All Forum Posts by: Marvin McTaw

Hey @Sophia Wang I think what @Steve Vaughan is saying is that there should 5 times as much equity in the house as what is technically owed. For example, if there was $10,000 in back payments (i.e. in arrears) then there should be at least $50,000 in equity in the house. 

@Ezra Lambsdorff - I'm kind of confused. Are these two properties or one? Is it in Stone Mountain or in California. Do you mind clarifying?

Hey @Chawn P. welcome to Bigger Pockets. Wholesalers get a bad wrap sometimes because we can at times underestimate the cost of repairs and/or overestimate the ARV. All that being said, end buyers can also be a little too conservative sometimes when determining repair costs and/or determining ARV (especially if they are financed and not real cash buyers).

When I'm wholesaling properties I've gotten away from giving rehab estimates and instead just tell people what I think needs to be done in order to get full ARV. The fact of the matter is the end buyer is the one who needs to know what they are going to spend anyway. I try to usually work backwards from what I know my strongest buyers are willing to pay for the property.

Another thing you can do to check your deal out is look at the cash sales (not all solds) for properties in similar shape in the immediate area in which you are looking to do a deal. When I say "immediate area" I mean within the same block to a quarter mile radius. Not the one mile radius stuff you will hear from appraisers. This can generally serve as a good test on whether or not you're actually offering a real deal to your end buyer. 

In any scenario, good luck in your real estate investing journey. If there's anything I can do to help you, don't hesitate to reach out.  

Hey @GioVanni Gibbs - can you tell us a little bit more about it? 

Welcome @Kevin Jones to BP! There are lots of resources right here on the site including the forums, podcasts and webinars that the company hosts. You should also set up the keywords like @Maxwell Hunter suggested and reach out to others. Looks like @Scott Trench has volunteered himself and I'll make myself available to you too. Let us know how we can help you along in your real estate investing journey. 

Congrats on the deals @Craig Macken! Keep it up.

Hi @Andres Sotelo! Congrats on getting started in investing. Instead of door knocking, why not go driving for dollars and then call or send mail to vacant houses? That being said, would love to hear a little bit more about your "cold knocking" experience. 

Hi @Marshall Petty its actually pretty easy to find cash buyers. You can go to the foreclosure auction and talk to the people who are buying properties there. They have to have the funds available to purchase the properties at the auctions (Learned this from Sean Terry). Second, you can ask a real estate agent to look up cash transactions in a particular area over a period of time. Then look up the buyer's of those properties in the tax records. You can usually pretty easily find their mailing address and then use that information to even find a phone number for them (e.g. try whitepages.com or search for them on social media).

That being said @Christopher Brainard is completely correct: the hard part is finding the deals. It does however become much easier to find the deals if you know exactly what you're looking for. Finding the cash buyers first and learning what they are looking for will make your job much easier.

Hi @Austin Hughes. You're correct that you've mitigated some risks but you're also letting all the benefits accrue to the seller for your hard work. If I were in your shoes, I don't know how I would have felt about essentially working for the owner of the property for free. 

Depending on where the numbers were actually at, I probably would have agreed to purchase it at their price (if you think it's ultimately reasonable) and just structure it accordingly. For example you could finance part of the purchase price in a promissory note that pays off in several years. You could also do seller financing and maybe structure in deferred payments (e.g. payments start in six months after you've had a chance to improve the property ), low cash payments or interest only payments. That way you would get the benefits (and risks) of ownership.

I feel like you also run the risk of the owner backing out of the agreement because your work has substantially improved the NOI of the property. Regardless of whatever paperwork they might sign, people can sometimes be fickle and the question becomes: do you really want to have to send a demand letter or take the person to court to enact your unilateral right to buy the property?

In any scenario, I think it's great that you're getting out there and making offers and working to get deals done. I just don't like the risk you are taking on for the potential return. I just think there are better ways to mitigate your risks and still get the cash flow you want. 

Hey @Nathanial Dunne it's really up to you how you choose to structure the deal. I would not recommend splitting the profits as your return would probably be lower than you otherwise would. Instead, do a JV type structure with a promissory note. This is actually something @Brian Gibbons recommended to me and that I have found to be very helpful in making stronger offers in certain situations.  

Essentially structure the purchase and cap what the owners actually get. For example if the house has a $200,000 ARV and needs $30,000 of rehab work most cash deals would be at or below $100,000 Purchase Price. Instead, buy the house using Seller Financing and have a six to nine months (you decide) promissory note to seller that's due on sale (i.e. after rehab sale to owner occupant) and give them say $120,000. Worst case scenario you can refinance out of the deal but best case scenario, you've accomplished the same goal. While your profits are technically $20,000 lower, your return is higher because you're putting in less money and basically have a lot less risk.

Good luck in your deals!