All Forum Posts by: Krystian Sosinski

Originally posted by @Anita Walter:

@Krystian Sosinski I have been trying hard to get my first wholesale deal here in phoenix and im just so lost with all the information I have been receiving about this topic. So basically I would have to obtain the property fully (by closing as sold to me) first before I can then resale it to the buyer ? A double closing is what I need to do ? 

 @Anita Walter

I'm not the best person to ask about the specifics of wholesaling (I have never wholesaled before) or give interpretations or guidance involving legal advice (because I'm not qualified to do so, you need a licensed attorney). 

However, what I posted above is in regards to whether a real estate license is needed when involving real estate activity for pay. Not whether wholesaling in itself is illegal. We know that wholesaling is considered a regulated real estate activity because it involves the sale of real estate, and the day to day operations of processing the transaction look very similar to that what a broker/agent would do. (e.g. marketing, front yard signage, procuring a buyer, negotiation, etc.) It is further defined in A.R.S. §32-2101. Look at point 48. The question in my mind would be whether or not wholesaling is exempted for licensure purposes? 

There are plenty of arguments and analysis online arguing for both sides, trying to qualify it under the FSBO exemption. You will hear terms like "equitable title" which is not the same as "legal title". However I will not go into the details as I'm not allowed to do so. What you need to know is that the penalty for unlicensed activity in AZ includes a class 6 felony which can result in fines and imprisonment.

With that said, why not just get a real estate license and have peace of mind? 

Please note that the Commissioner's Rules have the force and effect of law only to real estate licensees, if you are referencing @Brian Gibbons post.

Conducting real estate activity for pay in Arizona requires an active real estate license. Arizona law provides some exemptions from real estate licensing law, where people may in certain situations may legally conduct real estate activities without a license. 

The exemptions are:
* Persons buying and selling their own property, no matter how many properties owned. aka. For Sale By Owner
* An attorney in their line of work as an attorney (however, if they are doing real estate as a broker would, then they must have a real estate license)
* A trustee selling under a deed of trust
* A government employee carrying out their official duties
* A guardian, executor, administrator, receiver or any person carrying out a court order
* An attorney-in-fact, as long as the power of attorney is for an isolated transaction
* A property manager, if managing or leasing only one property at a time

Perhaps the loan calculator is using compound interest instead of simple interest. Typical financing uses simple interest where interest does not compound in itself. I = P*R I = $100,000 * 0.05 I = $5,000 Like the person above me said. That would be for an interest only loan where you don't pay down the principle. In real life, your principle is getting paid down. So you would want to make a spreadsheet for that

Perhaps the loan calculator is using compound interest instead of simple interest. Typical financing uses simple interest where interest does not compound in itself.

Whether it's enough to get your foot in the door, I don't know. However, the classes that you take to become a real estate licensee will give you good introductory educational exposure. If time is not an issue, I would definitely pursue it, especially with how inexpensive the classes can be. For example, the courses run $400 in Phoenix, AZ. In addition, with the license, depending on which broker you use, you can collect half the brokers agent commission every time you buy or sell your own property. That's 3% of the purchase price in savings for each transaction (not including brokers share). There are other intangibles such as having MLS access if you join a board and viewing properties on your own time at your own pace without needing another agent.

Ed Wood Thanks for the exclusion list. Could you include a typical inclusion list as well? There just so many different fees between lenders, I want to make sure I catch them all for this APR spreadsheet formula I'm trying to build.

Here are the different closing costs I'm working with for reference....

Lender Fees
Loan Origination
Points
Credit Report
Flood Determination
Tax Service
Appraisal

Third Party Fees
Buyer's Attorney Fee
Lender's Attorney Fee
Survey Fee

Escrow Fee
Title Insurance
Title Search
Recording Fee
Courier Fee

Pre-paid Interest (10 days)
Property Tax (3 months)
Homeowners Insurance (3 months)
1st year Insurance Premium

Other
Up Front Premium Rate (FHA)
Annual Premium Rate

I'm building a spreadsheet mortgage calculator for my toolkit in excel. It encompasses many variables and can be used for fixed FHA and conventional loans. I'm almost finished with this project but I'm having trouble building a formula for APR as I am unsure what fees it incorporates. I looked at several blogs/websites but their information varies. Any lenders or smart professionals out there who could clarify what fees are included and excluded in an APR formula for mortgages.

Is there any chance that this property you speak of located in Tempe, AZ?

I used to do commercial estimating for a little while however I don't know what the unit costs may be for your location and for residential applications. However, keep in mind that the general rule of thumb unit cost probably applies to just painting plain wall surfaces. You have a lot of miscellaneous work. Painting trim, ceilings, and doors is going to cost significantly higher on a unit basis due to the detail required. So keep that in mind.