All Forum Posts by: Andrew Christie

Thanks for the feedback Aaron. But like I've mentioned, I do currently have interest, so I think the price is pretty good. As they say, the buyers will tell you how much it's worth. And, of course, there are many different types of buyers who have many different interests and levels of sophistication. Not many deals will appeal to all buyers. I'm very confident that I don't have to go back to the seller concerning price, but I may have to go back concerning time.

Well, that's actually more on subject, Patrick and EXACTLY what I was looking for advice on.

The basic premise of wholesaling is that you get a property under contract and ensure that you always have an out clause to protect you in case you can't move the property. Many could argue that that process, in and of itself, is unethical if you never have any intention of purchasing the property for yourself. There's NO need to do that, since you could simply enter into an option to buy the property. But the reason why wholesalers don't use that strategy is because they know they would lose more deals than they'd get. Wholesalers need a way to protect all of the time, effort, and cost of marketing that they put into finding this seller and finding this deal. And they do that through entering into an assignable purchase contract rather than and option to purchase.

I don't know of ANY wholesalers who use option contract, yet, that would be the MOST ethical way to do business as a wholesaler. Yet, that simply won't work.

The intent of a wholesaler is to provide a win-win-win situation. They want to put money in the seller's pocket or get them out from under a bad situation, they want to be able to offer good deals to cash buyers who don't have to the time to do all of the required marketing, and they want to put some money in their pocket at the same time. As a wholesaler, do you tell the seller every detail about the entire process? No. But I don't see that as unethical if your intention is to solve the seller's problem and you absolutely believe you can do it.

How is it any different as a real estate agent? If someone wants me to sell their property as an agent, I will tell them that I am confident that I can do it (if I didn't, I wouldn't get many listing). But I'm not being entirely honest, because there's no way for me to know that for sure. Yes, I am confident and I have to portray confidence. And of course, I will do everything within my power to get it sold. Sure, there's a chance that it might not sell. But do I focus on that? No way! Some would argue it's unethical, but I disagree.

Maybe wholesaling shouldn't exit at all. There are many who believe that, but I'm not one of them. I think they provide a valuable service to sellers who would have little to no option otherwise. Sure, it's a fine ethical line, but I look mainly at the intent and probable outcome. If they match and neither party was outwardly deceived and everyone is happy in the end, then I think it's a valuable service.

So Patrick, how do you wholesale? Do you use a purchase agreement (which by definition, is an intent to purchase) or do you use a option to purchase?

I will say that I'm afraid this is a topic that's too much like religion and politics. It can become a long, drawn out, time wasting process of splitting hairs. So forgive me if I don't engage extensively, but I have to get to work getting some more marketing out there!

Well Roy, if you go back and read my initial post, you'll see that I asked for advice on a specific situation. I was not trying to market this deal to anyone nor was I asking anyone's opinion on price or value. But instead of people wanting to answer my questions, I get people who immediately want to bash the deal. Like this comment, for example, which came PRIOR to me providing ANY numbers, "Tell me about the "deal" and I'll tell you why no one is interested." WTH? Where does that come from?

I have people telling me there's no interest in it, when I DO have interest in it. Why would anyone do that? I even said in my original post that I have some people interested in it.

The intent of my original question was to do some contingency planning. Like, how am I going to handle this if it doesn't sell right away? But people want to take that question, twist it around, run with it, and immediately jump straight down the rabbit hole. Oh, if he thinks it might not sell right away then it MUST be a BAD deal, he MUST be an idiot, and we MUST put him in his place! Seriously?

You're absolutely right, this is business from my perspective, but I'm getting mostly non-business-like responses. When people disregard the original question and then provide irrelevant critical feedback that's based on assumptions rather than facts, that's neither business-like nor is it professional.

I'm new to BiggerPockets, but I'm certainly not new to real estate and this post was an extremely education experience. BiggerPockets can be an extraordinarily valuable resource, but like most other social networks, it has it's drawbacks. I will take what I've learned from this post, which sadly, is much more about the people who use this site than it is about my original question, and adjust it to use the site in a much more appropriate way.

Just got done showing the property to a couple of experienced local investors who I've worked with in the past. They're very interested but need to get financing lined up, which they're working on. I've also just sent a commission agreement to an agent who has a client who's also very interested in the property. Should hear something back from him later today or tomorrow. Not too bad considering that I've only done marketing to a limited market for a couple of days now.

I find the vast difference in feedback and opinions between my local network and colleagues and those of you who are responding here on BiggerPockets concerning the value of this property incredible! It must be that virtual world phenomenon. Kind of like how nobody can post a video on YouTube without someone out there making some kind of rude or insulting remark.I have the Director of Commercial markets at my brokerage encouraging me to increase the price and then I come on here and everyone just wants to crap all over it. I have the president of the local Tidewater Real Estate Investment Group, who's also a local HomeVestors, Great Clips, and Jackson Hewitt franchisee telling me that's it's a great price. I've yet to talk to anybody locally that hasn't told me it's a really good deal. But none of them (other than my prospects) are in a position to buy at this time. And that, I believe, is why it can take time to sell such a deal (even if it is a very good deal). Fortunately, the only price opinion that really matters is that of my local and colleagues, and even more importantly, prospective buyers.

Tax assessment is $301k. You can easily look that up in the tax records. Roof is 10 years old, and in good condition. Because they are smaller units (about 650 sqft each), the HVAC consists of floor board heating and AC units. They are all functional and relatively easy to fix or replace if they break. The two units that are vacant are vacant because the original owner, the one who was most involved with the property, died and left it to uninterested heirs.

But Mark, I suspect your motives are something other than any type of interest in qualifying or disqualifying the building for purchase.

Roy:

I think it's wise to be wary of ANY deal brought to you in this manner. If you don't know the person bringing in the deal, the you better spend some time doing your homework. Yet, there are many great deals brought to each other in this manner. So, if you decide to ignore them due to your wariness, then you're going to end up missing out on a lot of good deals. And I don't see why this situation would be different than any other.

And as a matter of fact, I would think that this situation would be relatively common (I say relatively because there are a lot less multi-unit buildings out there than there are SFHs). But in this situation, the apartment building was purchased by the uncle of the current owners/heirs in 1978, six years after it was built. He owned it for 34 years until he passed in 2012. He left it to his wife, who died a year later. And now his niece inherited it. She lives out of state, knows little about renting multi-unit buildings, and is mainly interested in cashing out. It's a perfect situation to get a great deal!

I invite you to view the listing on the site that Mark suggested. Thanks for the tip, Mark. I was aware of the site but it has been a while since I've visited it and didn't even think about listing this property there. I now have it listed and it is, by far, the best deal on there for Norfolk, VA.

http://www.loopnet.com/xNet/MainSite/Listing/Search/SearchResults.aspx#/Norfolk,VA/Multifamily/For-Sale/c!ARUIBQAAAQIB

Coleman Place is my listing. We'll see if we get any additional interest thought that.

Hey Mark. Can you send me some properties on Loopnet.com that has a 10%+ cash on cash rate for Norfolk? The highest cap rate I can find is 9.5%, and cap rate is always lower than cash on cash. If 10% is standard, why can't I find any?

That's how we help each other on this site, eh? Instead of giving pointers and tips, we tell people to just give it up.

Thank Wayne. You're so helpful.

Mark, what would you consider to be a good price for this deal?