All Forum Posts by: Tucker Cummings

@Lance Bolen house hacking is probably the easiest way to go, no courses or anything necessary. I think Bigger Pockets has a book about it that you could read. 

The premise is that you're going to get a loan for 3.5% (FHA loan) down, and buy a house. You'll rent out the rooms to your friends and boom, cash flowing real estate. If you need help on your first one, get your parents to co-sign for you. Only need 7k + closing costs for a 200k house.

@Lance Bolen awesome to hear that you're thinking about real estate this early. Go for it bud!

Now as for wholesaling... please take this from somebody (me) who is actively sourcing deals for rentals and flips, but assigns deals that he (I) doesn't want. You can go down this route, but I strongly advise against it. The reason why I say that is because of your current lack of experience in real estate transactions. We see this over and over in real estate, here is a common example:

You get a list of preforeclosures and start marketing to them. You find someone who says, "please help me, I'm in preforeclosure and I just need someone to take this problem off my plate before I get foreclosed on on this date." You say, "I buy houses (lie) and can solve your problem so you don't get foreclosed on and be in a situation where you can't buy a house or likely get good rent for the next 7 years." You put it under contract with no idea how you're going to assign the contract. You try and try but don't know who is a real buyer and fail to assign it. 2 days before the property gets foreclosed on, you go back the homeowner, who is so excited to have this burden taken off them, and say "sorry, gotta back out of the contract." 

You just screwed them over, walk away with no scrapes or bruises, and start trying to do it again on the next one.

Instead of trying to wholesale, try house hacking. You'll start building equity on your own and hopefully will have your entire mortgage subsidized by your room mates. This is a great strategy, especially if you're going off to college. You'll also have more time to learn about real estate, how to source, analyze and transact deals, and time to build up your network. 

My biggest "real estate" regret right now is not house hacking sooner. Didn't even know it was a thing but had I known, I'd be way further along in life.

Love it! Especially with what you're saying about take action. People can listen to as many podcasts, audio books, read books & articles, watch youtube videos, go to seminars etc. all they want to get an education. Which is great and necessary... but at some point you just have to DO IT and learn through the process of getting into it.

That’s awesome. I have a wonderful property manager that has found a way around it but that gives me confidence to start branching out to other markets.

@Jacquelyn First I would definitely provide the fridge. It’s pretty standard to include in any rental.

The basis of the 1031 exchange affects the tax on the sale of an asset. So what this would do is de-incentivize selling assets and plowing the proceeds into new assets with value-add opportunities. Take those away and what is the result?

1) Less asset sales meaning the government would get LESS tax income, therefore shooting themselves in the foot. If they did a little bit of research, they would see that 88% of investors end up paying the tax deferrals at some point down the line. So there's really no need for this.

2) Investors will have less profit margin for value add opportunities. Since the numbers are going to be skinnier to play with, investors might go with lower quality finishes, or not bypass certain renovations in order to hit numbers.

So the total end result is less valuable properties and less taxes gained by the government. Because of its back asswards-ness, and the way this country is going... it's likely to pass lol

Unless they go negative, meaning they'll pay you to buy a house, they can only go up. I think they'll pretty much stay they same, give or take a little, through the end of the year. 

As much as I hate taxes and higher interest rates (huge capitalism fan over here), I just don't understand how the government is going to offset all the money printed in the past 18 months. It's the government just doubled/tripled the liabilities on their balance sheet and didn't add any assets to increase their income.

@Kimberly Lima Don't get discouraged, people just like to just hate on what they don't understand. And I have zero patience for people unwilling to learn the business and just write it off as entirely unethical when they don't understand it.

What I mean is that a lot of wholesalers, especially new ones that give other wholesalers a bad name (hence this ridiculous forum), approach a seller by saying "I am a home buyer" and give the impression that they are going to be the one buying the house. In reality, they have no intention of being the end buyer or have any ability to purchase the house themselves. 

If you position yourself from the start by saying something along the lines of, "Homeowners work with me to sell their house fast in order to get out of all kinds of situations. Usually I make that happen by buying the house myself and flipping it or turning it into a rental, but if it's something that doesn't fit my personal buy criteria, I will assign the contract to another end buyer and they will pay me an assignment fee. You don't have to put another penny into repairs, closing costs, commissions, etc. We will buy as is and cover everything."

It's just about doing honest business. People think its not honest because you're getting a discount on the home. It's like other investors don't understand that people are willing to trade equity for speed and convenience.

I had a guy last week whose house was worth 82k and he knew its worth from an appraisal. He literally said to me "I know its worth 82k, but I'll sell it to you for 60k because I just want to get out of the house so I can move to Texas and be with my grandkids with what time I have left." 

Another way to show transparency is showing them how you come up with your numbers. After you've made an offer and they balk at the price or just think you're trying to swindle them, you can jot down on a piece of paper and say "Let me show you something so you can know where I and other home buyers like me come up with this. If nothing else, it gives a bit stronger negotiating power knowing how we think. When I go to the bank, they'll give me 75% loan of the value of the house. It needs X amount of work to get it to that value, and all in on purchase and rehab, it would leave my with Y dollars in the deal and it would take about Z months to make that money back. For that reason, my offer is $___" It might not make them come down to your price, but they usually appreciate knowing that you're not just trying to low ball for the sake of low balling, but there's a justification behind your offer.

These threads bashing wholesalers are always hilarious. As someone previously in this thread called them the “scummy bottom feeders.” Yeah there are bad, scummy wholesalers, just like there are bad agents, contractors, property managers, investors, etc. Let’s not be so ignorant that we paint an occupation with a broad stroke like that.

I’ll say it again, as I already posted, 1) yes it’s blown up as get rich quick and people are getting in that don’t know what they’re doing. 2) personally I dont think you should get into wholesaling if you have no intention or ability to buy. 3) if you can’t be honest about what you’re doing (saying that you’re doing this with the intention of making a profit, which you may do by flipping, renting, assigning, etc) then you shouldn’t get in this. 4) The only difference between a wholesaler and an investor is that a wholesaler is better at monetizing more leads.

All that said...

Guaran-muthaflippin-tee you that these same people bashing wholesalers are more than happy to buy the majority of their deals from off market wholesale deals, or they do the same direct to seller marketing. Whether you’re doing it to single family or multi family, people are mailing and cold calling property owners for deals.

On the contrary, if you think you're above finding off market deals and you're sticking to the MLS, or you're waiting for auctions and REOs, that's fine. You'll just be left with the scraps that the rest of us already decided weren't good deals.

Hey @Sam G.! Fellow Raleigh-ite here. I’m in a similar boat, working at massive software company in Cary, and they gave us similar instruction.

If you can remove the emotional attachment and see your house as an investment, not your former home, I’d keep that bad boy as a rental. Even if you’re breaking even on the rent and mortgage, which it sounds like you have a small buffer for cash flow, you’re appreciation in this area is about to pop off. I think if you can hold it for 5 more years, you’re going to be really thanking yourself you didn’t sell.