All Forum Posts by: Dennis Williams

Thanks guys. If you would have done something different,  please share. ;-)

@p. Martin Thanks for the feedback.  Do you wholesale in different states? 

@P. Martin Yes, I did.

I bought a HUD home last year in June 2014 with the intent of wholesaling the property. The property was located 200 miles from me and was for sale at $12,600. I had no way of looking up comps on the MLS so I looked at recent sales on Zillow (not the best source). Zillow suggest the home would sell for $38K to $45K. By looking at the pictures online it looked like the property may need about $12K to get it rent ready. I placed an offer for $5,500 not expecting HUD to accept the offer because it was more than half of what they wanted.

Sure enough, the next morning I had an accepted bid. Now normally I wouldn't go out to see the property, HOWEVER, since the price was sooooooo good I had to see the area and to see if it would make since to wholesale it or buy, fix, and flip it.  I jumped in the car and 200 miles later I was in an interesting part of Jacksonville (Jax). The property looked good to flip and I scheduled two local contractors to meet me at the property that day.  Both of them came in about $4,000 more than what I estimated.  This was my second wholesale deal and I just didn't have the capital to buy the property and spend $16K for rehab. 

Looking at the neighborhood, I notice the street the property was on was good, BUT the surrounding streets were filled with questionable street activity at night. So you guest it, back to plan A.  Now I didn't know the area or how to find buyers in that part of Jax. So I got on Facebook and started a "CHEAP HOME BUY IN JAX" ad focused in that part of Jax for $15,800.  Within two days I had over 32 responses.  Most of them wanted to rent the property and/or rent-to-own.   However, two of the 32 were investors looking to buy the property for $9K.  I know,... take the money and run right.  OOOOHHH no not THIS guy, I wanted at least $12K because I felt the value was there.

45 days later I had no commitments so I bought the property, all in at $6,200. Now I felt like it was not the BEST move having most of my capital tied to one property but I knew I could find a buyer for $12K or just rent-to-own to a buyer with a nice down payment.  I called both investors back to see if they would increase their offer but neither of them budged. I ran my FB add for 1 more week and asked a wholesale buddy of mine to share the property with his buyers and I would pay him $1000.  Two days later he calls me with the buyer for $12K and we closed in 14 days.  As an investor what would you have done differently, and why?

Thanks Mocellie Bitting. Yes I'm sure this was my first deal, I just have a long history in sales.  Love listening to Jim Rohn, Zig Ziggler, Brian Tracy, Grant Cardone, and Bob Procter to name a few.

At the beginning of 2014 I received my tax return and decided it was time to stop reading about investing in RE and start doing. I took $2,000 and placed a offer on 2 HUD properties. One was a Town Home (TH) and the other Single Family Home (SFH). Each required $1,000 for Escrow. I secured the TH at $78K and it had an ARV of $115K. I secured the SFH at $148K and its ARV was $180K. REMEMBER this is my first wholesale deal so I know now that these #'s were way to tight. To get the TH story out the way, that one did not sell in the 45 days time frame so I lost the $1,000. However, I reached out to a few individuals that I knew wholesale property. (Is it wholesale or wholesold.. .. anyway.) Two days after receiving and executed contract between me and HUD, one of the wholesalers told me they had a RETAIL cash buyer ready to buy the SFH for $165K and close in a week. Before the end buyer signed, she expressed that the home had a TON of problems and wanted a discount to fix them. I told the wholesaler that I wanted to walk away with $10K profit and the rest is his so whatever he negotiates is on him. He said okay and told the buyer he could sell it to her for $162K.

Normally this is a GREAT DEAL! however I didn't know the process that HUD homes go through, so I told the wholesaler that I needed a few days to clear title. I quickly found out, HUD does not work on your time frame..lol During the process, in the second week, the buyer was getting impatient and wanted to close ASAP. I found out that we were not going to close for another 2 weeks and relayed that to the wholesaler. The buyer understood but started to question if this deal was legit. Since we did secure a $2,000 earnest deposit at least my risk was covered if the buyer bailed. At this point the buyer reached out to me and said they felt like the wholesaler was not being honest with them and wanted out of the deal.

I asked her a series of questions to calm her down and to get back on board with going through the process of buying the home. To summarize it, she just didn't understand why it was taking so long since she was paying with cash. by this time I understood the HUD process and explained it to her full disclosure. After speaking with her, she sounded like an older Russian lady that spoke very good English but was pretending she didn't understand the numbers to work a better deal.

A Week before closing the wholesaler calls me and tells me he does not want to deal with the lady anymore because she keeps asking for a discount to take care of the problems in the house (some plumbing and cabinets needed to be replaced, est. $4,500). I found out later the the wholesaler was taking the buyer from his wholesale company to try and make some money on the side without his company knowing...

I call the buyer and calmed her down again, and I asked her what more can we do to make this house your home? She said, "It needs a TON of work and I want the $4,500 to make repairs." I said, "Okay, so if I'm hearing you correctly, I you can buy this house with a $4,500 discount off the original price, you would sign the addendum and close?" She said yes and we worked the addendum to show a sales price of $161,500.

By this point the wholesaler asked me to handle the deal and just pay him on the HUD-1. When the buyer received the addendum, again she pretended she didn't understand me and wanted to pull out or get a discount off of the $162K... At this point you can see the wholesaler is losing a great deal of profit. I spoke to the wholesaler and told him what was going on and gave him the opportunity to protect his profit. He was so done with this lady that he said, "Dude I don't care what you do, just make it up to me on the next one."

I said okay and reached out to the buyer and said to her again, "So if I'm hearing you correctly, if you can buy the property will a discount off $162K you will sign the addendum and close on the day of closing?" She said yes! I called her back in 3 hours and said, "If we give this property to you at $158,000 you will have to pay all closing cost buyer/seller." She said okay. 2 days before closing she gets the HUD-1 and FREAKS out. "$6,000 in closing cost?!!!" she said. " I am not coming to closing!!" "You are a BAD person!!!" and she hung up the phone... It was the worst situation to be in because I didn't have a back up buyer and I didn't have a buyer for the TH.

So I called the buyer back and explained to her that we agree she would pay both buyer and seller closing cost. (The reason I did this is to prevent her from trying to ask for another discount. By showing her the high closing cost allowed me to move her focus to getting her closing cost lowered instead of the price.) After she vented for a while, I asked her, "If I can get the seller to pay their closing cost and you not pay more than $4,000 would that work for you?" She replied, yes. After all of that, we finally got to the closing table and closed on the property. In the end, since it was my first deal, I used transnational funding that cost $3,500 and we walked away with $8,600 on the B-C contract + commission of $4,200 on the A-B contract. Since we almost lost the buyer I'd rather have $12,800 then $0.00. How would you have handled this scenario? If you have had something similar happen please share.

So I called the buyer back and explained to her that we agree she would pay both buyer and seller closing cost. (The reason I did this is to prevent her from trying to ask for another discount.  By showing her the high closing cost allowed me to move her focus to getting her closing cost lowered instead of the price.) After she vented for a while, I asked her, "If I can get the seller to pay their closing cost and you not pay more than $4,000 would that work for you?"  She replied, yes. After all of that, we finally got to the closing table and closed on the property.  In the end, since it was my first deal, I used transnational funding that cost $3,500 and we walked away with $8,600.  Since we almost lost the buyer I'd rather have $8,600 then $0.00.  How would you have handled this scenario? If you have had something similar happen please share.

E. Beauvais, yes that is correct.  But I will include that into the rest of the story soon.

At the beginning of 2014 I received my tax return and decided it was time to stop reading about investing in RE and start doing. I took $2,000 and placed a offer on 2 HUD properties. One was a Town Home (TH) and the other Single Family Home (SFH). Each required $1,000 for Escrow. I secured the TH at $78K and it had an ARV of $115K. I secured the SFH at $148K and its ARV was $180K. REMEMBER this is my first wholesale deal so I know now that these #'s were way to tight. To get the TH story out the way, that one did not sell in the 45 days time frame so I lost the $1,000. However, I reached out to a few individuals that I knew wholesale property. (Is it wholesale or wholesold.. .. anyway.) Two days after receiving and executed contract between me and HUD, one of the wholesalers told me they had a cash buyer ready to buy the SFH for $165K and close in a week. Before the end buyer signed, she expressed that the home had a TON of problems and wanted a discount to fix them. I told the wholesaler that I wanted to walk away with $10K profit and the rest is his so whatever he negotiates is on him. He said okay and told the buyer he could sell it to her for $162K.

Normally this is a GREAT DEAL! however I didn't know the process that a HUD home goes through, so I told the wholesaler that I needed a few days to clear title. I quickly found out, HUD does not work on your time frame..lol During the process, in the second week, the buyer was getting inpatient and wanted to close ASAP. I found out that we were not going to close for another 2 weeks and relayed that to the wholesaler. The buyer understood but started to question if this deal was legit. Since we did secure a $2,000 earnest deposit at least my risk was covered if the buyer bailed. At this point the buyer reached out to me and said they felt like the wholesaler was not being honest with them and wanted out of the deal.

I asked her a series of questions to calm her down and to get back on board with going through the process of buying the home. To summarize it, she just didn't understand why it was taking so long since she was paying with cash. by this time I understood the HUD process and explained it to her full disclosure. After speaking with her, she sounded like an older Russian lady that spoke very good English but was pretending she didn't understand the numbers to work a better deal.

A Week before closing the wholesaler calls me and tells me he does not want to deal with the lady anymore because she keeps asking for a discount to take care of the problems in the house (some plumbing and cabinets needed to be replaced, est. $4,500). I found out later the the wholesaler was taking the buyer from his wholesale company to try and make some money on the side without his company knowing...

I call the buyer and calmed her down again, and I asked her what more can we do to make this house your home?  She said, "It needs a TON of work and I want the $4,500 to make repairs." I said, "Okay, so if I'm hearing you correctly, I you can buy this house with a $4,500 discount off the original price, you would sign the addendum and close?"  She said yes and we worked the addendum to show a sales price of $161,500.  

By this point the wholesaler asked me to handle the deal and just pay him on the HUD-1. When the buyer received the addendum, again she pretended she didn't understand me and wanted to pull out or get a discount off of the $162K... At this point you can see the wholesaler is losing a great deal of profit. I spoke to the wholesaler and told him what was going on and gave him the opportunity to protect his profit. He was so done with this lady that he said, "Dude I don't care what you do, just make it up to me on the next one."

I said okay and reached out to the buyer and said to her again, "So if I'm hearing you correctly, if you can buy the property will a discount off $162K you will sign the addendum and close on the day of closing?" She said yes! I called her back in 3 hours and said, "If we give this property to you at $158,000 you will have to pay all closing cost buyer/seller." She said okay. 2 days before closing she gets the HUD-1 and FREAKS out. "$6,000 in closing cost?!!!" she said. " I am not coming to closing!!" "You are a BAD person!!!" and she hung up the phone... It was the worst situation to be in because I didn't have a back up buyer and I didn't have a buyer for the TH. .... You will not believe what happened next...to be continued (have a meeting to get to)

@Wayne Brooks I can appreciate that response.  Just to be clear, I would never take someones property who actually wanted the property.  Having said that, base on my research at the time of this incident I did learn that once someone, other than the owner, files for adverse possession, the owner is notified by mail.  I believe at that time, the owner would need to respond in one form or another (call the police) to correct the issue.  Is this correct?