All Forum Posts by: Lou Castillo

The biggest cost in a wholesale business is in marketing. Marketing to attract motivated sellers; and marketing to build your investor buyers list. Spend dollars in both of these areas (assuming that you have already invested in your education) and you will do well.

Almost that simple. The thing to remember in either scenario is that the lender has the right to call the entire loan due when title has been transferred. They have the right - not the obligation to do so. They'll only do it if it makes financial sense. If the lender is a real estate investor it makes sense to call the loan due. If it is a bank, then it doesn't. I have done dozens of subject to deals and the lender has never called theloan due. It is not in their best interest.

The seller has a lien on the house with a wrap mortgage which they do not with subject to. As an investor, I would rather have the seller out of the picture, so I always just offer ST. If you have a savvy seller who is very worried and you can not sell around it, then you could offer them a wrap. But I have never had to do that with a motivated seller.

If you do a ST deal, make sure that you have a good Disclosure letter to protect your assets. PM me and I will be happy to send you one if you're interested.

It can be a wrap if the Seller wants to set it up that way, but generally you simply take over making the paymetns on their mortgage leaving the loan in their name while having title to the property transferred to you.

I have always used creative financing for all of my rehab and rental purchases and structured so that I have none of my own cash or credit tied up in the property. The methods that I like best are buying subject to the original mortgage and using private lenders.

Given the current marketplace it is easy to find sellers willing to allow you to take over making paymetns on their loans. You just need to make sure that the property can afford the payments and any adjustments that are due to occur during your planned ownership.

I take a slightly different stance on that. I have seen many investors tie up all of their cash and credit resources in properties that they have bought, then discover that the least little bump in the road casue s a huge financial burden.

I recommend allocating only a small portion of your available cash to invest in properties. Use creative financing techniques such as subject to; seller financing; and private lenders to fund the purchase and rehab.

I keep hearing that wholesalers want to do double closings to hide their profit. There is no need for that if you are leaving a decent profit in there for the rehabber - especially when you're only making $10k. Sure, when I make $40,000 or more I do a double closing, but not on the smaller numbers. And very seldom do I have someone question my profit. When they do I remind them that they were happy with the profit they were making a minute ago - so why would you begrudge me a profit that I derived from great marketing and negotiating with sellers?

In fact my Assignment form even lists my profit right up front - that way if there is going to be a problem I know right up front and I can find someone else. When you have a great deal, rehabbers won't want to pass it up simply because they feel you made too much.

To answer your other questions, yes you need to come up with financing even for a few hours. There are still a few closing agents that will allow you to "sell" the property first and use the proceeds to "buy" the house (in other words, do the transaction in reverse order), but most find this to be unethical.

You could talk to the seller and get seller financing for just 1 day - that will satisfy the closing agent and make it an ethical deal.

If you close on the property, you will incur expenses. Be sure that you include Title Insurance in your list of expenses. Even if you own the property for 1 hour, you are liable for what happened before you.

If your buyer backs out at the last minute, then yes, you have a house and are liable for any loans you took out. See why just assigning the contract is so much better?

The 50-60 cents on the dollar is based on the ARV based on today's current marketplace. So even though the house may have been worth $350,000 1 year ago, the fact that values have dropped to $335,000 means that is where we start (based on what it will be like after repairs).

Paying down debt is always a good thing. The question is really can you do both? If the fixer upper that you are looking at is a really good deal, you could pick it up and wholesale it to anotehr investor. You would have to put none of your money into it, aand could still make $5000-$10,000. Then use your original bonus and your profit to pay down debt and have it available for future deals. Just be sure that it is a profitable deal before you get it.

In the last 15 years in the business I would say that less than 10% of teh motivated sellers I dealt with had ever listed their property. I have never found a deal from a FSBO ad. Understand that truly motivated sellers - the ones with the really profitable deals - are overwhelmed. They do not have the energy to try and sell their house. Therefore they do not list and they do not advertise to sell. Many will jujst let their house go to auction rather than take action. That is why you must market directly to your marketplace.

It depends on what you are looking for. Expos like these are great for exposing you to new ideas out there and introducing you to different teachers. They re not designed for in-depth teaching.

If you are looking for in-depth teaching, select a course/program designed around the specific topic you need.