Am I shooting myself in the foot?!?!

Wholesaling
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Am I shooting myself in the foot?!?!

Michael DuVentre
Member since 2014 · 61 posts · 5 votes

hey everyone I'm Mike! I'm a newbie to wholesaling!

Anyway I have yet to do a deal but I am optimistic! I have ran across a plethra of abandoned eye sore properties in my city. I looked the properties up on the tax assessors website and found that majority of the properties have  property taxes owed on them.   If  I were to get intouch with the property owner and do a deal on them, how would I actually go about it?!??   

Would it be:

1. Option to purchase agreement ( that states  buyer will pay property taxes)

2. Assignment of contract

3. I guess next I would have a memo recorded at the register of deeds office.

Am I missing something or did I totally screw that all up?!?!

Can someone show me a option to purchase agreement that states buyer will pay property taxes.

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Rick H.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
12y

Actually, I don't see much of anything going on here except that the OP (original poster) is looking for guidance on how to monetize what he (Michael DuVentre) sees as opportunities.

First off, you need to know what you are looking for. You are either trying to buy equity or cash flow, at a discount. Learn market values for both "as-is" properties and "after repaired value" for fully renovated properties. 

Each property will have different equity, depending on the mortgages and liens against them. Unless you are into masochism, eliminate the ones with mortgages encumbering more than half the current value in order to narrow your list to a manageable number.

Determine current title and eliminate the corporate owners. Now you're working a list of private owners who you will need to research their current whereabouts, if alive.

There are many ways to tie up a property contractually and clouding title however I suggest that you NOT do so until you fully understand the process. I encounter recorded documents by people who tried but could not complete "deals" who, for one reason or another, and disappear without clearing the wreckage they left behind. Guys like me then get to clear up recorded crap deeds and option agreements from title by owners and private administrators unaware of the detritus this causes for title insurers.

A simple, one-page Purchase and Sale Agreement, with lots of white space us sufficient to document the deal you intend to make. If clear, it can usually be assigned to someone else willing to pay you something to complete the purchase.

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  • Gerald Harris
    Investor · Atlanta, GA · Member since 2013 · 922 posts · 336 votes
    12y

    Here is a thread that should help you

    1.  contact the seller

    2.  know the values

    You can read all about wholesaling here.    Basically I would wholesale these deal.  If you had the money you could buy and hold  

    http://www.biggerpockets.com/forums/93/topics/6100-how-about-a-course-or-book-on-wholesaling-but-something-
    0Reply
  • Michael DuVentre
    OP
    Member since 2014 · 61 posts · 5 votes
    12y

    Thanks Gerald

    0Reply
  • Mark Ziegler
    Appraiser · Two Rivers, WI · Member since 2014 · 1 post · 0 votes
    12y

    Hi Mike,

    Whew...Lot going on here! If the abandoned eyesore properties are all in the same location, do you really have investors to flip to?

    Back taxes aren't typically an issue (if foreclosure isn't imminent), but simply a factor of associated costs. Are you capable of calculating a supported After Repaired Value? Will properties in this area actually sell if someone were willing to undertake necessary repairs? Are you flipping to rehabber's or landlords?

    The option agreement is the easy part. Take any template and simply insert the appropriate verbiage (and amount of arrearage as a specific dollar figure if you wish). All's fair in Love and Real Estate, but it has to be in writing. Consult a Real Estate attorney or professional as necessary. Recording the memo is optional, which is simply done to cloud title. 99 times out of a 100 it isn't necessary, and what you're trying to protect in this value range typically isn't worth the headache and potential bad publicity it might create.  

    Best Wishes!

    0Reply
  • Russell Ponce
    Investor · Santa Rosa, CA · Member since 2012 · 402 posts · 96 votes
    12y

    The above response makes a good point, make sure u hv a buyer for these properties if u think they are questionable products. Go to listsource and select the zip code. Select sale dates in last 6 months and select absentee owners only (these are typically investors). Purchase this list and u will hv investors who buy in that area. Write to them and see what they are looking for, make sure they can pay cash or hv private financing. When u get the list it will show the address of the property(s) they hv purchased and you can type that address into realtor.com and see what they bought and how much they paid.

    There's a lot of moving parts to wholesaling but pretty simple once u get it down. You will make mistakes but we all do, tell people u are new and they will be patient and helpful, u are putting in work to make them money, they will love u.

    0Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    12y

    Actually, I don't see much of anything going on here except that the OP (original poster) is looking for guidance on how to monetize what he (Michael DuVentre) sees as opportunities.

    First off, you need to know what you are looking for. You are either trying to buy equity or cash flow, at a discount. Learn market values for both "as-is" properties and "after repaired value" for fully renovated properties. 

    Each property will have different equity, depending on the mortgages and liens against them. Unless you are into masochism, eliminate the ones with mortgages encumbering more than half the current value in order to narrow your list to a manageable number.

    Determine current title and eliminate the corporate owners. Now you're working a list of private owners who you will need to research their current whereabouts, if alive.

    There are many ways to tie up a property contractually and clouding title however I suggest that you NOT do so until you fully understand the process. I encounter recorded documents by people who tried but could not complete "deals" who, for one reason or another, and disappear without clearing the wreckage they left behind. Guys like me then get to clear up recorded crap deeds and option agreements from title by owners and private administrators unaware of the detritus this causes for title insurers.

    A simple, one-page Purchase and Sale Agreement, with lots of white space us sufficient to document the deal you intend to make. If clear, it can usually be assigned to someone else willing to pay you something to complete the purchase.

    1Reply
  • Viktor R.
    Investor · Lynnwood, WA · Member since 2014 · 186 posts · 48 votes
    12y
    Russell Ponce Rick Harmon thanks for the great advice. I love the question that was asked. I'm in the same place right now with my Wholesaling. I'm going to be following this thread.
    0Reply
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