All Forum Posts by: Account Closed

Thank you, Russell. I looked it up. My understanding is that come Oct. 2024 and wholesaler must disclose that he is going to assign the contract to a third party. Which is fine by me. If I find a seller I will be very shrewd and let them know what I am doing, in terms of money I am going to make of the contract. I will negotiate the lowest MAO I can and earn the most money I can from the deal. If seller doesn't like it I will just wish them good luck, let them sell it on their own and find a buyer without my input. I will keep doing this in MD until at least October of 2025. By then (if new law passes) I will figure ways to go around the fascist/communist Maryland law/regulation, by creating JV or entirely moving my operation out of this State to wherever legislature is controlled by business friendly representatives. I have a feeling this trend will prevail in blue/purple states, not so much in red/business friendly States that are averse to overreach and overregulation by the government.

As to assignment fee, the average is said to be $10,000, with actual fee ranging from $2,000 to $50,000 or more. It all depends on numbers. Let's assume I , as a wholesaler, after netting $2000 per deal x 20 deals I closed in an entire year, stumbled upon certain property in town A. I run comps with my agent and they come at $450,000. I have full report drawn from MLS. That's my ARV. I deduct 30% and arrive at 315K. I hire a contractor to do accurate estimate of repairs and they quote $45,000. That brings the total down to $270,000. Suppose I want to make $10,000 , so I am ready to write a contract for $260,000. That's my MAO. The seller is motivated and says they want to get out of that property ASAP and will give it to anyone who pays them $220,000. $270,000 is a fair price for that property for an investor. I run my numbers, I know the market, I know the ARV. If I send this property to my buyers I will have three people next day wanting to pay cash to buy it at $270,000. Suppose you, as an investor, also find out (through my RE agent) about that property and want to buy it. Do you think I should assign it to you for less than $270,000, so you can get full title insurance on it, while three other buyers are willing to buy it for 270K with no questions asked (and aware of the issue with title insurance)? How much should I assign it to you for? $230K? And forego other investors/buyers? If yes, please tell me why should I consider it a fair deal and give that contract to you, knowing that this house has $450K ARV after $45K spent on rehab/renovation? What I think is fair is for you to do what I did, to find that exact house or similar property on your own, close the deal at $220K and not deal with me at all. But if you go through me, then I am entitled to my fair share. You didn't pay me to work the entire year, driving one town after another, putting up signs, making cold calls, networking, paying for local ads to make $2000 on each deal I netted prior to this $50K gem. Why should I give it to you for less than it's worth in a wholesale market?

I get it. But if I were you and had such a negative perception of wholesalers, or any specific wholesale deal where I can't get a title fully insured, I would simply forego the assets offered by wholesaler/s. Every day I go buy things for my household I decide whether the price I pay for an item is worth it or not. If it's not, or if purchase is too risky and costly, I simply don't buy it. 

 David, the amount you will have to spend to locate the property (run adds, put up signs, buy lists and etc) is not comparable to the amount you would have to invest if you wanted to personally buy that property, hire a crew to fix it and absorb the costs of owning that property before you could sell it. Difference is huge. Instead of putting up hundreds of thousands of dollars, you could spend only few thousands and get your first deal, then another and then another and so on. As a wholesaler you have to work a lot to make a deal, it takes great deal of effort to find and close a good deal especially when you are just starting out. But it doesn't require a great amount of the capital. Therefore, I stated that wholesaling requires minimum capital investment (as opposed to hundreds of thousands or millions of dollars you would need to flip a house or buy and hold it).  

 Jay, why are you buying anything from wholesalers? Why don't you go out and find the sellers who own property directly, so you can buy from individual homeowners and cut the middleman out? 

As a wholesaler I can acquire a mobile home for $10,000 , mark it up by million dollars and offer to cash buyer for $1,010.000. Obviously, no intelligent buyer will buy it from me.  Market will correct me. Why is it necessary to outlaw wholesaling, when market laws can easily take care of this problem?

The rules are simple: find a property. Get comps from MLS for similar homes bought in the past 30-180 days in the same area. That should bring you to the ARV. Deduct 30% from that number. Then do your estimate of repairs (use a software or hire a contractor if it's too complicated for you). Deduct the estimated figure from the ARV as well. Then deduct whatever you want to charge for your service. Thus you will arrive at your MAO. Make an offer to seller. Keep negotiating with seller as long as what they ask leaves room for you to make what you deserve. If seller accepts your offer then get your contract with seller signed and present your contract to investor , with your cut added on top of what seller agreed to sell for. If the numbers are right, if your comps are accurate, ARV is real, the repair estimates are accurate and etc., then any investor who stands to gain their 30% should be interested in buying the property. You should not get stuck as a wholesaler with a contract if you didn't inflate the ARV and didn't artificially diminish the repair costs.

Of course, i could be an idiot who does that, as in example I cited at the very beginning: I could get a mobile home for $10,000 that is worth $8,000 after the repairs ,and try to add million dollars to selling price for finding it. That deal simply won't close. And the market will kick me out of wholesaling business as a punishment for my sheer incompetence. No one will deal with me, no one will buy a property from me. But why should everyone in wholesale business be penalized and outlawed if I am so clueless about it?

Thank you, Russell. Can you post a link to current Bill (or the name of the Bill) in current legislative season? I searched but couldn't find anything similar to 2023 Bill introduced in 2024. 

Quote from @Chaim Shwartz:

Quote from @Russell Brazil:

South Carolina, Virginia, Arizona, Ohio, Illinois, Maryland, Philadelphia have all recently passed wholesaling bills. Many more states have them in the works too....and in some of those states, further legislation is in the works to fill in some of the gaps in the legislation they just passed.

So yes, it does seem like the tide is turning on this practice.

Seems like they require you to have Insurance. 

Most of you in the thread:
 

 It's kind of a lame excuse, to say "we don't have enough resources to go after criminals, so we will outlaw the wholesaling for good". That's like outlawing RE agents and brokers because there are some fraudsters and criminals among them and there are no resources to go after and penalize the bad guys, Therefore, all must be outlawed. I am sure brokers and RE agents love this trend, after all less competition for them is good for them. But it's business killing legislation. Wholesalers don't look for property that can be staged and sold in market to end buyers (that's what realtors and brokers do). Wholesalers look for properties that can not be sold to end buyer and, as others mentioned, realtors won't touch most of these properties because it isn't worth their time and effort when they can stage and retail a prime property in excellent or good to pass all inspections condition. Why bother with few thousands of dollars worth of deal when you can sell a house for million dollars and net 3% on it? 

P.S. It's a nice T-shirt. Tragically, we have a lot of people who yearn for a daddy to govern them harder. As if it ever delivered any good results in past. 

Hi everyone. I was away from RE world since COVID hit. Now I am back and was about to get myself started with wholesaling RE. I know it has a bad rep and everyone hates wholesalers, the state, brokers, realtors, you name it. But having researched it thoroughly, I found it to be the best way to venture into RE business. It requires minimum capital, it's doable and it can be profitable if you do it right. However, as well know , there is nothing that nanny state will allow to exist without stifling it. Any opportunity is too good for the law abiding citizen, unless he can bring to table millions of dollars , spend 60 hours on some BS course to acquire a license, to have every breath and sigh controlled, regulated, restricted, obstructed and sabotaged. So, just as could be expected, MD legislature introduced a bill last year that would outlaw the wholesaling. I searched for the similar bill in 2024, but couldn't locate it online. Did they reintroduce it? What is the most current status of another anti-citizen bill proposed by our nanny state? I would love to hear from experienced investors, realtors and attorneys who know about inner workings of MD legislature. What are your thoughts on it? Am I going to waste my time and effort, only to see my venture outlawed by MD in about 6 months to a year?

I would also like to connect with all investor friendly realtors, lenders, accountants, wholesalers and business/asset managers in the area. Hopefully, we can have a brief chat to discover ways we could be useful to each other. 

Best regards,

Eric

 That person is not registered in the State of Nevada, nor is the business they claim to represent. It's easy to verify on Secretary of State's page. Do not share any personal information with strangers.