Wholesaling real estate by assignment of contracts in Florida?

Question

I've been reading a lot about wholesaling lately, and it seems like a great way to build some capital if you can hustle. My concern is the legality of wholesaling in FL, to cash buyers by assigning them contracts on deals i find. Does anyone have any prior experience they would be willing to share? Would i need to be a broker to do deals like this? If i did need to be a broker is there anyway i could use one i know and bring the deal to him/her along with a cash buyer to make it all legal? Just want to make sure i do things right before i start doing anything at all, thanks guys.

John Thedford · Answer

@Alexander Santini good move making sure you stay legal. Refer to chapter 475 FL statutes. If you do not have any financial interest in a property it is brokering without a license. That is a 3rd degree felony. My best suggestion is to contact DBPR with your questions to make sure your actions are legal. Assigning contracts that where you have equitable interest in is legal. The only question remains: what IS equitable interest. The state may be very subjective as to what is equitable interest. A $100 deposit on a $100K house may not cut it. Contracts full of weasel clauses probably won't work either. If you want to stay 100% legal, get title, then resell. No license needed, and no chance of felony charges either.

Account Closed · Answer

My opinion,

Get your license! That will be one less thing to worry about.  I was fighting over this as well. Is going over the speed limit on the highway against the law? Yes! does everyone get caught? No but it does suck if you are the one......Get your license and you will be around more deals as well.

Carlos Coppin Jr · Answer

@Alexander SantiniI wholesale multiple deals here in South Florida.  Nothing illegal about it.  Good luck!

John Thedford · Answer

That is the exact analogy I was going to post. Blanket statements of "wholesaling is legal" without prefacing them with HOW TO DO IT LEGALLY can leave the wrong impression. It is legal? Yes, done correctly. Is it a felony? Yes, done the wrong way. Anyone wanting to operate as a "wholesaler" really needs to learn how to do it legally. Advertising a property you don't have equitable interest in IS a felony. If YOU have equitable interest, and another person chooses to advertise it, that third person IS committing a felony. DBPR is not out to hang anyone. Got questions? Contact them.

John Thedford · Answer

The state basically says: if you have legal title or equitable title you can advertise the property, the exception being a licensee. So, your buddy has a house under contract. You want to make 2K assignment fee and advertise the house. Felony. Suppose, you have the house under contract. You never paid any consideration but did sign a contract. You advertise the house. Felony. Suppose, you put down $100 on a 200K house and advertise it. The state says: that's bulloney, $100 is not valuable consideration for a 200K house. Felony.  Suppose you put down 5K on a 100K house, having escrowed the funds, and then advertise the house. The state, in their wisdom, would say that is equitable title or equitable interest, and give you their blessing. Bottom line: tying up properties and putting none to little at risk and then advertising them is a felony in FL. They also frown on the popular BS contracts promoted on BP "wholesaling" forums where they use 30-60 inspection periods, fake partners, all the garbage. From my experience, most "wholesalers" are pushing overpriced houses and will say anything to anyone to make a buck. Recently, I had some guy call me with a "deal". He was trying to make a 27K fee on a property he didn't have the contract on (no equitable title). Turned out I had seen the house days earlier for substantially less money:) Other guys try selling properties listed on the MLS with huge markups:) Guess sooner or later, you put enough hooks in the water, you catch a fish!

Mike Waltman · Answer

I have been wondering the same thing. I am about to start a direct mail campaign primarily to find my own rental properties but if a deal come along that doesn't fit my criteria but would work for someone else I would like to be able to wholesale it.

Seems like there's a very blurred line here between it being legal or it being illegal with small chances of getting in trouble for it, at this point in time atleast. Remember all it takes is one or a few people in the right position to change enforcement standards. I've seen it happen in other industries.

I will be talking with a lawyer soon and will post back.

Wayne Brooks · Answer

Florida Statute 475.43  read it for yourself, then report back.

Shavawne Kelly · Answer

hey @Alexander Santini would you be interested in partnering ? I live in the Port Saint Lucie area as well

Alexander Santini · Answer

Also, i will be getting my real estate license in the couple of months, if i had that would i have more options to how i could wholesale? Or would a Florida's brokers license be the silver bullet to all my questions (which i will also be getting in a couple years once i qualify)?

Wholesaling real estate by assignment of contracts in Florida?

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