All Forum Posts by: Terry Maher

Jason,

Most wholesalers try to get properties under contract for about 55-60% of ARV, including repair costs. Whenever I do my calculations i always allow for carry costs, commissions, closing costs, etc. Every expense needs to be factored in because savvy buyers will run their own numbers and deals with small margins can turn in to no deal if you don't account for them.

Brie,

Where is your meeting located on the NW side and what time does it start?  Thanks.

Terry

Tawanna,

Chicago Real Estate Connections Club (CRECC) is a really good club.  They meet the 3rd Tuesday of every month at the Double Tree Hotel in Oakbrook starting at 6:30.  Cost is $25 but your first meeting is free.  Great people.  Another is the Redevelop-U meetup at 3009 N Kedzie in the VFW Hall.  First Tuesday of the month, cost is $5 and they run from 6-8pm.  Always very well attended and very informative presentations.   You can also go online and Google 'real estate investment clubs in Chicago' and find a bunch of them.  Hope that helps.

What most wholesalers do is try for as long of an inspection period/attorney review period as possible, just as a cushion.  I always try for at least 15 business days, and sometimes the seller knocks that down.  But as long as you cancel the contract within the review/due diligence period you will get your earnest money back.  BTW, Monica, I am also a wholesaler here in Chicago so if you want to meet and share ideas or talk, just PM me.  Hope that helps.

I have been mailing to absentee owners for about four months now, a total of about 2300 mail pieces.  We made about 150 offers and closed one deal.  Not great numbers. We are continuing to mail around 1500 pieces every 6 weeks or so, many to the same owners we have already mailed to, as I have read and heard the same thing, that you need to touch them at least 4-5 times.  Motivation requires a change in your life situation, and that may not happen over a period of just a few months.

But the majority of the offers we made were in nicer suburbs with good ARV's, most had no mortgage and had good long term tenants and good cash flow. So there was no distress, no urgency and no life circumstance that was forcing them to sell. We have begun to cull the nicer suburbs and focus more on middle class areas where the motivation might be higher. And the fact that prices are rising is another reason that owners/sellers believe they can do better with an agent. And many of them may be right. But consistency and persistence are very important.

Thanks for the feedback everyone.  Appreciated as always.

I understand conceptually what a 'subject to' contract is but i have a question about how to structure it.  I know as an investor you take over the seller's existing mortgage (though not the loan) payments for a period of time, such as while the rehab is being completed.  But i have also heard deals where you can offer the seller a small down payment and they continue to make their own payments.   Is that true, or is just better to agree to assume the payments and then cash the seller out at closing?  Thank you.

Another way of looking at it, and i am sort of repeating what has already been offered, is that you 'make' your profit, ie, lock in your profit at contract time by getting the property at a good price and understanding your repair and ARV numbers, but you receive money when you sell. But the cake has already been baked when you decided what to pay for the property.

Renee,

i typically ask for 21 business days and wait for the seller to pare that back.  You really don't need that much time, but ideally i try to get as much as possible.  You need to keep in mind also that your earnest money is only refundable within the inspection period spelled out in the contract; if you extend the contract past that you risk losing the EM.  Bottom line, get as much time as the seller will agree to, and always make sure your EM is refundable.  Hope that helps.

Cesar,

Generally speaking when you as a wholesaler get a property under contract the contract with the seller is usually no longer than 15 business days, depending on what you cannegotiate. So a realtor would really not be useful since it's highly unlikely that he/she would find a retail buyer that quickly, and your property would eventually fall out of contract. Besides, you want cash buyers who can a) close and b) close quickly. That typically does not describe a retail buyer. You are better off marketing it to other investors, pitching it at REIA's. Craigslist, etc.