RE business concept - pros/cons

RE business concept - pros/cons

Member since 2022 · 2 posts · 1 vote

Hey BP community!

I've been a part time RE investor for about 10 years. Little background on me to help paint the picture for my business concept. I'm a licensed builder and have been actively building and renovating homes as my primary occupation while dabbling in the RE space buying properties, fixing them up and flipping/holding. Finding deals has always been my biggest challenge and I've leveraged wholesalers, RE agents and my own marketing to find properties, but still not the greatest amount of deal flow. About 5 years ago, I decided to get my RE license as I kinda predicted legislation being put in place against wholesalers (which slowly seems to be happening) and my thought was if I was licensed, I would be able to continue marketing to home owners (not to assign, but only to purchase for my own flips/rentals) 

So, I'm seeking guidance on a business concept that encompasses my knowledge, experience and licenses. I'd like to position myself as a one stop shop for home owners with distressed properties where I'd: 
1) Provide a cash offer on there home - (with all the close fast, no hassle things)
2) Help them list it or refer them to an agent in their area (keeping in mind that I would likely get a referral fee)
3) Renovate their house for them then help them sell - I've got the team and know what renovations move the needle

I'm beginning a period of what I hope to be substantial growth and I'd like to increase my flips/rentals at the same time so I'm wanting to ramp up my marketing. Not disregarding wholesalers at all (I truly appreciate them and think they have a place in the market) but I feel yucky simply saying sell me your house for penny's on the dollar which is the primary reason for including the other options listed above. So my thought is to provide a summary to sellers of the 3 options on the front end which explain the pros/cons with each and ultimately provide them with an estimate of their proceeds based on the option they select. 


Couple questions I've been wrestling with:

1) Am I trying to do too much? Is my services to complex to have an effective marketing message?

2) Legal - I know licensed agents have a fiduciary responsibility (which is why I want to be transparent with the options and provide accurate numbers) but I want to make sure I don't expose myself to any legal issues down the road. I also know plenty of RE agents who continue to buy off market properties at a bargain and they have not experienced any legal issues. 

3) Business structure - keep under my building LLC (taxed as S-corp) or start new, then transfer properties that I keep to my holdings company.

4) Overall concept feedback? Again, to me it seems there are only 2 options that are put in front of owners (buy for cash, sell on MLS) and that is from two different professionals (investors, agents) but I feel like there's value in being able to provide any solution for this type homeowner. But then again, I may be too close to it.

Any an all feedback would be much appreciated. 

Thanks,
Aaron

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  • Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes
    2y

    @Aaron Dennis,

    I like it!  

    I've done exactly that for many years, and many, many times.

    Of critical importance (which you already understand) is to be COMPLETELY up-front and transparent about the cash offer:  "I will pay $xxx in cash, with NO contingencies" or something to that effect.  

    Let them know they might get more money by listing with you and selling to a third party, however, the seller should consider the contingencies that enter into it, for example, inspections, appraisals, mortgage approval, etc.  

    And then there's TIME.  If urgency is a factor for the seller, you could close as soon as the title is clear.  With a mortgaged, third-party transaction, it could take several months or more (depending on your local customs).

    Good luck!  Keep investing and moving forward!

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