All Forum Posts by: Daniel Lane

With a similar amount down payment (about 20,000) I looked for a house hack opportunity in my area (Vancouver, Wa). The market here is insanely hot so trying to find a good deal was tough. Looking at townhouses with low to no HOA dues was my plan. I was able to find a townhouse from a wholesaler that needed next to nothing done to it. All said and done I purchased the house for $295,000 and it appraised for 328,000. I now have two roommates paying me 1200 a month. I pay very little to live there and pay off my mortgage. A similar plan would work well for that amount of money. My down payment was 5 percent of the purchase price.

@James Foley

So the trick is to have money leftover once you cash out refinance and pay off all debts and costs associated with the project. Cash out refinances are around 70-80 percent of the ARV. So this means that the HML, all repairs and carrying costs need to come in below that 70-80 percent of ARV when the project is finished. The only cash you will make on a BRRR is the difference between your project costs and the money you get from the refinance. The costs you have while the project is in progress are not going towards equity. Just towards the hard money lender. The only way I can see you making money during a BRRR is if you are renting out the space or spaces during the rehab. Which is definitely an options.

Does this answer your question?

@Nate Marshall It’s unfortunate you feel the urge to threaten rather than discuss. I do not intend to drag you through the dirt but inappropriate behavior in a learning environment needs to be called out.

To everyone bashing on wholesalers, you have some valid points but your replies are nothing but angry banter that do not push the conversation forward and provide a learning experience for people trying to reach out to the BP community. Especially you @John Thedford, your posts are always negative and occasionally unprofessional. I have seen you call out people and threaten to send their information to the police because they are talking about wholesaling in a BP forum. You really think that is the best approach? I highly doubt the people you threaten are going to give your opinion a second thought. So what's the point and what do you gain from it? And you @Nate Marshall, comparing someone trying to make a living and looking for answers to a terrorist? You make yourself look bad. How could anyone take you seriously and consider you professional enough to work with.   

Yes, there are newbies out there that give most wholesalers a bad name. However, a good wholesaler can walk into a situation and help a distressed seller out no matter what they require. When I speak to homeowners, I do not try to get them under contract to later just back out of it leaving them screwed, I do not lie about how assignments work and I do not lie about being a big time cash investor with massive amounts of cash on hand. I listen to their needs and find solutions to their problems. If their situation requires a real estate agent... guess what?? I refer them to a real estate agent. If I personally wouldn't be willing to buy the house then I would not put them under contract. Most wholesalers that I have worked with or spoken to have the same mindset. 

Your idea of what a wholesaler is is based off of the select few out there that do not know what they are doing. There's bad apples in every niche of real estate. It's terrible to see you commenting on all these threads spreading negative information and preventing forums from actually moving forward with good information that people can learn from. I do agree that wholesalers who lie and put sellers under contract to later just ghost them should not be in the profession. However, these people are not the majority. 

Yes, there can be legal ramifications from wholesaling if individuals are negligent and don't know what they are doing. Everyone should always consult a local attorney before starting. Every state is different and they all have different laws pertaining to this subject.

@Walter Dobbins

I would suggest diving into books and forums posts that already exist for information. You will get better information from the forums if you come asking specific questions. This question is broad and you will inevitably get generic answers that won’t help you.

I would strongly recommend starting with books that were written by some of the bigger pockets guys. They have a couple books on rental property investing. Also if you haven’t already, listen to the Biggerpockets podcast. Crazy amount of good information by high level investors in that podcast.

Good luck.

@Kelli Standekar

I just went through a similar situation with a property I had under contract. I ended up backing out of the deal after the inspection because some repairs were too large and the numbers I was running stopped making sense.

In your case you need to re-evaluate the numbers and make sure they still work for you. If you have the capital to take on this house then I say go for it but just know water damage can be a lot more than what meets the eye, especially when the damage is seen inside of the building. To me that means that mold could be all over the building where you really can’t see it and that might not be fun to take care of when you are trying to move tenants in right away.

As mentioned above, all houses have their issues. That is why it is so important to run your numbers and make sure they make sense even assuming the most expensive repairs. If the numbers stop making sense, take the money and run.

You mentioned that you are wondering if these would be things that you could fix up over time? My guess is probably not. So if you don’t have the money right now then probably not a good house for you personally.

Also, assuming you are still in your inspection period of the contract and have time, I would bring in a contractor or specialist to take a look at the water damage and give you estimates on what it would take to repair and eradicate mold.

Biggest concern is the water damage and what caused the water damage. Other issues can be solved quickly. Just my two cents.

@Pete Storseth I am not entirely sure how the market is where you live but here in Washington there’s loads of buyer money in the market and not a lot of sellers or inventory. Wholesalers are always looking for bird dogs and cold callers to help them find sellers.

I imagine you could find some wholesalers in your area on this website. Personally, I would reach out to them first and see if they have any positions available inside of their operation. Or at the very least see if they would be willing to meet with you and let you pick their brain.

I just hate seeing people pay thousands for information that is available to them on the internet. Hell, you could honestly go out and find some houses that are in disrepair, look up the property information in your county website, then skip trace the name and get their phone number. From there just call and see if people are willing to sell. That’s the baseline of what most people are doing. Obviously, wholesalers are streamlining the process with softwares and applications and there’s technique and strategy with how they talk to homeowners but all that information is online and in podcasts.

I just listened to a podcast Brandon Turner did and he talked about his favorite deal from when he first started. He targeted a list of homeowners that met his specific criteria and he then sent them all personalized post cards explaining he was interested in buying property. Lots of people called him back and he ended up landing a fourplex from one of the people who called him back. That is not a hard process to copy and do for yourself.

@Oleg Enik lenders are numbers people and age is not one of the numbers they are going to look at when pre-approving you.

For example, if you walked into a lenders office and told them you make 50k a year, have zero debt, have no monthly payments besides a rent payment and you have a good credit score, you’re going to get pre-approved for a good amount. They aren’t going to question your age.

However, if you have little income, little savings, a bad credit score and debt. A lender will have a tough time helping you out. So it all comes down to where you are at financially.

I personally found my lender and realtor at a real estate meetup. I was able to build a relationship with them prior to working with them. This helped tons in the whole process. As I was looking at houses I could text my lender addresses and he would plug the numbers in and tell me what my debt to income ratio would be, what my mortgage would be and if I could make it work. I feel that kind of relationship with a lender is important. My lender was even available on weekends for me to reach out and ask questions.

Good luck with reaching out to the lenders. Remember, you are technically hiring these people, you do not need to work with any of them. It’s ok to have conversations with multiple lenders and let them know you are just reaching out to find the best one that’s fit your personal needs and goals.

@Pete Storseth I personally would not recommend paying for this kind of help. There is a wealth of information inside of the Biggerpockets community.

I was in the same position you are in now, 6 or so months ago. I began listening to different wholesaling podcasts like “wholesale inc” and whatever show Max Maxwell does. Both podcasts constantly discuss how deals are found and what successful wholesalers have done to find deals and motivated sellers.

After researching for several months I decided to just start cold calling home owners and getting my feet wet with having conversations with random homeowners. Initially, I was able to find a few homeowners who were interested in talking but didn’t end up selling. After working on my own for about a month I reached out to a local wholesaling business here in Vancouver, Wa and started working for them as a cold caller.

Fast forward another 3 or so months and I now have a fairly good understanding of what it takes to connect with homeowners and what kind of strategies are needed to find motivated sellers. I am now actually getting paid while gaining experience and knowledge in the field.

Long story short, you are better off saving for a down payment. Put your head in the books and reach out to local investors/wholesalers for information and or work.

If you have questions on how we find motivated sellers feel free to PM me and I we can email or talk on the phone.

David Greene has a lot of good information and has a book on the brrrr method of REI. Pretty much anything from the Bigger Pockets guys you can't go wrong with. @Harith Hadi