. Real Estate is highly localized and one block can do well while the adjacent one turns into the hood. It is also cyclical, so if you are overleveraged and the market takes a drastic turn for the worse, you can lose your shirt. It isn't the easy street guaranteed millionaire pitch that the gurus send your way.

-Christopher

@Zachary Gwin

It is doubtful - none of the national banks would allow this activity, but you may be able to sell this to a local bank, if you have an established relationship. Generally speaking, they will need you to show two years of tax returns to verify your income, which shouldn't be an issue of how many chunks it came in. Additionally, they will not allow you to refinance based on the appraisal without the appropriate seasoning. 

So, I think your options are to (1) buy the place and wait six months or whatever the seasoning period is (with hard money, probably not a good option) or (2) look for private capital, which is probably the best idea. If the deal is as good as you stated, I'm sure you can find an investor to front the money for a 8% to 10% return for as long as you need. That's the going rate of what we're paying here in Las Vegas, but may be different for private capital in your area.

-Christopher