All Forum Posts by: Marvin McTaw

There's no standard answer. It changes from taxing authority to taxing authority. I would suggest you talk to someone in the office that handles these. They may have a standard and/or guideline for handling. 

@Kenny Breeze whole-tailing is a combination of a wholesale deal and a retail sale. A typical wholesale deal sells to a cash or privately financed buyers for usually 45-65% of After Repair Value. A typical retail deal is usually at 100% of ARV.

The idea is to combine buying a wholesale property at a wholesale price that's usually in OK to good shape, doing little to nothing to the house and then listing the property on the MLS to quickly sell to a retail buyer at a retail price and in doing so increase your revenue spread on the transaction. Most wholetail deals are funded by either private lenders, cash or hard money lenders.

As an example, say you've got a $150,000 ARV house that's in good but not great shape. You would typically not be able to wholesale that for more than say $100,000 meaning you'd have to buy it at say $90,000 if you want a $10,000 spread. Under a wholesale deal you'd buy for $90,000 and sell for $100,000 and make the spread in between.

With a wholetail deal, you'd buy for $90,000, list on the MLS for say $135,000 (i.e. 10% below market which looks like a good deal for a retail buyer) and make the $45,000 spread in between less the points, interest, fees and holding costs you'd probably pay a hard money lender, let's say that's all less than $10,000 so you'd end up netting about $35,000 on a wholetail deal versus the $10,000 on a wholesale deal.

There are definitely benefits (i.e. larger spreads) but also considerations (e.g. higher costs, risks of ownership or swift market decline, etc.). Hope it helps! 

@Account Closed you generally rise to your highest level of preparation so I'd encourage you to have any and everything you think you would need including comps, your script (if you're not comfortable with it), your offer ranges, walking through the numbers, some sales collateral (e.g. your process), etc. Basically any and everything you think you would need. 

The fact of the matter though is that, at least for us, it's usually more about the person's situation and the numbers working. Our best wholesale deals are with people who willingly know they are selling their property for less than it's currently worth because they value the speed at which we can execute on a transaction. 

You're there to help solve a problem and all the other things you've discussed are mostly just supporting materials. 

@Walter Roby jr would it be possible for you to help out @Robyn Calvin? 

@Joshua Pagan I would encourage you to be direct with the owner about what you are planning to do i.e. you will likely be selling the property to another investor. It takes the weight off your shoulders of pretending to be the actual end buyer. You will not get every deal from the people you tell that to but the ones you do get will be much easier to get across the finish line because every knows what is going on. 

@Martin Perez if you're looking for Buy & Hold information check out the calculators available here on Bigger Pockets. There are also forums on various strategies to finance the acquisition/purchase of a property including creative financing options like seller financing, lease options, purchasing subject to, land contracts, etc. You can also check out Hard Money Lenders (they are listed here on the site) as well as tapping friends and family as private lenders to potentially help fund your deals. 

@Maya Eshel each state is a little bit different but tax delinquent is not the same as Tax Default Sales. It's kind of like how a square is a rectangle but a rectangle is not a square. Tax Delinquent just means the property tax that was due did not come in on time. The Tax Sale means that the taxing authority has waited so long and/or the back due tax amount is so high that they are willing to sell the tax obligation to the highest bidder and in return, the buyer can typically also take ownership of the house. 

Said differently, tax sales are usually tax-delinquent but every tax delinquent is not necessarily up for tax sale. Hope it helps!

@Jacob Robinson I have experience with Auction.com and Hubzu. You will need to check the terms of service of each of the sites of how their auctions work to figure out what you can and can't do. One thing I'm almost certain of (like 95% certain) is that you will have to double close and will not likely be able to assign your agreements. This means you will likely have to use a transactional funding source adding to your transaction costs and lowering your margin. 

Also, watch out for fees you may not even think about (because they don't occur in a "normal" transaction) like Hubzu's "Technology Fee" which can be sizable. If you end up not closing on the transaction, there are serious penalties. Not saying it's not possible but just be aware of the rules of the game before you get started. 

Hope it helps!

@Brent Moonsammy we don't try and hide the fact that we are looking to wholesale the property. We tell them throughout our process we are likely going to sell it to another investor and make money doing it. There have been some unscrupulous potential buyers who have tried to go behind our back but usually, we've built such a strong relationship with the Sellers and they know and trust us to the point where they actually come and tell us what's going on. Be transparent with what you're doing and it shouldn't really be a problem.

The other suggestion is to screen and train your buyers. You can have only one showing, set the expectation for your seller not to be at the walk-through with the other potential buyers and they completely avoid that interaction. Hope it helps!

@Adrian Smalls thank you! All the agreements we send out are contracts we are direct to seller (current owner) on but we do co-wholesale transactions as well. 

Regarding lists, there is no magical list. We primarily do absentee owners but have used all sorts of lists including vacant, expired listings, evictions, tax delinquent, probate, pre-foreclosure, bankruptcy, high equity, unknown equity, etc. I can't tell you what your lead conversion will look like because it's really different for everyone depending on how you market, your skill level and type of deals you're looking for...I also can't tell you because frankly, we haven't done the full conversion math to tell you! LOL