All Forum Posts by: Account Closed

Michael, I was in the paralysis of analysis mode for over a year before I dove in head first.

Hey, Lawrence! I DO agree that you can find good REO deals all day long, but you need to be, generally speaking, a “real†cash buyer to secure them. I also agree with everyone else that your numbers are probably skewed. However, if you do have a good deal, find the biggest and best wholesaler in your area and split the profit. No exclusive agreement, though. You’ll want to maintain the right to market the property on your own. You will learn the ropes and build your buyers list at the same time.

Hey, Charles! I don’t have experience buying tax liens, so anyone who does, correct me if I’m wrong. Tax lien auctions are different from foreclosure auctions, although they both happen at the courthouse steps. One is a delinquency on taxes and the other is a default on a mortgage. You need to be well-capitalized and be at the courthouse steps of many different localities. When you buy a tax lien, you need to pay off the homeowners back taxes. Then you need to hold the lien for months, if not years. A majority of the homeowners resolve their situation by selling their home or paying you for holding their tax lien. Most people in the tax lien business by boatloads of tax liens and make their money by the fees paid by homeowners to resolve their situation. Once in a great while, like a needle in a haystack, they get a house for pennies on the dollar. There are better ways to make money in real estate!

Hey, Michael! As far as order, move locating deals from the bottom to the top. Clothes? Save your dress clothes for funerals. If you're comfortable, your sellers and buyers will be too!

I've never been a super high-volume wholesaler. I like to balance time and freedom with income. Believe it or not, my first year in the biz was my best, 12 deals, over $100K.

Hey, Jeff and Cheray, I’d stick with guessing!

The fact is there are countless variables which can sway repair costs from one extreme to another. At every aspect of the process, from personal expertise, cash purchases vs. financing, financing rates and holding costs, efficiency and cost of labor, the quality of materials used, what you repair vs. what you replace … the cost of repairs will always vary from one buyer to the next. The buyer is ultimately accountable for repair estimates and costs, not the wholesaler.

Unfortunately, there’s no way out of it; we HAVE to provide repair estimates. “How much in repairs?†will always be one of your first questions. What you can do until estimating becomes second nature is start Googling wholesale properties and look for listings with itemized repair costs. You can make a ballpark estimate which should be sufficient. I always include a disclaimer with my estimates, such as, “For rental quality rehab: My repair estimate is just that, an estimate. You, the Buyer, will ultimately determine your own costs. Bring your contractor.â€

Inspections are simply impractical. Some will tell you to provide for and speculate on your buyers closing costs and any fees or expenses incurred by the seller to purchase the property, renovate the property, hold the property or sell the property. They tell you to factor in repair estimates supported by three licensed contractor bids, scope of work and breakdowns of material and labor costs, financing costs, holding costs, property tax, insurance, utilities, lawn care or snow removal, baby-sitting, coddling, pacifying or any other unforeseen provisions required to provide complete immunity to your powerless and unwitting buyer from personal responsibility.

The numbers you disclose on your marketing material should be limited to price, ARV, supporting comparables and a “rough†repair estimate. That’s it. There is absolutely no good reason to assume your buyer’s responsibility in analyzing the deal any further.

Hey, Stephen! If you put it in terms of vacant, distressed or boarded up, then yes, they are good candidates. Most in these categories will be REO’s, however, and generally reserved for cash buyers or particularly savvy buyers. Otherwise, it just takes some legwork and research to track down the owners.

Spotting vacant and distressed properties by tall grass, broken windows, etc, is easy. Finding the owner, on the other hand, can evolve into quite the laborious quest. You may consult your property data service, but too often fruitless. If the property looks like it has been sitting there, deteriorating for years, chances are hundreds of other investors have already sifted through the records in hopes of landing the deal of a century. It’s usually sitting there for a reason, like the owners have fallen off the face of the earth and/or the property is tied up in the courts.

Most homeowner records I have found on vacant properties are outdated, inaccurate or nonexistent. You can do a title search and open a full-blown investigation, research marriage records, deceased records, trace liens and lis pendens, but your valuable time is better directed through simple person to person inquiry.

Often, spotting vacant houses, which are NOT obviously vacant, yield the best results. Recently abandoned houses can look just like any other occupied house. Without tell-tale signs like boarded-up windows and doors, you’ll need to look for other clues. You may see that marketing flyers have begun building a nest somewhere on the door, the mailbox is overflowing or newspapers have begun colonizing the driveway. If you have any question, just ask a neighbor if someone lives there and what they might know about the owner.

Unfortunately, the business of wholesaling doesn’t always gain the respect it might, otherwise, deserve. Wholesalers are middlemen, plain and simple. And middlemen often get a bad rap. After all, used car dealers are middlemen. They are thieves sticking their greedy little fingers into the pot.

If a house for sale is a deal, it’s a deal based on numbers, not on who’s selling it or who’s making money on the sale. For illustrative purposes, let’s say I get a house under contract for one dollar. The house is in mint condition and appraises at $100,000. I market the house at $65,000. Does the fact that I’m making $64,999 make it a bad deal? Of course not.

Yet, some people illogically surmise that if somebody else is making money on the deal, it could not possibly be a deal. It’s the same reason some believe you cannot possibly find a deal through a real estate agent, because the agent makes a commission. Even some lenders put a cap on what a wholesaler can make, and some attorneys won’t do an assignment if deemed too excessive. It’s insane.

The fact is wholesalers provide a valuable service, not unlike an antiques dealer. Dealers use their expertise and time to locate what buyers in their industry want. Good wholesalers lay the groundwork for those investors, seasoned or otherwise, who benefit from full-time legwork and proficiency in locating, researching, evaluating and, most importantly, securing prospective investment property. Wholesalers make, otherwise, unavailable properties available to the investor community.

Just sayin …

Hey, Steve! I value my time, and buying at the courthouse steps requires too much legwork compared to the results achieved. You have to do and pay for title searches, drive the properties and so on. Half of the properties are resolved before they make it to auction. And the banks start the bids too high. Wait ‘til the bank takes them back. REO’s! Then you’ll have a trashed-out (cleaned out for lay persons) house with a clear title.

Masa Don! Nope, you don’t need an agent. Like some others have said, the MLS is available to you through realtor websites. Not all the info is there, but enough. Then go to realtor.com with the MLS number to find the listing agent. Submit offer to listing agent directly. Use a property data service like RealQuest or Haines Criss-Cross for your comps. Expensive, but a must have.

Hey, George! I started out giving little $500-$1000 referral fees. Then I upped the ante to 50/50 profit split! Why not? You wouldn’t have had the deal otherwise. Share the pie! Money motivates.