Wholesaler · Gaithersburg, MD · Member since 2014 · 45 posts · 11 votes
Hello all,
I'm new to investing and on my way to finding my first deal. I'm now looking for title companies to work with and my first meeting with an attorney didn't go swimmingly. As a beginner I've always been told to start with wholesale because it's the easiest and quickest way to make money and there is little to no risk. The attorney burst my bubble by telling me there will be transfer taxes I'd be responsible for specifically dealing with double closing. (something I didn't want to hear AT ALL). I'm a college student and don't have money to spend at all. Can someone explain to me if that's just in Maryland and/or just some title companies require both parties to pay that? At this point I'm just very confused about what fees I will and will not be responsible for.
Rahdia, as far as I know there are no hard-and-fast rules about who pays what settlement fees. It's all subject to negotiation, as long as you stay within the regulations that apply to certain buyers, as John just said, such as first-timers (in MD) and veterans using VA loans.
Also, there is certainly no requirement that you do a double closing in MD. I don't know anyone who does that. It would just cost too much.
I'm sorry to say, it sounds like the lawyer you spoke with didn't know enough about wholesaling to counsel you reliably. People you want to discuss this with are actually out there doing it, not sitting at their desk. So why don't you try getting out to some RE investor meetings (google it with "Maryland"--or go to Meetup.com) where you can cultivate some relationships.
BTW, I don't want to burst your bubble either, but wholesaling is not the only way to get started in real estate. It's a bumpier path than some would have you think, and for some people it's just not the right way to go. There are soooo many great entry points into the trade, please don't confine yourself to wholesaling just because you heard it was the thing to do.
Depending on how you get funding/financing on the front end and back end will dictate your costs. Normally if you are buying with cash you will be required to pay all the costs (title search, 1.5% recordation, and other closing fees....normally around 2%). Title searches are around $150-250. I use Emkay title in Baltimore. They are great. I'll leave their info below. On the sale it again depends on the buyer and the financing. VA/USDA loans usually have the seller paying most of the closing costs and if its a first time MD buyer than you will also have to pay the 1.5% recordation and transfer taxes. If there are agents around then plan on 6% (sometimes you can get that down a bit towards 5% if you have an agent). I usually plan on 8% for closing costs on the backend but sometimes have seen 10%. Hope this helps.
Rahdia, as far as I know there are no hard-and-fast rules about who pays what settlement fees. It's all subject to negotiation, as long as you stay within the regulations that apply to certain buyers, as John just said, such as first-timers (in MD) and veterans using VA loans.
Also, there is certainly no requirement that you do a double closing in MD. I don't know anyone who does that. It would just cost too much.
I'm sorry to say, it sounds like the lawyer you spoke with didn't know enough about wholesaling to counsel you reliably. People you want to discuss this with are actually out there doing it, not sitting at their desk. So why don't you try getting out to some RE investor meetings (google it with "Maryland"--or go to Meetup.com) where you can cultivate some relationships.
BTW, I don't want to burst your bubble either, but wholesaling is not the only way to get started in real estate. It's a bumpier path than some would have you think, and for some people it's just not the right way to go. There are soooo many great entry points into the trade, please don't confine yourself to wholesaling just because you heard it was the thing to do.
@Nancy Roth@John Rubino Thank you both for the advice, it is greatly appreciated! Yes, I have been taught that wholesale was the easiest and quickest way to make money and good for someone who doesn't have money because it's usually not out of pocket. And I'm apart of many meet up groups and I'm learning a lot from the meetings.
Be careful with folks who say something is "the easiest and quickest way to make money." These folks tend to either be really good at it and aren't telling you the down/bad sides of things or are just telling you what you want to hear. If something sounds too good to be true it usually is....especially in Real estate.
@John Rubino yes definitely. I just figured why not try it out. I haven't done my first deal yet, so Although there are setbacks I'm not going to stop here. Thank you all so much for taking time to answer the many questions I have! I really appreciate it.
Yes, I have been taught that wholesale was the easiest and quickest way to make money and good for someone who doesn't have money because it's usually not out of pocket.
Welcome to BP @Rahdia Green No Wholesaling is NOT easy. It is simple in concept. It is difficult to find deal so good that there is enough juice in the deal for both you and the end investor.
It is one of the most accessible ways to get into real estate. You can do it with very little money. It is hard to buy a rental or rehab a house without some significant money if you are just starting.One the other hand If you find a great deal you can assign your contract and need little of your own money to do the deal.
What people ofter fail to mention is it can take a lot of marketing dollars to find that first deal. Good luck - Ned