All Forum Posts by: Rob Rice

To be honest with you Chris, I asked myself that same question when I first got started back in 2004.

I was trying to wrap my head around the same thing. I went to my REIA and spoke to Lawyers, Agents, CPA's, Brokers, Lenders, Police Officers, City officials, Detectives, etc. You name it..I spoke to them making sure that I was not getting myself in trouble. I was going to get my license even though all them told me that It was legal.

Here is grey area when it comes to wholesaling....

You are not selling a property.  You are assigning your interest in an agreement.  That is it.

Your intent is to purchase that property.  The agreement spells out clearly what will happen if you don't buy it.  Most of the time it would be losing your earnest money.  Whether your a licensed Real Estate Professional or not, you have the right to sign an agreement that basically sais ... "I want to buy this"... property, this car, this boat, this land, this pair of shoes, whatever.  

That is where the law has its hands tied.  If you tell a person they cant sign an agreement to purchase real estate, and assign that interest to someone else, you basically have taken the people who created the laws that we follow out of business.  You have also opened up the argument for getting a license in the area of buying and selling anything that has value.  

What if I said to you... Chris you can't agree to buy a house for your family to live in, and sell it to make profit unless you get your real estate license...  That would be crazy.

Remember.. Intent is the key word.  No wholesaler should be out there lying to people saying that they are going to buy someone's home personally if they don't intend to.  No wholesaler should be saying that they own a property when they don't.  You need whats called equitable interest to do that.  That is the only thing the agreement does.  You need to let people know what your intentions are by verbal communication and also in the agreement.  If someone agrees to those terms and signs a legal agreement to that affect it is a personal agreement between two parties, and nothing else.  I didn't make the laws, and I didn't create the way this business is done.  I just made sure through professional legal advice that I don't break any laws.  That is it.  No more than that.

It is my hopes that all wholesalers out there take time to learn how to do this business legally, morally, and realize that your business success is in direct proportion to the amount of service that you offer to others.  You are not here to take advantage.  

To be honest wholesaling isn't really investing to me.  It is really just participating in transactions that utilize the that grey area I discussed.  

Have a good one.  

I couldn't resist reposting the article I wrote on my BP blog page.

Please EVERYONE IN THIS THREAD READ THIS.

This post is one that is in response to a thread started by a BP Member

That talked about wholesalers putting out BS numbers.

I thought the response would serve well to everyone.

Wow.So many points to talk about.LOL

You are right. There are so many guys out there that don't know what they are doing.

I get newbies all the time that try to partner with me on a deal and don't have a clue.They put anything under contract just to try and make sugar from sh*t and It blows up in their face, they lose credibility, and waste the time of people who actually could be buyers if only it was a true deal.

I will make 2 points.One for the person who started the thread, and One for the newbie wholesalers who don't have a clue.

Point #1.

Emptor cavete=Buyer beware.

I suggest you don't even do business with a wholesaler without having a first time 5 minute conversation about their experience in Real Estate, how did they come about this property, and how did they come up with their ARV.

I actually do the same thing with people who call about my deals.I’m trying to find a buyer, however if this is my first time speaking with them, I will ask them about their real estate experience, if they understand about assignments, if they understand that I’m wholesaling the property, and basically have a meeting of the minds about what my intentions are and If I can answer any questions for them.

That is what a good wholesaler should do.If someone doesn’t want to give me 5 minutes to have a meeting of the minds, they are not someone who I want to do business with anyway.I don’t care how good the deal is.You should do the same.

In defense of the comment about another chance to bash wholesalers…

There are just as many BS cash buyer, time wasting, wanna be investors out there as there are wholesalers who don’t have a clue.

I’m an Investor first, and a wholesaler second.I keep 1 out of every 5 deals on average to either fix and flip, or hold for rentals.Every deal I contract is one that I would keep or fix or flip myself.I just like the idea of a fast nickel instead of a slow dime.Not to mention that my strengths are in the areas of Marketing, Negotiating, and Sales….I love that part of the business and wholesaling fits that mold.

So let me put this out there.I’M PROUD TO BE A WHOLESALER.11 years since my first real estate deal, and I have been involved in the buying or selling of about 200 deals residential and commercial.

I did it morally and legally, and paid my dues.That’s why my number is public. LOL…

Sorry about the emotional blowup BP… I just had to get it out..

Now

Point #2.For Newbie Wholesalers.

Go get educated.I hate to agree with the wholesale bashers, but they are right.Learn how to do your business.Stop thinking that you can read a 20 page ebook, call up some “Handy Man Special” signs, partner with a wholesaler, market their deals, get a cut, and that makes you an investor. It does not.

Real wholesalers, know their business, know what their buyers want, and know how to keep them coming back.They know marketing, how to talk to sellers, and negotiate without lying and being a scumbag.They know how to evaluate a deal for a true ARV, true repairs, and a true profit.You don't have to fudge numbers.Present the true ones.If someone wants it they will buy it, if they don't then they won't.Plus true numbers will tell you information about the deal, the market, and where you need to improve in your business.Here is something to think about newbies.

I give my buyers a copy of my original purchase contract.This builds tons of credibility, I let them know how much I’m making up front.I make money wholesaling through volume, good business practices, and doing what I say I’m going to do.We all should do the same no matter our experience level in Real Estate.

Also.. Be ready to defend yourself against the negatives… If you are good and honest about what you do, It won’t be a problem.

I have said my part.That was a great topic Dave.I guess I needed to vent huh…LOL..

If anyone has questions they want answered from a real life wholesaler… connect with me.

Good luck all.

Here we go again.  David....Listen to me closely........

WHOLESALING IS NOT ILLEGAL!!!!

MISREPRESENTING YOURSELF OR YOUR INTENTIONS, LYING, CHEATING, STEALING AND TAKING ADVANTAGE OF PEOPLE IS ILLEGAL!!!

IF YOU DO THOSE THINGS, YOU WOULD BE A SCUMBAG, THEN YOU DESERVE WHATEVER YOU GET!!!

NO YOU DON'T NEED A LICENSE TO DO IT!!!

Just remember.  You are not selling a property.  You are assigning your equitable interest in the property.  The purchase and sell agreement gives you that right.

If you want to get your license, do that.  Just understand that you are legally bound to your responsibility to the public and your Broker house.  

There is no way around that, and rightfully so.  That is the way it works.  There is nothing wrong with getting your license, just understand what you are doing.  

Also if you start wholesaling, understand what you are doing on that side also.

Here is an article that I wrote that would serve you well if you are serious about being a wholesaler.

https://www.biggerpockets.com/blogs/7384/47278-ans...

I just went ahead and reposted it below.

Welcome Emily. I will give you the advice that I give most people. Get to a REIA. Please, Please, Please, Get to a REIA. Be cautious also about who you take advice from, and how you word your post. I just don't want to see you get taken advantage of. I have met people who could easily peg you as someone to sell a deal to that isn't a deal at all on the apartment side.

Now that I have that out of the way.....

Evaluating apartments is actually easier to do than single family homes in my opinion.  

This is simply because the numbers are there on I and E Statement. Apartments are valued by the amount of cash they throw off. The ROI, Cash on Cash return, and the NOI. Its that simple.

If you know your goals going in... IE...buy and hold for cash flow, force appreciation, value add, wholesaling for fast cash, syndication, sandwich lease options, etc, you will be fine. Determine that first. Pick a strategy and get the info. Then when your comfortable.... Pull the trigger. The REIA will have plenty of investors who deal in apartments. The REIA will also have people there with all the training, networking, info, and money you may need to get rolling.

When I wholesale apartments I have found that Atlanta market cap rates are all over the place. It can vary depending on the are of the city. When I don't know the area that good, I will usually go to my REIA, network, and find an agent. A CCIM, and simply ask them about rates in the area where I'm working. If they are experienced, they usually know buyers in that market. This works great because you have someone who is not only an agent, but is involved hands on with investors in one shape or form.

As far as Hubby leaving the job.  Just remember that boldness is always rewarded if it has a plan, and a goal.....Notice I said Plan....and Goal...lol.

As far as someone looking at your spreadsheet, whatever it has on it.... I would suggest finding a proven and experienced mentor, recommended through someone at your REIA, that agrees with your personality, and spirit.

I have personally paid thousands over the years for different courses learning the commercial side of the business, and can honestly say that you don't need to.  Find someone who is really agreeable to you that can train you right, and take massive action to achieve your goals.  

If you want some first hand feedback on a few of the ones I have bought feel free to reach out.

Good Luck.

Hey Vemon. Welcome aboard. Yes Wholesaling is legal in GA. It is a large part of my investing business and has been for years. You do need to get trained. Get to a REIA as fast as possible.

There are many courses online however, I suggest getting to a REIA meeting so you can interact with real investors who do this. Ask where they got their training from. Any training that you pay for will usually give you the forms you need. The forms that you will need to do a traditional wholesale (assignment) would be:

1.  Purchase and Sale agreement between you and the seller that has the right for you to assign the contract.

2.  Assignment of Contract agreement between you and your buyer giving them the right to close on the contract you have with the seller, as the buyer, Giving you an assignment fee in the process.

You can also use another Purchase and Sale agreement with your buyer and do a double close using the buyers funds or transactional funding.  

As for approaching sellers, there are a number of ways to find deals.  Everyone has their own way of finding them.  There is no one way.  You just find one that works for you that you are comfortable with and go with it until your satisfied.  

Most of the wholesalers who do this including myself use Direct Mail, Signs, and Internet ads driving sellers to a website or squeeze page.  You put marketing out there, take the incoming calls, go through common questions to determine if its a deal or not, and make an offer.  Once again, you need to get Trained on how to do this!

Finding buyers is the exact same process.  To be honest with you, if you get deals tied up that are really deals then you won't have any problem finding buyers.  I will strongly suggest that you evaluate your deals as if you were the buyer.  Would you buy the deal yourself if it were brought to you.  Remember also.... You are providing a service to buyers.  Don't BS them with fluffy numbers, Don't lie, and Don't make promises you can't keep.  The amount of money you make in this business will be in direct proportion to the amount of service you provide TO YOUR SELLER, AND TO YOUR BUYER.  This business can be done morally, honestly, and can satisfy the needs of many people if done correctly.  Do it right, learn the business, and provide service to people.  You will have no problems and make good money if you remember and follow that advice.

Good luck.  Hit me up on BP if you have any more questions.

Good for you Garbriel.

Great way to show work ethic.  I suggest you get 2 of J Scott's books.  I got them right here at BP for I think $29 bucks.

The Book on Flipping Houses

The Book on Estimating Repairs

You can get them here...  http://get.biggerpockets.com/flippingbook/

They will be worth a thousand times the cost.  Trust me.  

Take care.

Wow.  That sucks and swallows Joe.  Sorry to here that.  However, you know the business.   Being a wholesaler myself, I'm totally in your corner that it was shady.  Might I suggest getting a good size earnest money deposit from new buyers, and also talking to your new buyers about what your expectations are, and how you do business.  This doesn't mean you won't get burned, but It does open up the door for more communication which could be used to weed out any uncomfortable feelings that may arise from how they deal with you.  I myself don't even deal with Buyers unless we speak about there business needs.  This could be only a 5 minute conversation.  I have found that if someone can't take 5 minutes to speak with me about there business needs, and let me qualify them as a good person to deal with, I WON'T DEAL WITH THEM.  Trust me, You will see 95% of the weasels.  Good luck man.  Keep Wholesaling alive..

Take Care.

Rob.

Hey Nghi Le.

My take on this is that you think to much.

Don't worry about the structure.  You can work that out later.  I have done the following in a similar situation and it worked out fine.  Make offer in the name of a Land Trust. Make the buyers name as follows:

"The Property Address Nghi Le Trust"

There is another sheet of paper that goes along with the land Trust called the Beneficial Interest of that Trust.  You can leave it blank until its time to decide which entity to use with your purchase.  Whatever that entity name is that you have created with partners or whatever will be the Beneficial Interest to "The Property Address Nghi Le Trust"

It works.  Its usually used to for asset protection to keep your personal name or business off of the county records showing that you own a lot of property.  The name that shows on public record is "The Property Address Nghi Le Trust", however the Name of the Beneficial Interest paperwork is the true owner of the property, and that is never made public until its needed by you, or someone request a court order.  At which time you fill it out as needed.

I hope that helps.  [Solicitation Removed]

Good Luck.

Hey Will.  To be honest.  I think your time would be better spent looking for another deal.

30K rehab on an 80K house is real close for a house that cheap. As a guy who does mostly wholesale deals in my city and virtualy I wouldn't offer anymore than 21k or so. I mean, there is money to be made, however, If you have to do that much math to squeeze out such a small amount of money it is a cause for concern. I'v done plenty of rehabs since 2004, I saw up and down markets since then, and I can tell you this from experience....Most of my rehabs, BRRR's, and those that I've sold to buyers didn't take that much thinking. Suck it up and do a little marketing, run the calls to an answering machine or answer them yourself. I guarantee you'll find a better deal.

I suggest taking $500 -$1000 and doing a marketing campaign.

Hell, since your a real buyer.  I'll find you a deal from here.  Let me know.

Good luck.