All Forum Posts by: Mike Lee

So "what if" you secure the contract, but can't get any buyers to come around and check out the house? I know they say to have your "investor's list/contacts" beforehand, but "what if" none of them are interested in the property? How do you go about this with the seller?

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Thanks for the reply Aaron.

Typically how many days does your contract give you to sell the property?

Also, the big "what if"....What if you can't find an investor to buy the property? This is the part that gets me confused b/c you tell the seller you are going to buy the house. If you then can't sell it for him, you've wasted his time. Not to mention, he's going to be pretty ticked. So "what if" you can't find an investor?

Mike

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Okay, I think I'm starting to understand the wholesale process. It's the little things that I don't understand.

Correct me if I'm wrong:
1.A wholesaler finds the deal from a motivated seller.
2.Secures the deal with a "subject to" purchase agreement.
3.Flips the contract over to another investor.

I understand between 2 &3 the wholesaler is marketing the property to investors, but what is he telling the seller all the while. I see bandit signs all the time "48 hours Cash for your home"...etc. I'm lost as to what a wholesaler is telling the seller this whole time between 2&3. Is he stalling/buying time?. For example, I secure the "subject to" purchase agreement. As soon as I do that the seller should be expecting to close the deal immediately....right? Do wholesalers disappear for a month or so until they find an investor to assign to? I'm not sure I understand this part.

Mike

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Originally posted by "Wheatie":

If the market's setting at about $60K for this property, could you list it at $55K or $50K and sell it quickly? How much do you currently owe? You mention getting cash a closing, which makes me think you over the $71K you paid for the place. If you sell for $55K, you'll have to bring the extra cash to to table to complete the transaction.

Do you have that money? Do you have a job and other assets? If so, the bank's unlikely to accept a short sale. An owner occupant who's lost their job, has no assets, and is losing their one and only property might be able to get the bank to take a short sale. If you have a job and assets, they're aren't going to be so forgiving.

With $800 rent, the 50% rule of thumb says your expense are $400, leaving you NOI of $400. Take off the $600 payment, and you're losing $200/month or $2400 a year. Is your tax situation such that you can take advantage of the special passive loss allowance? I'd estimate your annual depreciation for this to be about $2065. Most of that $600/month, $7200/year payment is interest. Your other expense are deuctible, too, for about $400/month, $4800/year. That's a total deduction of $14,000/year vs. income of $9,600/year for a passive loss of $4,400. If you can offset your regular income at 28%, that's worth a tax savings of about $1200. That reduces your net loss to $1200/year, $100/month. Tht may be easier to deal with than having to bring $10K or $20K to the closing table.

Get a property manager, if you don't want to deal with the tenants yourself. If you are managing it yourself, and do a good job selecting the tenant, you could earn back about $80/month of those expenses. With the tax break, that puts you very close to break even.

Jon

Wow Jon...you just turned a huge negative into a positive. I'm blown away. :shock:

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Originally posted by "Ryan Webber":

I normally will always give title insurance on a property when I sell it.

3. YES, I always get title work. ...

Okay rookie question: I thought one of the advantages of wholesaling was the minimal cash needed and risk involved. When do you give title insurance or get title work done?...after you have a buyer under contract?

Mike

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Originally posted by "wholesalepro":

I never tell the seller that I am planning to wholesale the property. I simply go under contract which gives me control over the property. Imbedded in my Purchase and Sales Agreeement is a phrase that states "This Agreement can be assigned" This is what allows me to wholesale the property without having to purchase it myself.

The main ingredient in a successful wholesale is starting with a motivated seller.

So what do you do or say to the owner if you can't sell the property to another buyer/investor?

Mike

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Thanks Jon,

So I wouldn't be lying or doing wrong by telling the pre-foreclosure(soon to be foreclosed on) seller that he/she is going to lose all their equity if they don't sell the house before it gets auctioned off by the bank?...right?

Mike

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I too read a post about some wholesalers not even stopping by the property. I'd like to know how that works.

Mike

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Thanks Mike,

What's the name of that book? I searched and found a ton of books by him. Anyone in particular?

Mike

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Ok...so a wholesaler would collect earnest money from an investor interested in purchasing the property? I'm guessing the investor/buyer would only deposit earnest money towards the latter part of the transaction. Any books you can recommend that go into detail about wholesaling?

Mike

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All Forum Posts by: Mike Lee

Mike Lee has started 18 posts and replied 47 times.

Post: More questions for wholesalers

Post: More questions for wholesalers

Post: More questions for wholesalers

Post: Help

Post: when do I assign

Post: How do I presuade somone to let me wholesale their property

Post: pre 4 closure equity in Florida

Post: Wholesaling out of town

Post: How do I presuade somone to let me wholesale their property

Post: How do I presuade somone to let me wholesale their property