Should I take an agent job??

[Kelsey Kyser]

Morning everyone! Quick question...... I'm preparing to do my first wholesale deal and jump start my business. A real estate company has an opening for employment in my city. Being that I don't know much about the real estate business, do you think I should leave my current job in car sales and have an all-around career in real estate, or keep my business running until I'm able to quit my car sales job and run my business full time? I know it has it's benefits like access to the MLS, but is it really necessary?

[Brian Gibbons]

Should I take an agent job??

Well that depends.

Getting your license is one thing, making money with it is another story.

If you are doing lease option assignments, I think a license is helpful.

Lets assume that it costs you 10% to sell (of appraisal) due to sales commissions,

Here are 3 deal types

All $100K ARV

1. Pretty House 20% equity

Option 1) As an agent, Offer to list and pay 10% or more to traditionally sell with an agent

 ($20,000 equity pretty house)
-so if the cost to sell are $10,000, the net to the seller is $10,000. Is that enough for them to move on and go to another place or for them to feel that's a good deal?

-What if they could wait for their equity or profit? A lease to own at 105,000 with the buyer paying the closing costs and you getting the commission, with that be more attractive?
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Another example, stay with me on this one!

If that were your sister or your brother or your mother would you tell me take the deal?

Alternative
let's say your active in your REIA, you get up and say,
"I'm looking for joint venture partners that has accessible money in the range of 10 the 30,000. This money is used to improve property and quickly turn it within 90 days. You will sign a joint venture agreement with me, get a lien against the property in your name, and receive 15% annual interest for your money. If you have money in your IRA that wants to get 15% on your money we can set you up with a custodian and a procedure to lend money through your IRA."

Okay this is called "joint venture with the seller" with private money for the repairs

This is how it works

"Mr. Mrs. seller the "We buy houses people" give you $45,000 for your house. I know you think it's worth 100,000 and you have 100,000 equity. The "We buy houses people" have a formula which is .65 times ARV minus repairs.

They have to 

• buy it, 
• pay the closing costs on the purchase, 
• paid holding costs while they are doing the work 
• reselling it, 
• pay the agent to resell it, and 
• pay a new set a closing costs.

And they need to profit.

So Mr. Mrs. seller what I can do is this...

$100K ARV
I'll use my money and repair the property quickly and professionally and get $100,000 sale.
There will be approximate 10% cost to sell which is $10,000.
The bid $20,000 repair bill and I will charge $10,000 for a JV fee.

Now I know that sounds like a lot of money. But this way you make more money by doing it this way.

Let's look at the numbers

$100K sale
- costs to sell (see above) = $10K
- JV fee to REI $10K
- rehab loan to REI $20K + interest @15% for 90 days = $20,750
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$59,250 Net cash to seller

Compare to We Buy houses - Net to Seller ----- $45,000

Seriously ? Almost 15,000 more ?

No wonder real estate agents hate rehabbers ! Just kidding.
Agents make half of 3% 

.15 x 100,000 which is 1500 bucks. 

Yuk!  I'd rather make $15K too.

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Here is another example
$5000 equity Pretty house ARV $100K (5% equity)
There are 20 million houses in the US that do not have a lot equity
so when they pay the cost to sell that to pay to get rid of the house

So if you're an agent what you say
"Mr. seller I know you have to pay get rid of this house but at least you'll get rid of it...
Or
"Mr. seller agree to find a way where I'll carry my commission so that you can have some funds to move??

Seriously?
If you care about the seller you think creatively.
Lease to own is a good solution that helps the seller preserve their little equity they have.

Say you put a sign out the front yard

Lease to Own
owner will finance with $5000 down
555-5555

You do have to qualify these buyers that want to buy a Lease to Own

I use RMLO which is a registered mortgage loan originator because of Dodd Frank and seller financing.

Let's just keep it simple and look at the result.

That's less money for you agents!

So think outside the box and look for creative solutions to help sellers that have a hard time selling and buyers that are having a hard time getting a bank loan, especially the Millennials that don't want to buy now, which is strangling the first home buyer market.

Wouldn't Lease 2 Own be a great alternative?