All Forum Posts by: Tarl Yarber

@Dominic Jones

@Tarrin Lilly

Hey Tarrin, Im going to answer a few things for you and for Dominic since he had some good questions too.

First: You CAN wholesale a shortsale, just not in the traditional sense of "assigning" it.

Here is how: Create an LLC that you do not plan to keep (I have a whole mess of LLC's that start with C&Y Holdings I, II, III, IV, etc make sense?) Write up the sales contract on the shortsale with the LLC. DO NOT do anything else with that LLC, it is only for that shortsale. Once the shortsale is approved, market the property just like any "wholesale" deal and find a buyer/rehabber who wants it. Then sell them the LLC while the property is still in escrow and transfer the LLC ownership to them. And your done! You just sold the LLC for what ever "assignment" fee you wanted, instead of selling the contract you sell the LLC. I have done this A LOT OF TIMES. Your state specific requirements for selling an LLC are important to find out first though.

Second: I market to pre-foreclosures all the time and end up dealing with a lot of people with no equity. These are shortsale clients. I have a shortsale negotiator I am teamed up with. I send the lead to them after I sell the client on the shortsale. I then write my offer under the LLC I want to use, and then give to the negotiator and let them do their work. There is sometimes more to it if the bank requires the property to be on MLS for a period of time, but that depends on the bank.

I hope any of this helps, if you want more specifics, please let me know and ill be happy to help.

@Ryan Moran

PM me when you get to the point you need more help

So this is my first post on the diaries and i thought i would start it with this property since it is one that i unfortunately have to do full permits on because of the location and the city inspectors have been watching it like a hawk waiting for some unsuspecting investor to buy it so that they can pounce on them.

Freddie Mac home near Tacoma WA.

Before stats:  4 Bed 2 Bath 1,537 Sqft with an Un-Finished 1041 sq/ft basement and 2 car detached garage, also includes a large pain in the butt 3 story chimney (basement to second floor).

Post Rehab: Will be a 5 bed 3.5 Bath 2,578 Sqft home.  Adding a full master suite on top floor with soaking tub and walk-in glass/tiled shower. Finishing entire basement, adding .5 bath there and a bed plus media room. Remove the three story chimney.

Deal stats: Purchase $150,000 CASH, rehab $75,000, Resale at $320,000. WA state has a 1.78% excise tax when reselling on top of property taxes, i pay 5% realtor fees, and then standard closing costs, etc. Projected Profit: $66,000 but i base everything on ROI% so that equates to cash on cash return of 28.9% so long as project doesnt get too crazy.

Before pics: I have plenty of before pics and i am done with the new framing and we are currently doing plumbing and electrical.  I will post a bit later the before pics and the current progress photos of the rehab. 

After removing the three story chimney, we found that the main floor walls separating the kitchen from living area had two load bearing walls.  We had to do a new beam but also replace 8 second floor floor joists so that they reached the new beam. Will have pics up later and progress pics as time continues.

We have another 60 days till completion.

Ugly front of the house...curb appeal will be fixed of course.

@Marcus Mccluster

Great question that I am sure many investors doing direct marketing asks themselves all the time!

First: How many have you sent out and how frequently?  Short and simple answer is that if you only sent 100, then its not a big enough sample size, but then again, if you sent 500...then you should probably re-evaluate either your list or your letter. 

Second: Does your letter look like junk mail that people would just throw away without opening?  Plus vacant homes can sometimes be a challenge to get the mail to the right place, so it can also be dependent on the quality of your list.

I have been doing direct mailers for some time now, i mainly use letters, but they have been refined over the years and we get great responses. I would re-evaluate what you are sending and/or start sending postcards to the same list you were sending your letters to.  The key is to make minor changes and track what works and what doesnt, this is very important in the long run.

Keep up the activity and read the great deal of blogs on direct marketing here on BP, there is a lot of information here that can help.

i agree with most of what Linda says. I am a big advocate for getting a seperate llc for each property. This will help limit any liability exposure you have to your self and your personal assets. Keep in mind that depending on your state, this can add up is costs and yearly minimum tax (ie. Dumb California). However i find the costs are minor compared to the liability exposure if you were to be sued on one of your properties. If that property is sued they can go only after the llc that owns it and its assets, if thats the only house it owns then its all they can go after. It is important to note that you keep those expenses seperate from other llcs or personal accounts or it can allow for some attorney to potentially pierce the corporate veil.

I see wholesaling as a tool on your investor tool belt. It is a strategy to apply when appropriate. My full time source of income is through flipping houses and I do not take offense of the fact that I am only as good as my last flip just like a sales person is only as good as their last sale. And wholesaling is just selling a contract. 

True investing and wealth building can most effectively be accomplished in real estate by buying and holding and then incorporating any number of strategies within that realm. I barely equate flipping as truely investing, but who cares if it is or not? Ill just keep cashing the checks. And paying them in some cases...

Hi Ryan,

Congrats of trying to get creative and find ways to make a deal happen!  Keep in mind i am not from your area, but i have a good amount of experience with partnership deals.  First: be very very clear with what your goals are with this property.  If its a duplex, are you living on one side and renting the other? Are you fixing any part of it up prior to renting? What kind of financing are you getting? What are the rental rates, insurance costs, maintenance, have you budgeted for not being able to rent right away, taxes (property and gains), etc. Second: Since this is your first rental and the first of your friends, is everyone very very clear on what their money is being used for and the risks involved? I never partner with anyone unless they have their eyes wide open and there are clearly defined terms in a contract.  If you want to use their money and give them a portion of the return with no owner ship in the property, that is fine, but if you want to give them part ownership then it is best they understand they get part of the losses as well if they happen.  Third: how are you taking title? It is pretty simple to give ownership interest in a rental by giving shares of an LLC to other investors, depending on your state will depend on how easy this is to set up. In my state of WA its $200 to set up an LLC and you dont have to file your operating agreement at all. You can create an LLC, give a third to each of you and two friends, and then lay out the way the capital investments will work, operating expenses, profit distribution, etc. There are a lot of other ways to do this depending on how formal you want to be. Also consider what will happen if one of your friends all of a sudden demands their investment money back for some reason...how will this be handled? My advice is to keep things VERY clear and defined, if this is done incorrectly and things go wrong, you will have some pissed off friends looking to you for blame...

Hope some part of this helps.