STR sub-to/ portfolio

[Timothy Franklin]

Hey all, I'm new to wholesaling and my first deal is proving challenging, I'm looking for advice or potentially a j/v on dispo. It is a 3 unit airbnb portfolio with each unit in a different city. Would it be better to dispo each location independently or as a whole, and if done as a package deal does this fall under commercial or residential? The portfolio is turnkey/ fully furnished and active. The deal is structured with partial seller financing ($766k) below market rates (varied on each unit). I'm light on capital so paying a mentor isn't an option, but happy to split revenue (pay as I learn).

[Don Konipol]

Quote from @Corby Goade:

Quote from @Timothy Franklin:

@James Wise so you would rather pay higher interest rates to the bank? I could have sworn everyone in real estate was trying to get the most back on their dollar, but that could just be me I suppose. But I guess if you want to give a bank $375,000 upfront and $10,871 a month for 30 years you are welcome to. This deal is not exclusive by any means, just trying to help people get deals done.

 I don't think that's the point- although @James Wise isn't known for subtlety. 

Sub to deals are risky for the buyer and typically provide little to no value for the seller. 

If they need to reinvest, how does sub to help them accomplish that goal? Also, wholesale deals off of the MLS are typically a waste of time for all parties.

Geez, there’s so much opinion, emotions, beliefs, and personal experience in this thread.  It kinda makes it FUN.  Maybe not (sometimes) rational, but FUN nevertheless. 

Person new to real estate trying to get in the “game” with little or no capital and trying creatively.  Misled by gurus on YouTube hyping how people JUST LIKE THEM with no capital, experience or real estate education, can join his mentorship and make these incredibly profitable deals.  We all know it bull, but we know it because we have the experience and knowledge the newbie lacks. 

So , I’d like to address a few posts where the poster has expressed his opinion that I disagree with.  The posters opinion is based on their experience, my opinion is based on mine.  Some times our experiences differ; other times our experiences are similar but we draw different conclusions. I still respect their opinions.  

1. I believe subject to transactions, done CORRECTLY, between KNOWLEDGABLE participants, with FULL DISCLOSURE, are typically successful transactions that have benefits for both sides.  The seller can often sell a property that can not otherwise be sold, financed, or sold for enough to pay off existing mortgage or obtain a higher price by selling Sub To, or Sub To wrap/owner finance.  The buyer can obtain a property with no mortgage qualifying and or a lower than current interest rate, or on terms not readily available otherwise.  With a backup plan, and proper (extensive) legal docs, much of the risk can be mitigated. Btw, I’ve found that these types transactions actually work better when used to purchase/sell COMMERCIAL property. 

2. As I addressed in another discussion, most money in real estate is made by long term appreciation and by improving, repositioning, and stabilizing the property, NOT thru purchasing at a discounted price.  While a substantial profit can be made purchasing below “market price” these types transactions deals are a rarity.  MOST transactions where people think they’re buying below market are actually being purchased AT market price; the purchaser is either valuing the property incorrectly usually because the “comps” they’re using are not being adjusted accurately for difference or because the appraiser’s opinion is just plain incorrect. 

3. Flipping properties, commonly called “wholesaling” can be done ethically, legally and successfully.  Unfortunately, 98% of the participants can’t or won’t operate ethically.  People trying to “wholesale” who lack knowledge of real estate principles, real estate law, the local real estate market, the market for the property type they’re trying to wholesale, etc, CAN NOT WHO;ESALE ETHICALLY no matter what they do.  Because to provide the seller with value the wholesaler MUST possess the experience and knowledge mentioned above, otherwise the wholesaler is merely tying up the sellers property under false pretenses.  

Here’s my bottom line.  Just because a technique for acquiring or earning money is popularized by gurus and practiced unethically by the gurus students does not mean that the technique itself is a scam, unethical, immoral, or that the participants aren’t honest.