All Forum Posts by: Chris Piper

They might want a down payment on the 90% mortgage they are providing you, which you might run into at most banks. In that case, you would need to come up with whatever down payment they want on their 90%. Borrow it from a friend or relative, get a short term loan if you feel you can pay it back based on whatever terms the short term lender gives you, borrow it from your 401K if you have one, etc.

@Chad Bernstein No problem. Cash buyers who say that are just wasting your time. When you put them on the spot, let them know exactly how you will help them, and what you expect in return from them and get them to commit in advance, you are golden from that point on.

Even if you get 5 cash buyers on board with you to start, you can make a great living from that, and keep building up your list. The average cash buyer buys 2.5 properties per year. So, if you are making a $10,000 wholesale fee per deal, and you have 5 cash buyers doing 2.5 deals per year each, that equals $125,000 a year. Not too shabby depending on what part of the country you live in.

Honestly though, once you deliver to cash buyers and continue to do so, they will want to increase the number of deals they do with you because you are bringing them gold. Any more questions, let me know. I'm here to help.

As a side note, I'm not sure how much money you have to put into your business, but targeting cash buyers is a big deal and will really fast track your business. I am using Kent Clothier's "Find Cash Buyer's Now" system. It's great and you can pull up cash buyer anywhere in the U.S. that you want to target. It is rather pricey, but aside from putting up bandit signs and craigslist ads in your town, it is a much faster way to build your list. You would need to pay for Kent's system, and then pay to direct mail the cash buyers. I think Ken't system is like $1,000, and they will put together and mail out your letters to cash buyers for around $1 each or so. Just a though for you. If you don't have that kind of money, I would look through the forums on here and search on youtube for techniques for building a cash buyer's list. Good luck!

There are a couple of different ways you can determine the best areas to be working in.

1. Pull records from the county of properties sold in the last 90 days or so.

2. Ask your realtor to pull up solds in the last 90-180 days, sort them by zip, and see which zips have the most sales and focus on those areas.

3. Go to this website: http://www.trulia.com/home_prices/New_York/Queens-heat_map/city_by_zip/ALP/zip/

This is a heat map from trulia which shows recent sales activity. Try to stick with zips that are the lightest green, yellow, and the lightest orange.

@Billy Rowe Welcome to Bigger Pockets. If you are planning to invest in a year from now, that should give you sufficient time to rebuild you credit. You can go to your bank or several banks and get secured credit cards. You give them $300 or $500 cash, and they give you a credit card with the equivalent credit limit. Once you have a few of those, go charge something on them. Maybe use half the credit limit on each buying whatever you want. Make sure that you pay the payments on those cards every month on time for maybe 6 months, and then pay them off. They will be reporting those payments to the credit bureaus every month, which will help rebuild your credit. Then, you can do it all over again. The more cards you get and use, the more positive credit you will have added to your credit report.

Banks always view investment properties differently than a property you will personally occupy. They will look at your debt-to-income ratio of course, you credit history, job time, etc. You will need to get a mortgage on your investment property unless you have the cash to buy it outright. You might be able to use a hard money lender, but the interest and points would probably eat up all your profits.

You can always start out by wholesaling right away, and build up enough cash for buy and hold properties. Wholesaling is pretty simple and cheap to get going with, and you can make $5k, $10K, $15K, and sometimes even more per deal. Your credit has no bearing when wholesaling either. Anyway, good luck.

@Chad Bernstein I know people always say when you find a great deal, the buyers will come out of the woodwork and find you. I have not found that to be true at all in my experience. You can't really know what a good deal is if you don't have a cash buyer's list and if you don't know exactly what they want to buy.

If you find a 3 bed 2 bath in the ghetto for $50,000, and it has an ARV of $150,000, is it a good deal if you have no cash buyers list or if you do, but have no idea what they want? The answer is no. It's not a good deal for you. It might be a good deal on paper, or for wholesalers who already have a cash buyer's list of people who are looking for properties in the ghetto. If you don't have buyers who want those types of properties, then it is not a good deal for you.

A good deal starts with knowing what you are looking for. Initially, you need to let the cash buyer's know that you are very good at what you do, and you will be creating deals for them based on what they tell you they are looking for as their perfect investment property. Let them know that you don't waste a minute of your time, that your time is either spent working on creating deals for cash buyers, or with your family. You will be bringing them the perfect deal wrapped up with a bow on top, and all they have to do is pull the trigger.

You can only know what a good deal is by knowing exactly what your cash buyers are looking for, by talking to them in the beginning, and finding out exactly what they want. I do mean everything: the number of beds and baths, what the exterior looks like, what side of the house the driveway is on, garage, what the interior looks like, what price they are willing to pay, etc. You need to become a master at reverse wholesaling. Once they tell you what their perfect investment property looks like in vivid detail, you need to let them how you operate and what you expect from them. Always talk to your cash buyers with confidence and be straight forward. Even if you've never done a single deal in your life, "act as if." Act as if you've been wholesaling for 10 years, act as if you are the best in your area at what you do, etc.

When explaining how you operate and what you expect from them, let them know that you will be spending your time, money, and resources to create deals for them based on their description of their perfect investment property. So, let them know that when you call, that you will be bringing them exactly what they want and at the price they want, so they need to answer when you call. At the very least, they need to let you know if they are busy and that they will be getting back to you soon via text, email, etc.

Let them know that when you bring their perfect deal to them, that you expect them to put the property under contract immediately, and they need to put $2,500 in escrow right away as well. They will have 7 days to inspect the property, and if they don't like it, they can back out within the 7 days and get their money back. No harm no foul. But, let them know that after the 7 day inspection, that you expect them to close. If they don't close, then inform them that they will be looking for their own deals from then on. It seems harsh, but they have to understand that you are the best at what you do, and that they are lucky to be working with you. Obviously, you want to convey that without saying it, and without being a jerk about it.

The key is 100% to build a cash buyer's list first. Imagine being able to put a house under contract that you know is already sold. That is like getting paid to shop. Pretty powerful stuff.

P.S.- Don't let your cash buyers blow you off by saying "Oh just send me anything you get" or "I want 3 bedrooms 2 baths." That is too vague, and that will cause you to go after deals like that, and end up getting stuck with them when those same cash buyers don't buy when you come to them anything or with a 3 bedroom 2 bath. Make sure you make them imagine and walk you through their perfect investment property that they would buy every day of the year if they could.

Wholesaling is never on the decline if you are doing it right. As long as you completely per-qualify your cash buyers and know very specifically what they want, you will always make money wholesaling. You need to be confident and honest with them, and when they walk you through every single detail of their ideal investment property and you get it, you need to walk them through how you work, how your deals will work, what you expect from them, and get them to commit in advance to buying their ideal investment property when you bring it to them. Now, every house you put under contract is sold in advance.

@Ben Dunk I have some experience in this area. I bought a HUD home, rehabbed it, and sold it, but that was 7 or 8 years ago. If you are looking to wholesale HUD homes, be aware that HUD does not negotiate much on their prices, which means a lot of HUD homes, if not all will be too expensive for them to be a good deal for you and a cash buyer.

Double close/back to back close is pretty much the standard in the wholesale business world. Keep in mind that if you buy bank or government properties, you will almost certainly NOT be able to assign those contracts. This means you can still do a double close, assuming the seller(bank or government) doesn't have any seasoning restrictions(meaning you can't resell for a profit for a specified amount of time). Since these properties are non-assignable, as stated in their contracts, you will need to have "Wet Funds" available. That means you need to have private funding, hard money, or transactional funding ready to pay and close on a property you have under contract. Then, you turn around and sell the property to the cash buyer that signed a purchase agreement with you to buy the property. You close with your cash buyer on the exact same day you closed and purchased the property, but you do that closing with the cash buyer a few hours after you close on the property yourself. It might sound complicated, but it's very simple really.

Setting up an LLC for each property using the property address as the LLC name is old school, complicated, expensive, time consuming, and will DEFINITELY raise some red flags with the IRS. Don't do it. There are two options that I would say are the best way to operate:

1. Set-up an LLC. Buy and sell properties through the LLC. For example: Joe Smith Investments, LLC. You do all of your real estate transactions through that LLC.

2. Set-up Land Trusts. This is a safe and private way to do all of your real estate deals. It takes some knowledge and understanding of how they work, but they are great. Just google Land Trusts or purchase some training on how to set them up and use them for real estate. There is a great lawyer in Chicago who sells a system on A-Z on how Land Trusts work, how to set them up, etc. His name is Bill Bronchick. Hope this info helps. Good luck.

Use your own agent, have them pull comps for you and send you a CMA(comparative market analysis), put your offer in. Make sure you buy at the right price, make sure it is a house that your cash buyers want to buy based on you pre-qualifying them. Put a 7 day inspection period in there and give them $100 earnest money. I never pay more than $100 earnest when contracting on a property from an individual.

You need to have accurate comps to determine the ARV, then subtract 30% which means you will be selling at 70 cents on the dollar, subtract repairs from the 70% of the ARV, and that is what you need to sell the property at to your cash buyer. Then, from that price, deduct your commission/assignment fee and any closing costs/agent fees, and that's you maximum offer price. I take my max offer price and multiply by 85% first and that is my initial offer.

Escrow is how the money is held. It's held in escrow by the title company/lawyer. You put $28K in escrow, you then close on the house. If you are wholesaling using a double close, then your cash buyer puts $50K in escrow and you guys close on that. Minus the title company's fees and any realtor's fees, your lender gets their money and you get your commission or wholesale fee.

Any property is assignable anywhere in the country, unless otherwise stated in the contract. Bank owned/REOS's are NOT assignable because they specifically put that in their contracts.