Is paying for a mentor worth it?

Question

Wholesalers and investors, did you pay for a mentor or did you do it successfully without a mentor? I’m considering a mentor who wants 5k but not sure if a mentor will help scale my real estate business or it’s possible doing it blindly on my own. Your thoughts and experience...

James Wise · Answer

Ehhh I can save you $5k right now. Wholesaling as it's taught is a myth. You need a license to Broker real estate. That's all wholesaling is, it's brokering real estate except instead of being up front & telling the distressed seller that you'll sell their property for X amount & take X amount as your commission / fee you are taught to lie to the seller & pretend you are going to buy the property while you secretly attempt to "assign" your contract. It doesn't work. Nobody has any respect for wholesalers. Whenever a wholesaler contact me I simply get the information about the property & reach out to the owner myself cutting the wholesaler out of the deal entirely. If you do business above board as a licensed agent that won't happen to you. The only people making money wholesaling are the guys selling the education.

Michael Johnson · Answer

@Greg Dickerson & @Daniella Sanchez & @Billy Smith, thank you so kindly for your input. All advice is definitely valued. I know for a fact that it’s not illegal. @Greg Dickerson explained it plain and simple. We are up front with our sellers and our investors are fully aware as well. We do this with honesty and integrity. I get it, competition is fierce so I can understand the frustrations. Happy investing.

Jay Hinrichs · Answer

things are changing in some states with the unlicensed activity of assigning contracts.. depends on the state.in Oregon if your business model is to assign contracts any form of advertising them via e mail flyers craigslist bp market place etc is deemed an activity that a license is required.. see below from our state regulators. Hello Jay, Thank you for getting back to me. The advertising copy you attached to your email came out perfectly and will be very helpful. Thanks! The Agency is well aware that unlicensed “wholesalers” are rampant in our jurisdiction. Addressing the problems is like trying to put out small individual fires in a forest that is burning. The Agency’s investigations are complaint driven, so we rely heavily on the public, and our licensees to bring these individuals to our attention. Thank you again for the information, if I have further questions for you during the investigation I will certainly reach out. Best regards, Frances Hlawatsch | Financial Investigator State of Oregon - Real Estate AgencyI got tired of the is this legal is it not. .and why do I have a license .. when others are basically selling real estate with out one just because they are assigning contracts its still putting two parties together for compensation.. so I get this flyer from a known wholesaler who I know is not licensed etc and i know he does not own the property.. so I sent it to the state to get their feedback.. they opened a case and this person is now licensed.. This state Oregon does not agree with the activity of setting up a assigning business without a license.. I mean it just is what it is here.I have had others who use me for funding get turned in as well and get cease and desists.. I believe Ohio is cracking down and I think AR is and I know FLA is.. so its just how each state decides to enforce the laws on the books.. Oregon and you will like this one as well.. If you buy a home and hire a GC to fix it up and sell it or you do a project or subdivision like I do a developers license is required.. even if you do one flip.. and the license has to be in the vested owners name.. so with me I have 5 different developers licenses.. this one is violated every day and twice on Sunday as no one thinks that it could be required and of course I learned of it when an inspector asked to see our developers license.. then turned us in and there you go 5k fine.. and go get the licenses.. So these are all state specific one hat does not cover all heads.. Enjoy your weekend.

Greg Dickerson · Answer

I coach some of the top wholesalers and investors in the county. Some are doing 200-300 deals a year. Wholesaling is just a term used for assignment of contract which is totally legal, acceptable and is part of most State association contracts. You can wholesale anything you have a contract to purchase as long as the contract grants the purchaser the right to do so. Professional wholesalers provide a valuable service to sellers who need cash quickly or do not have the means to fix up a property for sale as well as for investors and agents who have clients looking for properties below market value.Wholesalers are not selling the property or representing an owner or a buyer, they are assigning a contract so you do not need a license. Reputable and professional wholesalers explain to the seller exactly what they do and how the process works and do not misrepresent. I understand that some wholesalers do not operate ethically but all the top wholesalers i know and work with do.It's also important to point out that wholesaling is not investing. Its flipping contracts. Investing is actually buying the property to fix and flip or hold. Wholesaling is transactional.

Corby Goade · Answer

No way. Everything you need to know is available for free- network here, go to local REI groups, read every book. If you have it in you, you'll be successful. Once you get the ball rolling and meet people, you'll have local, real, experience and successful people in your network who want to help you for free, just buy them a cup of coffee, it'll save you $25k.

Steve Vaughan · Answer

Without more info about what exactly you are trying to accomplish or what specifically this mentor can do for you, $5k is most likely too much to pay at this stage of the market cycle. Learning how to do the math to calculate (70% minus repairs) your MAO is completely detached from and not relevant to actually being able to convince a seller to sell for 60%ish of market value. And if you do find that clueless unicorn seller, then what? Flip the contract for a small one-time payday? Learn how to hold. Learn creative purchase strategies like seller financing. Don't pay $5k to learn how to do a high effort, high liability risk job with such a low probability of success.

James Wise · Answer

A simple assignment of a contract is a completely separate issue from brokering real estate. As Jay mentioned many times assignments are used to transfer to one entity owned by the same principle. I use them all the time when I go under contract to buy a property then later create an LLC such as 123 MainStreet LLC to take title of said property. The business model of assigning contracts to separate individuals and calling your commission an "assignment fee" as a clever way to attempt to circumvent state brokering laws has been shot down all over the country. That is not conjecture. That is fact. I do not make the laws, only wish those of us in the know would present proper education here on the site. Far too many newbies out there getting bad information about things they don't even begin to understand.

Greg Dickerson · Answer

@Jay Hinrichs @James Wise My statements are fact based. I am a licensed broker in VA and NC and I have clients are all over the country and none have been required to get a license yet. Every state is different and I pointed out in my post that "most" state contracts have an assignment clause that allow assignment if the seller agrees. Also a state that is "lobbying", "looking into" and "contemplating" is not a requirement or a law. That being said the game is changing nd realtor associations across the country are lobbying for licensure especially as Zillow, open door, offerpad etc. enter the game. It will be interesting to see what the future of retail real estate looks like.

Jay Hinrichs · Answer

Ya know as I think this through and of course being a broker for 44 years it never really dawned on me.. But we use the and or assigns all the time .. but its simply to move from one of OUR entities to vest in another one OF OUR entities .. so I think this just morphed into hey we can just do this and start swapping contracts to third parties as a business model.. I get contracts assigned to me on occasion the 90 lots I just bought in Oregon a developer who spent two years getting approvals assigned his purchase contract to me.. I paid him 125k for the privilege to step into his contract. So I know it happens all the time but when you have folks doing this in the SFR space with homeowners in distress who's property is most likely their sole asset or most of their assets .I got one deal in Charleston a few years back wholesaler wanted 200k for it.. I researched it a bit and they had a 100k option to buy the owner was a older minority lady.. not that that matters but lets be frank about this.. older and minorities are targets .. I told the guys nope not doing it.. well true to wholesalers the world over turned out the lady owed 206k on it.. and I paid 208k and gave them 2k and paid of the property before the sherrifs sale.. but I just cant be a party to transactions where middle men or anyone for that matter just goes into contract tells someone their house is only worth half of what its really worth or will real sell for..

James Wise · Answer

Good example Jay. Posts like this, that contain factual data directly from the government agencies who are regulating the industry are what need to be shared around here. Posts on BiggerPockets and other online forums that contain opinions based on conjecture are wildly dangerous. @John Thedford you've usually got your ear to the ground on government regulations regarding this topic. You have anything to share here?