All Forum Posts by: James Hamling

First, sorry for that multipule post, I have no idea what happened, my cpu got the hicups.

On the wholesaler topic, has anyone ever found a place that legitimate wholesalers congrigate, such as a club, a web site of some kind, anything?

I myself have not found this magic spot. And the advice of REIA meetings, real real spotty in my experience. I am certain there are many legitimate ones, but figuring out exactly who is and is not, I have not found the short formula for doing so, just trial and error. Or I should say near error, discovered after wasted time and deal verefication.

Myself, no joke, I spend easily 7/10 of my time reviewing bs deals. I get swamped every day with submissions. My due diligence is not quick, it eats my time up. In the last months, I seriously have reviewed 2 TWO legitimate wholeasler deals, both from the same guy. Bogus ones, gotta be over 100, well over. Worst part, I suck as a wholesaler, lol. I can buy MLS all day, negotiate like a champ, but the good money is in wholesale and I'm stuck on stupid on that avenue.

Chris,

In reading this I right away had a thought, this could be a "next gen" platform well beyond real estate investing alone itself, and a potential picture of mortgage generation itself.

In the traditional system (soon to expire) a bank or broker originates a mortgage. That mortgage thru what ever channel is sold to Fannie, Freddie, and so on. Who then in turn repackage, and resell again to a private investment holding, like a REIT.

I think you have truly hit upon a great point, and I personally feel this just may be our glimps at a fully privatized, tech savy next gen system.

Now, just for someone to build it. I believe a platform very similar to the types Max Kiser has built would be on line to this. If I had a few mill growing dust, I may have to jump on it, lol.

James,

This is totally NOT to harp on you, I myself have just tried reading your original post several times....... and I am still not so clear on it. It's hard to say much to help when so uncertain.

And as stated by Jon, if your in other states right now, and focusing on being in all 50, I am confused how your "small" by any means. I am also confused how you can have that current footprint and no finances, either in reserve, flow, or equitable draw.

I just wanted to say Thank You for putting this topic out there.

It is very reassuring to see so many responses, so I know I am not the only one dealing with the "wholesale" jackals.

Another point to the issue. I have been buing and rehabbing REO's since the very very begining. I was into new development construction, and saw the fall coming a mile away. For the last years there has been month-month development as to buying, but I will tell ya what, it has NEVER been HALF as impossible as it has been the last 6 months. Reason being, a FLOOD of super novice "wholesalers" grabbing up properties on contract, and of course they can, there throwing offers out there that have no margin.
I forsee another collapse, the novice investor defaults, of unknowing people who read a book, saw a video, and wanted to get into R..I. (good 4 them) BUT were told it was easy, duped by these HACK "wholesalers", and are into a loosing investment.

I feel for those people. There is a moral obligation to R.E.I., we are the informed experts in a conveyance of what for most people is the #1 most important purchase and belonging of there entire life. It sickens me to see people knowingly, wantingly, taking advantage of the ignorant and trusting, using the fine print excuse of do your due dilligence". It's like opening a stand selling an "elixer cure for cancer", charging top dollar, and when they die and relatives come back pointing out the fine print of "do your due dilligence".

Yes, DO do your due dilligence, but a scam is a scam, period. Saying they didn't find out it was a scam until after, does NOT place burden on the buyer.

I wish there were a way we could root that ugly element out. They ruin the name of us all, make all good R.E.I. harder, will cause more stringent regulation to pass, AND make it far harder for a newbie to start and rise.

Good to hear all comments and serious interest on this. It is easily one of our top issues at hand effecting us all, especially if the "predatory" side of it grows, causing MORE regulations on us.

What your missing is *what is your competition*?

If your going to be offering at a discount price, where theres little stock, and you pretty much hold all the cards, then I'd take that gamble.

If not, well there is no way I would not do it. craig patterson Had 5 star advice, on how he gets Norandex windows on big discount. I am a contractor, and that is the #1 smartest investor move I have heard in a long time.

I ALWAYS replace all windows. Energy efficency is a big deal, and big selling point. It sets your property apart from the others, is very obvious and noticable, and every time a buyer has done a viewing they say "oh wow, new windows". So, I ALWAYS do windows, so my listing time is as close to 0 as possible.

I say, if your on the fence about it, do it but do it smart.

Absolute best thing you can do, while under contract BUT BEFORE executing contract fully (ie. buying), get detailed renovation bids. You could throw out an ad that your looking to hire for a bog renovation, and contractors can do estimates on XYZ day between XXX too XXX and to e-mail with credentials for address.

more then getting numbers, you will get free ideas, and possibly a solution you never saw.

A warning on projects like that, most state reg.s state that once you open a structure exposing framework, it is subject to inspection AND must be up to present code. But if you leave it closed, it is "grandfathered" in. This is observed in many features other then framing, like electrical, plumbing, etc.. So point is, a certain renovation can snow ball quickly by having to do unplanned work simply because you opened up an area. Make certain to understand your state bulding codes, and city/ local building codes for the specific project. It can make a good deal ugly real fast.

May just be me, and fact I am in #1 lawsuite state, but for me when it comes to the LLC vs Corp. questions and twists, I always look #1 at liability, and then at taxation savings.

I had a large company, organized as a c-corp, and yes it was a hassle, and yes taxes where hell on the surface, although i hired a good CPA who I could barely understand his strategies, I just followed them and saved. I had a lot too loose, so the absolute protection of the c-corp was great.

On the other side of the coin, my LLC's are super ez, and I like that. But I really dislike the ease a good attourney would have tearing into it, attaching other companies, and trying to connect as many "dominoes" as possible. Tax speaking, really once I just do as the CPA says (which I again can barely follow) it generally comes out similarly in the wash.

For me, I K.I.S.S. (Keep It Simple Stupid).

Best words in this is:
#1, Organize for what your doing, each calls for something different
#2 if your not an expert at an aspect, hire one. Or try the "free lunch Q&A", you would not believe how much great nearly free advice and answers I have gotten that way.

True, very true. Same as your point on different ways of doing things, very true.

I would like to say, my main point for investors is, there are major major discounting opertunaties out there, and I have never meet a sub-contractor ever who has had access to them, nor 90% of contractors. For subs being excluded, it is a licensing detail, because the manufacturers license licensed contractors as distributors (not easy usually), and I have never known a sub to be licensed.

The other side, is imports and similar unlicensed manufacturer direct relations. I have never seen a sub ever go thru the work to get this, nor 90% of contractors.

Countless times I see investors and others going to supply houses of big box stores fighting for maximum discount, but never from the actuall supply, where those people get it. Cut out ALL the middle people. I did it on my windows and it slashed my cost in half. I can price compete with the U.S. #1 window installer, and I have heard them claim to be #1 manufacturer but I think it is a marketing ploy.

I am no where near that big, but I get them from the manufacturer, directly, not a supply yard, the plant. I have saved tons rehabbing my homes. Cabinets, I found out who was making the lines you see in H.D. and Lowes over in China, and so I buy them from the correspondent in China. I can put in high end custom cabinets with ever add on for the cost of a lawn mower shed, it is sick the discounts.

That was my point, getting the best discounts at a supply yard is far from the best discount you could be getting. And the difference is reliably in the 50% range, sometimes more, possibly much more.

the second example is a flip right James?

Yes, the 2nd is a flip example. Lots left out of those numbers though, and really, there far from factuale, it was for an argument point on a true net net R.O.I. (return on investment) in rentals vs many others.

Far far far far too many new investors do there math without all the accurate data until it is too late. Usually it is costs of sale and associated holding costs. As well with rentals, maintenance re-investment, updates, vacency and so on. There are also bennefits many miss, different ways of structuring the monies in a flip to maxemize tax bennefits, and in rentals, taking advantage of multipule outlets for free upgrade and reinvestment funds, and on and on, as well as funds structuring for taxs.

Really, the math gets pretty deep.

But short story was, by using the power of long term financing in a rental (interest being a deduction) then a person is amplifying the capital they have to earn far more for the actual cash investment. Where in a flip for example, it is a large outflow of capital for a slightly larger amount of return, although percentage wise is much less.
10K return on 20K invested is a 50% annual return, so what if theres 80K financed, that is not your money invested. (for the points sake)
20K return on 100K invested is only a 20% R.O.I.. Now if you factor by time, and did it say 3 times in a year, you "could" say you have 60K return and 60% R.O.I., although issue is you have truly invested 300K for that 60K. AND assumed the risk factoring 3 times, where in the former it is a risk factoring once.

Thing is, I AM a flip investor, I have all the reason to argue to the opposite. I am currently completely retooling my operation BECAUSE the math - dos not - lie.
Rule #1, never invest emotionally
Rule #2, remember rule #1

[quote=Tenant problems are not just a PM problem, but also an INVESTING problem.

Property manager management, and tenant management are "subsets" of RE investing.

I just love it when property sellers (wholesalers, turnkey vendors...etc.) pass the buck on to PMs

I agree, yes, P.M. IS a sub-set in the big picture of a investment. In that aspect, so is the light bulbs. For anyone who reads my post, I believe they will get the point of what I wrote.
I imagine you yourself are a P.M., and I would like to say, no offense meant at all, I know many great P.M.s, I have employed many many stars.
Best shortest way to clear the issue, is a book called "the one minute manager". Any and all should read it 10 times, greatest writings on large logistic managment.

And to address any question in that last quoted phrase, I am not a wholesaler, I am a private investor, and a logistics master. Before going FT private, I was a executive field operations supervisor for one of the single largest commercial residential rehabbers and builders in the us, the largest in my region. On any given day I was in direct oversight of operating projects in a area the size of Texas, many of them residential complexs with anywhere from 20-400 units in process per site. I know logistics, and the immense importance of having competent people in there positions, competently carrying out there missions without hand holding.
I was one man alone, one truck, one desk, one truck, if I had to be hands on on each of my sites and units, no way, absolute impossability. I oversaw 32million in annual projects.
All done because I held my sight foreman accountable for being proficent in there mission to carry out the sight goal, and that made my job to simply empower them, and review.
I had many P.M.s that ran 800 units with more ease then the 1 you spoke of, and believe me, the owners never would entertain the idea of spending 1 second on sight personally resolving a matter with a tennant or unit, that is a P.M.'s job, if not, then what are they employed for.
When I hire a P.M., it is clear, they are to P.M. to certain expectation, I am NOT paying them so I can deal with tennants and units, if so, there gone, period. And guess what, I never have had to deal with a single issue, ever. Not one beyond my choosing, not even the tax filing preperations for my quarterly and annual fillings.