All Forum Posts by: John Hixon

@Sekelle O. I was not referring to the seller paying the assignment fee.  I was saying that if a seller see's that you made $50,000 on an assignment fee (from buyer) and they get mad because they realized they could have probably sold it for more and go to the real estate commission or file a law suit against you then a judge could easily rule that since you were the real estate investor you were the knowledgeable one and took advantage of the poor seller and stole equity out of their home.  Real estate investors in general do not have a very good name, especially when it comes to defending yourself in court against sellers.

Having contingencies are fine as long as there are time frames associated with them, 7 or 10 days.  The problem arises when you just put a contingency in there and 25 days goes by and the seller thinks you are closing next week and you say sorry I can't buy your house and walk away.  If you cannot find financing within 10 days then your not getting financed.  When I said weasel clauses I was referring to all of these wanna be wholesalers who put all of the junk in their contracts and then walk away at the last minute.  7 days fine, 10 days fine, in you cannot find a buyer or get financing in 10 days then there is an issue.  All of my contracts are assigned within 7 days.

@Sekelle O.  I am aware of what an assignment fee is.  I was just saying  that 20% is rather steep especially given the fact it does not look like he has the ability to actually purchase the home.  Does he have an equitable interest in the home, if so how much earnest money did he put down? A lot of states consider assignment of contracts without an equitable interest or the ability to buy the house acting as a broker without a license.  And, it is not the end buyer that would have the issue with the $4,400 assignment fee, but it might be the seller.  If the seller got really mad about that for whatever reason and decided to take you to court the judge could rule it as equity striping. 

I recently put a house under contract. The owner is 78 years old and in our conversation before we signed the contract he told me 3 times that he would accept $8,000 less then what I finally offered him. Why did I pay $8,000 more then what he told me he would accept? Because it was the right thing to do. Before meeting the seller I came up with a number that I would be happy getting the property for given an estimate of repairs. I plan on assigning this contract and I will make about 4% of ARV. But, unlike most wholesalers I actually put down $3,000 earnest money and can pay cash for the property it my buyer backs out. I do not need to include weasel clauses in it that trick the seller into thinking their house is sold just to find out the buyer cannot buy it and backs out.

wholesalers are being cracked down on across the country because they do not understand how real estate works or have the ability to close on a contract.  They just went to some weekend seminar and now they figure they can get rich quick.  They put houses under contract, do not close and sellers get mad.  Which brings lawsuits and eventually the state real estate board steps  in and say enough is enough, which has happened in Ohio and Florida.  

@Rick Rozela also 20% is pretty steep for an assignment fee.  

@Rick Rozela How much is there in repairs?  I'm guessing if this house is really $37,000 then there is probably at lease $10,000 in repairs.

What is the MLS CMA say the ARV is? Redfin is not the most accurate of services.

What kind of contract did you use?  The Texas TREC contract or some other internet contract?

In the TREC contract there is a spot at the end of the contract for you to put in the number of days you need before deciding if you want to back out or not.  You have to pay the owner a nominal fee I put $100.  

Also, and this is just a pet peev because it makes wholesalers look bad is please do not use "contingent on financing and partners approval" If you do not have the approval or ability to finance then you should not be signing a contract.   If you used the TREC contract then there are time lines built into the contract that allow you to back out for things like inspections.   

@Chibuzor Nnaji Boomer Sooner.  Glad to see an OU person on here.  I am a die hard sooner fan.  My wife and I had season tickets for 7 years before moving to Dallas, we are originally from Tulsa.  My mentor is actually the same person who handles all of my direct mail.  It is a nice bonus if you go with him as your direct mail provider.   Let me know when you get to Dallas, possibly we can meet up and talk real estate.  

It is amazing to me that someone would spend $50,000 on a program to teach you what you can learn on BP for free.  Imagine if you invested just a fraction of that into direct mail, in my opinion you would see much bigger returns.  I am sending out 1,800 letters a month and in the first 6 months I will make more money then I do in 1 year at my current job and if the deal goes through that I am working on right now it will net me more then I make in 4 years at my job.  These smooth talking sales men just pray on fear in people.  Its disgusting.

@Nathan Foust Congrats on deciding to take action in 2017.  I was in the same boat until 4 months ago when I decided enough is enough.  I teamed up with a great direct mail partner who also acts as my mentor/coach for free.  I am sending out 1,800 letters a month, so far I have gotten two great deals and a third that will close at the end of March which will net a nice profit and a fourth that if everything goes right will be my first flip and will make me more money then I make in 4 years at my current job.  (if that turns out like I think it will I wont be at my current job any longer )  :)   I say that just to let you know that it is possible to make it as real estate investor.  It just takes time, dedication and most important lots of direct mail.  

Also I see several people on here suggest to work out a script.  I do not use scripts because I have a call center take all of my calls live.  If you are serious about taking your real estate investing to another level and getting off on the right foot I would highly recommend a call center.  But, watch out what call center you choose, I use one that is only for real estate investors so all of the representatives know what they are talking about and can actually have productive real estate related conversations.  A lot of call centers out there just use some generic script.  

Lastly, if you decide to take your own calls, you have to answer your phone.  99% of investors let the calls go to voicemail,  I never understood that.  If a homeowner has a stack of letters in front of them which most do because all real estate investors are using the same lists, then you want to be the one who picks up.  I work full time and cannot answer the phone at work so that is why I use a call center but if you can answer your phone then for the love of God pick it up.  You spend way too much money just to let a call go to voicemail.  

Well, best of luck in your REI business. You already made one of the hardest decisions and that was to start, now the easy work begins.

@Brian Lee I would not put much hope into Sean Terry partnering with you.  You would probably get a lot better results from contacting some of the serious investors here on BP.  You might also attend some of your areas local real estate investor meetings.  Like I said if it is truly a great deal then you should not have much trouble finding a buyer.  And, yes the BP market place is a Pro member benefit.  

@Brian Lee you could put it on the BP market place.  Or reach our to some of the big investors here on BP.  If it is truly a good deal, I'm sure someone will take it.

@Joshua M Pozzi it all depends on how much money you have in savings, how much you make, credit score.  There are several options for new investors but they are all different and all require different things.  But, the one key to all of them is money.  Maybe think about saving as much as possible so you can make a bigger splash right off the bat and do 1,500 or 2,000 letters a months for 6 months.  That should be enough to get some deals and then you can turn that profit around and expand again.  Maybe look at getting a part time job and using that money as marketing money or saving it.  I saved for 5 years before taking the leap and it paid off.  It sucks to hear that but sometimes that what it requires.  Commercials make it look easy, no money, no experience and in the first two weeks make $20,000.  Not saying it could not happen, anything is possible but the chances are remote at best.