Wholesalers providing funding to buyers?

Question

Hi all! Quick question for the wholesalers out there? Do any of you, as part of your business, have hml's or private funds lined up for your buyers? Say for someone with proveable income and good credit, but without a lot of cash? I was considering this, and wanted to know if any of you did it, and if so, how you went about securing it, and basically putting the funds on 'retainer.' I wouldn't qualify for a hml right now in today's lending climate, which is why I'm focused on wholesaling presently, so I wouldn't be approaching them for myself. Is there a good way to approach them for such a thing, or am I off-base? Thanks! :cool:

Ryan Webber · Answer

If you don't have commercial bankers, hard money lenders, conventional mortgage brokers, contractors, realtors, title agents, appraisers, attorneys, and insurance agents to refer your buyers to, I think you are missing the boat.

Adding value in these ways helps promote your buyers to buy.  To me its a no brainer.  My experience in real estate is that your net worth is directly proportional to your network.  Though wholesaling is about income and not assets, the same idea holds true as a wholesaler.  You need to have the best network in town.

Jerry Puckett · Answer

Hi Joseph,
I think Ryan is right on the money here. And just my opinion here, but it seems to me that all of the folks who say they need a "mentor" are really just looking for some guidance in setting up their own network.

You say you have a ways to go in developing your own network, let me tell you how mine seemed to grow over night: I started hanging out with people from BP. Yes, it's true you can get a valuable education from the forums, and that's great, but when I started picking up the phone, meeting people for lunch and so on....OH MY!

I brought with me quite a few contacts from my last gig as an Acquisitions guy, but now I have folks from one end of DFW to the other. It starts with "hey, do you know anyone who...?" (fill in the blank) Then I hear "sure, you should talk to.....he's great. Here's the phone number."

Then you of course follow up and call those folks, forming your own relationships. I've found that my network is not only helpful to the buyer's side, but the seller's side also. Some folks I just can't help, so I refer them to someone who can in full expectation that it will come back to me somewhere down the line.

I'm sure this isn't new or startling information, I just wanted to point out that there are many different ways BP can help your business. I've never met a member I didn't gain something from.

Ryan Webber · Answer

Mostly newer folks, but every once in awhile I get an old timer asking me who I use for insurance or as a contractor.

And as Bill pointed out, only "refer" your buyers and sellers to other people.  I would not ever require anyone to use anyone, well except my title agent.  I always try to use mine.

My title agent is the best in town.  A couple  weeks ago, I sent in a contract at 11 am and the seller and I were closing with clear title at 3 pm that SAME day.  Clear title and closing in 4 hours, that is awesome.  Just got to give her a plug here.  Kathryn Wilson with Lawyer's Title in Amarillo, Texas.  She's the best I've ever worked with.

As for the SAFE Act, the national one (if your state doesn't have its own then you fall under the national one) does require a mortgage license to originate notes, BUT if your "note buyer" has their license you can set them up as the direct lender to your buyer so you are not originating the note.  Most note buyers are not equipped and/or comfortable doing this, so finding one is not easy but they are out there.  I knew a hard money lender that used to do exactly that, and he was a local lender that knew the market very well and was very comfortable loaning on houses in certain areas for certain prices.

With the SAFE Act and with any other legal maneuvering, you should always check with a qualified attorney in your state FIRST.

Remember as a beginning wholesaler, KISS it, Keep It Simple Stupid.  As you gain experience you can tackle more creative ventures but there's no reason to complicate the model.  It works.  Just work it.

Chris Martin · Answer

I'm not a wholesaler, but I'll try to add what I can. Ultimately, the buyer must either be a cash buyer (in short supply you say) or must supply a lender with whatever loan package the lender needs. So it seems your task you are undertaking is to save the borrowing buyer some time and effort by making the first connection(s) to already willing and able HML or bank lender(s). While this is admirable, I would think the buyer (in their own self interest) would have done most or all of this work already. If they haven't are you sure you want them as a client buyer?

Joseph Ziolkowski · Answer

Thanks Bill, now if I offered seller financing, wouldn't that run me afoul of the safe act? My understanding (limited though it is on this) is that you can only offer seller financing on your personal residence w/o being a mortgage broker or some nonsense and only then if you jump through a flaming hoop whilst reciting something in latin and clicking your heels? Ridiculous...

Bill Gulley · Answer

Joesph, As mentioned above your efforts and agenda may be well meaning, but unnfortunitely now, preparing a loan package as you mentioned will require you to be a mortgage broker/originator. Out of the loan transaction you will receive a benefit, the loan amount as part of the sale price. So, as Ryan pointed out, you need to build your "team" and have the connections with lenders to refer your clients to.

As a seller, you can suggest any lender, but becareful not to require a specific lender, which may be construed as steering. Another aspect of requiring someone to use a particular service provider is that if they feel they got messed over by any provider and brought legal action against them you too may be drawn into the suit since you made the requirement. You'll never hear a doctor or an attorney recommend that you see a certain other professional by name, well, I never have....you can become liable simply by making a specific referral much less a requirement of it.

Back to the idea, you might see about note buyers and see what they want, then seller finance a deal and sell the note. There are several here that can fill you in on what they would like to see. Good luck...

Joseph Ziolkowski · Answer

Thanks Edward, that's a great persective on my initial question. That's what I love about this site. I started with one little idea and now with everyone's help it's grown into a monster :) Looks like I've got some work to do in the coming year, but I know it will pay dividends. I read your profile Edward, it sounds like you're set for success. Best of luck in your new business!

Joseph Ziolkowski · Answer

Thanks Ryan, I was hoping you would weigh in on this. So you're saying not only to have the financing hook up, but to be entirely full service.. I like that. I have a ways to go to get my network to that level, but I see the advantages of doing so. Do these services help your more experienced buyers too, or do you find that it mostly benefits the newer folks?

Joseph Ziolkowski · Answer

That's a good point Chris. That's the thing, I'm not sure yet. I haven't taken any action on this, I'm just doing a little market research to see if it would be worth the while. Thanks!

Joseph Ziolkowski · Answer

Any other wholesalers out there thinking along the same lines?

Wholesalers providing funding to buyers?

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