All Forum Posts by: Ryan Evans

Hey @Dan Sarao, I completely agree with everything you said. I never discounted the work that goes into wholesaling, but that's not the point. 

I didn't mean to claim that I know every single wholesaler, but I have either met or been directly contacted by many of them, including yourself. And no I haven't fully vetted each one, which is why I'm seeing if anyone else can back a few of them up with something tangible. I'm just talking about my experiences and wondering if anyone else has had a different experience. 

I don't need to trust wholesalers because I can do my own due diligence. I live in Cleveland and have a pretty good grasp on how to estimate rehabs and run comps.

My point is if you or anyone else reading this are one of the good ones, then fantastic. I'd like to chat. But I'd also like to talk to your buyers and see the projects they've done. Flippers love showing off their projects and I don't mind driving across town so if these buyers do exist then I don't see why that would be a problem. Especially because it would give the wholesaler tons of credibility a new business. 

I want to pose a kind of survey to the people of Bigger Pockets who invest in Cleveland.

I’ll start by saying that I have no issues with wholesalers. They get a slimy reputation, but there are bad people in all industries. But, I’ve yet to come across one who has any kind of decent reputation in Cleveland. They all claim to be doing deals but are unable or unwilling to give any kind of testimonial from buyers they’ve worked with. If their buyers had so many great experiences buying their deals, then where are they?

There are plenty of buyers who got screwed and many more that came close to buying a deal that they would have been screwed on. I’ve met lots of them, yet I never meet people who have seen success buying from a wholesaler. And I meet a lot of investors.

I posed this idea to one of the popular local Facebook groups a while back and I got bombarded with wholesalers wanting to add me to their lists and talking a big game. Though, when I asked them to show me any kind of proof that they have wholesaled a deal to an end buyer and that end buyer actually flipped or BRRRR'd the property successfully, they all go silent. So I'm giving this group a shot.

Let’s not go into the ethics of wholesaling because that’s a black hole. I’m also well aware that many of the good wholesalers only need to sell to their go-to repeat buyers. 

Has anyone who invests in Cleveland bought properties from a wholesaler and actually had a good experience? Meaning, they were given realistic numbers and weren’t blatantly lied to? I'm not necessarily asking for contacts, I just want to know if they exist! 

@Robert Mitchener My business partner has bought a couple of SFR's through citizens bank with 15% down as rental properties so your loan officer is misinformed. I was the broker on one of them. One of those was for a $33k purchase price. That said, that deal prompted their branch to change their loan minimums as it was the lowest price transaction they did that year. But it didn't go up all that much.

There are going to be consistent standards among conforming loans, but you shouldn't limit yourself to just those. And if you think it's a waste of time finding a reliable lender than you're missing the big picture. Having a go-to lender is one of the few key pieces you need in this business and you have plenty of time on your hands to find one. It's a tough game and if you're not willing to work to make it happen then it just won't happen. 

I don't have access to conventional financing because I've moved around and had a very unstable income, but I've bought ten units in the last few years by getting creative and grinding it out because that's what it takes. 

Keep digging through the forums and you'll find plenty of stories of people who have done what you're up against right now. Finding a partner and bringing them a deal is a much lower risk way of getting things going.

But the best thing you can probably do right now is going to talk to lenders. That's the part people are afraid of for some reason, but that's when it all becomes real. If you don't have good credit they will walk you through exactly what you need to do to get a mortgage with them. Then just start checking things off the list. Don't think about what lenders will say even if you know you're not qualified. Just start! 

It sounds like you're really overthinking this. If you can qualify for a traditional mortgage then that's usually the best way to start out. You can go get a 15% down conventional rental property loan for a single-family home. You can get something pretty respectable for $75-100k that will rent for $1100. 

Forget about the private money lending, creative financing, and payoff schedules for now. Just go talk to more banks, get approved, and buy something!

I come across things like this all the time when I'm buying properties for myself or my clients. There is something going on behind the scenes where you're going to get screwed every time if you arent diligent. It's probably a combination of a broke owner, bad tenants, and little to no record keeping. 100% of the time I've seen something like this come up, the tenants have serious issues or move out unexpectedly. You'll likely get stuck with no deposit, a lot of damage, tenants that stop paying rent conveniently around the time you take ownership and then drag out the eviction process because you have little or no proof of deposits, leases, etc. Not having a good paper trail will only lead to more headaches. 

I write up my deals with clauses to handle all of that stuff now. Get an estoppel agreement and put it in writing that if rents aren't paid during the escrow process, that you're not stuck with the bill. I either do that or tell the owners that it needs to be vacant. Sellers, of course, aren't a fan of when I do this. So I politely remind them that if they're not trying to screw me then they shouldn't have an issue providing all of that in writing. If they are trying to screw me, that's fine, but I adjust my offer to reflect the cost of several months of lost rent, additional rehab, the costs associated with evicting the tenants, and getting it re-rented. It can be a 5-10k mistake if you do it wrong, so don't be afraid to stand your ground. 

I think decent is a good way to put it. Nothing special, but the numbers seem to work well there for doubles. I have some friends a few streets away so I'm in the area a few times a month. It's a very working-class area that has plenty of room for improvement, but it hasn't been hollowed out like plenty of other suburbs. It's probably a property that can cash flow well but won't see a huge appreciation, but that's why most people are investing here after all! 

How well does your agent know the neighborhood? It's easy to pull comps from over in Euclid and pump your numbers, but only a couple doubles have sold for over 100k in the past two years. And I get my data from the MLS since I have my license as well. Even if you can get it appraised at 100k and take out 70k then you'll be in a great position to flip or buy other rentals and you can still sell without paying taxes within a couple of years, so maybe that's worth considering.

Single families can sell for more, but they're really in a different property class with a different set of buyers. 

If you're looking to buy rentals and flip then it might make sense to hold on to it. You're already in a good cash flow area and if it's a nice remodel then you should make the most of it and just pull some cash out to flip with. 

And where are you getting the 120K ARV? North Collinwood is coming up, sure, but nothing sold last year over 107k and that was a pretty nice one on East Park so that will be a tough sell. My friend who brokered that one for 107k listed another duplex down the street for 125k the other day, so you might have a good comp to go off soon. I invest and live in the neighborhood, so I'd love to see high comps above 120k, but I'm skeptical.

State farm can do coverage based on a number of your choosing if it's over the cash value. I do this on my properties that are worth less than 100k. Though, I don't have experience in mixed-use so I bet that has something to do with it.