All Forum Posts by: Kelly Boulton

Hi Briant, Welcome!  After reading everyone else's comments, I may have a controversial take, but here goes. Yes, the sentiment toward wholesaling is not very positive--especially in an oversaturated wholesale market like Orlando.  Yes, wholesaling is tough to break into and to do it correctly is to have a good foundation of knowledge on the subject.  And yes, it may be a good idea to work for a wholesaler first to get your feet wet.

I don't think it's necessary to spend money to get your real estate license first.  Most agents don't understand or have any interest in wholesaling, and honestly some agents don't seem to know much about the basics of their industry at all.

While you do need to understand real estate and the real estate market, I think what's truly necessary is having the right tools and systems to help you as you begin. For instance, a worksheet calculator that you can depend on for accurate rehab numbers, a coach or mentor that has experience wholesaling whose brain you can pick, a curious, principled solution-based mindset, willingness to find sellers that are NOT on the market, and for good measure -- steal underpants!

I've had clients use Alpha because they do a free inspection, which is likely what you will want.  I will say that each time they tend to come back with seemingly over the top quotes for "potential" problems, but the guys are very timely and helpful especially if you ask questions during the inspect.  Which you definitely want to do as @Chris Grenzig mentioned. 

Another company I've used is LRE Foundation Repair. Free inspect.  Happy to answer questions and didn't come back with a crazy quote.  Good luck!  And if you go with another company besides these, you should totally update us on your experience for future reference!

Hi Elizabeth,

It sounds like you have a couple of options.  Could you share a little more about the property?  Maybe we can weigh-in and help you hash it out.

Is there a mortgage? 

Is cash invested related to renovation? If so, what did you update and did it add significant value?

How much are similar homes selling for?

How much would a similar home's rent for? Is it more than your mortgage payment?

Spill the tea! :)

I'm not sure if the bank would pay, but hopefully you have already reached out to them to see what they require to move forward.  If they are not willing to pay, I'm sure you could negotiate with the seller.  I wouldn't think it would be more than $150. Personally, I would eat the money up front to get someone on schedule asap and work with either the bank or the seller for a credit at close.

If there is roof damage, that would be an insurance claim on the current owner's policy.  You would not be responsible for the repair from damage.  This could be another reason the closing is delayed. Depending on the bank/loan type they could require that the claim is filed and there is proof of repair.  

As for Force Majeure, first this is not legal advice because I am NOT an attorney. Though when it came up last year with my client it was determined that you can easily use the county declared state-of-emergency as proof that there was a hurricane.  

So if there is damage that can't be rectified through reasonable effort with both parties (ie. damage that the buyer is not willing to claim on ins., won't credit you the cost to fix, a delay longer than 30 days while the bank is processing "re-inspection', ETC) than you can cancel the contract and receive your escrow back.  Remember, the seller is counting on this to close as well.  It sounds like the transaction is close to closing, which means instead of finding a new buyer, they'd likely be open to reasonable concessions.

Included full clause below...

FORCE MAJEURE: Buyer or Seller shall not be required to exercise or perform any right or obligation under this Contract or be liable to each other for damages so long as performance or non-performance of the right or obligation, or the availability of services, insurance, or required approvals essential to Closing, is disrupted, delayed, aused or prevented by a Force Majeure event. “Force Majeure” means: hurricanes, floods, extreme weather, earthquakes, fires, or other acts of God, unusual transportation delays, wars, insurrections, civil unrest, or acts of terrorism, governmental actions and mandates, government shut downs, epidemics, or pandemics, which, by exercise of reasonable diligent effort, the non-performing party is unable in whole or in part to prevent or overcome. The Force Majeure event will be deemed to have begun on the first day the effect of the Force Majeure prevents performance, non-performance, or the availability of services, insurance or required approvals essential to Closing. All time periods affected by the Force Majeure event, including Closing Date, will be extended a reasonable time up to 7 days after the Force Majeure event no longer prevents performance under this Contract; provided, however, if such Force Majeure event continues to prevent performance under this Contract more than 30 days beyond Closing Date, then either party may terminate this Contract by delivering written notice to the other and the Deposit shall be refunded to Buyer, thereby releasing Buyer and Seller from all further obligations under this Contract.

Hey Kevin,

I was representing an investor that was purchasing a quad in Gainesville last year when a storm came through.  Although it delayed the closing by a week, here is what I learned:

It was the lender that had to reinspect.  Appraisal was already done and accepted.  With this bank, they only required time stamped photos to be submitted to prove their was no damage.  Allowing photos may have been an exception to their specific guidelines, but it was accepted.  If you are being represented by an agent, encourage them to be the "squeaky wheel." If photos aren't an option, a quick reinspect on 4 point will likely do the trick.

If your county was declared a state of emergency ahead of the storm, the bank will likely follow up to tell you what they require.  

In terms of getting out of the contract should there be damage, and it can't be negotiated with the seller--Line 439 "Force Majeure" will allow you to terminate the contract just as long as the property is within the designated state of emergency area.  This portion of the contract also states that if closing cannot be performed within a reasonable time due to delays past 30 days, you also have the option.

Hope this provides some useful insight!

I think someone else may have replied to this already, but yes DTI is considered. The process is underwritten in the same way that a normal mortgage would be. Also, the larger down payment can be the case depending on the remaining mortgage balance vs. the sales price. Say you are assuming a mortgage on a property that has $250k remaining balance, but the seller is asking and you've agreed to pay $300k. The $50,000 gap would be your down payment.

 Great point!  I don't see any reason she couldn't put it in a trust though, right?

HI Aaron,

As everyone has mentioned, both the photos and theming need improvement.  I also agree that additional "nickel and dime" charges do deter renters, at least in this market.  STRs are increasingly popular, but that also means your guests are increasingly aware of their options.  No matter how well the home is designed and priced, vacationers will click away as soon as they feel like a host is inflating costs.  Remember, your day-to-day costs have increased, but so too have your client's.

I work closely with an STR investor that just began offering co-hosting for AirBnB. She takes her expertise and success and strategizes how to make immediate game-changing improvements. It isn't too costly, and with you being out of state, you may benefit from having a local professional to assist you with implementing changes. Send me a message if you'd like her contact info! Good luck!

Assumable mortgages in this market, other than a potentially longer close, don't really have many cons.

You work with the seller's bank, who is currently holding the loan.  They go through their underwriting process and approval, which as I mentioned may be slower than applying for a new loan.  I currently have a listing where the sellers are marketing an assumable mortgage.  Their loan is through UWM and have confirmed that it may take closer to 45 days to close.

Otherwise, the sale closes with the note as well as the deed in your company's name.  At closing there is no difference from a traditional sale/purchase.

Hey Kevin,

I'm not sure what your motivation for transferring the property to your LLC was, but if that's no longer an option creating a land trust like mentioned by @Account Closed shouldn't cause any problems with your bank.  I'd love to hear an update on the direction you decide to take and how it works out.

@Andrew Kessler Brava, sir! I often feel like the LLC route isn't necessary and now I can better identify why. Thank you