All Forum Posts by: Pavel Sakurets

Jerry, I've been doing rehabbing for 14 years, and want to transition into wholesaling completely. I'm a re broker and licensed builder, and still margins on flips are very low. I only do flips on the houses that I couldn't wholesale. If I had an ability not to do any flips, I would not do that, too much work, too little money, a lot of liabilities and uncertainties, you never know exactly how much it would cost to fix up the house, how long would it take to sell it and for how much it would sell for. I made less money on deals where I was certain that I would make 25k for sure and made only 5k. Only this year I had 5 houses like that.

Plus you never know if you sell a house or not, for example I have 6 properties on the market now form 130k to 360k and every month is costing me 10k only in holding costs.

Thus I want to do wholesaling only, and do rehabs only if I couldn't wholesale.

Envelopes have mailing addresses written by real human. Letters are printed, but look like that somebody wrote them by hand.

Generally all real estate contracts are assignable (unless you are buying a property from the bank that doesn't allow assignments and you already have an executed purchase agreement with the bank that says that assignment is not allowed).

If you don't have an executed PA with the seller, at the bottom of the contract where it says ''other'' you write :"buyer has a right to close on the purchase under the entity of its choice''

Then after you found the end buyer your title Co or an attorney structure a contract b/n you and a new buyer where your attorney includes the legal language and other stipulations that basically will say '' that you are the seller of a certain contract and Mr Jones-buyer is a buyer of the contract, and you agree to sell the contract to Mr Jones for X -dollars''

On the HUD you will see the purchase price that you buy the property for and a separate line item for an assignment fee (your profit) that you get by assigning the contract to Mr Jones.

If you do have an executed PA without the language above, you will need to write an amendment with the seller that says'' Buyer has a right to close on the purchase under the entity of its choice''

Your new buyer will set up a new LLC or will close under existing LLC of his/her choice.

But be careful though, when sellers and end buyers see the HUD statement before the closing, some of them might flip out and don't come to closing because they get frustrated by knowing how much money you are making (not the end buyer, because they see the original contract that they are buying). Thus if there is a big spread of over 15k, I always do double closing and request 2 HUDs, one for me and the seller, and second one with me and end buyer, so the seller and end buyer could not know right away how much money I made.

 Andrew, how much do you estimate it would take you to send out 1000 letters like you described? If you calculate postage, paper, ink, envelopes and your time buying the paper, printing, leaking envelopes, placing stamps and return addresses at $100/hr which is 208k per year?

I know that if you need to mail out 10 letters it would make sense to do it yourself, but if you are sending a lot, does it still make sense?

For 1000 hand printed yellow letters including regular stamp, envelop and hand-printed address I pay $700

 15% as a response rate is great. What is your closing % from the entire marketing campaign would be more important for me than the response rate. Please share if you can.

 Jason, please share what are 3 best marketing types you are using so you get super motivated sellers to call you?

 I don't need a deposit from the people that I know, if  I know that they would close.

I would take a deposit from a buyer that I have not worked with before. And I would not even look at a buyer that wanted to put my deal under contract without EM that equals at least 5% of the deal's value. 

If you are a serious buyer and I'm a wholesaler, you would not ask me to sign the PA with you and give you 5 days inspection period. Serious buyers do not do that, they understand that you, as a wholesaler, do not want to have them control the property for 5-7 days before they do an inspection. When the deal is good and has a good margin, I go and look at the property myself or my workers do and we put it under contract without contingencies. What could possibly be bad with the property that you can't see? Nothing.

Maybe cracked foundation that is covered with drywall or bad wiring/plumbing, which is all fixable. Just spend a little bit more time than 5 min and inspect the property well. You do not need to be an expert builder or inspector to do that. BTW to become a ''certified inspector'', at least in MN, you need to complete 3 days course and you will get an inspector's certificate :-)

I would not execute a contract with an investor-buyers if they had an inspection contingency in the PA. I would tell them, ''If you like the property, go inspect it and then we will execute the PA without contingencies with none refundable EM, assuming there are no issues with the title'' . EM will be delivered to the title Co or given to me as a cashiers check at the execution of the PA.

If investor does not give you EM, that means that they have nothing to loose except their reputation if they don't close. They understand, that you would not sue them for ''specific performance'' and if you do, it will take 3-4 years, plus attorneys' feed, etc; even if you win the case 3-4 years later, it's not worth the time and effort, lick your wounds, and don't step on the same rake any more :-)

 I would contact your title Co and asked them to do a title search on the property that you are looking to buy. If you close 10-20 deals per year with your title Co, most likely they will do a search for free, which will save you time.

If they don't, just pay them $50-$100 and save yourself some time not going to the court house ( which is minimum wage labor, are you willing to spend 3-4 hours doing that or you would rather spend the time on something else and found another deal, maybe?)

Every time when I have a task that needs to be accomplished, I asked myself, who is the best person to complete it at a reasonable cost? Works every time. Sometimes of course, you decide to do something yourself, because it would take you longer to explain to somebody what needs to be done rather than doing it yourself.

The more you do yourself, the less money you make :-)

If I understood you correctly Joe, you close under new LLC and then you sell the interest of the LLC to another party, correct? It's probably not very beneficial for an end buyer, because potentially your LLC which you are selling shares of could have other liabilities. I would be hesitant to buy interest in any Co because of this risk. What is the advantage of doing that rather than do a double close or assignment of the contract?

May I ask you, what's is an average gross profit that you make from all your 150 flips that you did in 2014? I understand that in order to run such a massive business you have a lot of overhead as well, that eats up a lot of your profit.

I do 2-4/month and the average gross profit is 16k from each flip. Also I'm a GC, licensed builder, have 16 full time construction employees and 50+ independent subs and have my own store where I sell cabinets, tile, carpet, hardwood, vinyl to contractors and house flippers. But still on average the gpm is only 16k. We buy under 150k and sell under 250k