All Forum Posts by: Adrien C.

The tax rate is just one of the big differences between IL & IN. Indiana for the most part has a lower price point yet rents are still on par w IL. Indiana is a landlord friendly state where IL is pro-tenant (Cook county can be a pain to evict anyone). 

People invest based on location (is it close enough for them to manage or are they comfortable with a PM doing it) and numbers (where is the best ROI).

Nick- you seem to be the new wholesaling policeman on BP (i read your bio so understand where you are coming from). This gentlemen asked a very specific question and your expertise should allow you to give him a specific answer instead of such a vague one. There are plenty of situations where it makes sense (and is in the seller's best interest) to wholesale a property and not list it on the MLS. Surely there is a way in Ohio for this to be done legally -especially if this dude is licensed. I understand you don't like the idea of someone pretending to buy a property and close when they have no means. But if the wholesaler is upfront with their intentions and the seller is okay with that- how can he execute that transaction legally in your state?

Dude, if you want to be a successful investor- grow some thicker skin and don't take everything so seriously. My comment was not to criticize you but to open up your mind to thinking about the bigger picture. 

Can you wholesale a property on the MLS- yes. Put it under contract, pay the EM, close on it, and resell it to an investor. You probably will find it harder to have the offer accepted if the RE agent knows you are assigning the contract and want to bring a bunch of folks through the house.

But it doesn't sound like you know too much about how to put a wholesale deal together. I would encourage you to read as many posts as you can here and learn how to structure the deal, how to show it to investors, how to assign, etc. Once you know that, find people who want to buy from you and then go find a motivated seller. Wholesaling an MLS listed property is difficult because again, the investors can see these properties already. They've probably already evaluated that property with the RE agent they work with.

For you to be successful as a wholesaler, you need to bring value to an investor. Figure out what value you can bring and work backwards to achieve that. 

@Steve Vaughan I wasn't bothered by your response; I have thick skin:) She wanted to purchase it and turn around and sell it as a lease option. That's why my offer was in the range it was so she could make money on the sale. These numbers are very similar to properties in my area and I'll buy all the time as long term holds. The investors I work w locally are all-in up to 85-90% ARV (around $55-60k). But thats because rents are $1000/m + and it's the same idea of big CF versus instant equity.

@Steve Vaughan my offer was based on her exit strategy of a lease option and eventually selling to an end buyer. With your purchase price of $41k and $20k in rehab, what is her option price to the end buyer going to be? She's already at the ARV. If she's buying and holding for CF, your offer is decent- at about 10% ROI (not sure if that's good or bad for the area). Still, don't you want some equity on your buy/hold?

Regardless of financing options, the purchase price still needs to make sense from an investment perspective. I have been able to pay less than the asking price with seller financing because they make up part of the difference though the seller financing. If you plan to refinance with a bank, they will only lead up to a percentage of the ARV so unless you want to bring more money to the table, you need to buy and rehab and be under probably 80%. Just because you're not wholesaling the property doesn't mean you offer more or closer to the asking price. Again, it still has to make sense from an investment perspective. In this situation, assuming your numbers are correct, I'm offering $25-30K.

Why doesn't your buyer just go purchase the property themselves? What value do you bring to the investment world when you purchase a property off the MLS that the investor can already see? The value of a wholesaler is to find properties not listed that no one knows about and bringing those to the investor.

Hi Rich - wholesaling is a legit business when done correctly. There is a need for wholesalers just like there is a need for licensed agents to list a house. However, the problem is that too many wannabe investors get into wholesaling without knowing what they are doing? The get all excited about putting a house under contract but have no exit strategy. You can search hundreds of forums that look like this "Have house under contract- now what?" Well, figure out the now what part before you put the house under contract. 

Before you even talk with a seller, I would recommend you have these things figured out:

1- Build a buyers list in your area. Know what your buyers are looking for, what they are willing to pay, and what condition property they want to buy. 

2- Understand the real estate market in your area- how to figure out the market value of a property. Who is buying there, etc. These is where having a good relationship with local realtors is key.

3- Understand what rehab investors in your area are doing and the cost of the rehab. Speak with local investors to get this figured out. 

Once you feel comfortable that you can put a house under contract at a price (relative to it's condition) that an investor would want to buy- go find your sellers. When you are with a seller, be very transparent about what you do. I let them know that I work with local investors and I find properties for them. I let the seller know that the investor pays me to find them houses. If they don't like that, I refer them to 2-3 realtors that I know in their area. But most times, there is a specific reason they want to use my services and not a realtors- need a quick sale, the condition of the house, etc. In fact, my realtor has given me referrals for properties that he knows won't sell quickly on the MLS. He gives them the option "I can list it in its current condition but it may take some time to sell. Or you can work with Adrien who can network with his cash buyers and probably get it sold faster but maybe at a lower price. Which method works best for your needs?" Focus on solving the sellers needs and everything works out for the best of all parties.

One of the big things to consider is if the cost of rehab plus your time is going to increase value enough where you'll make money. In my opinion, if the house could sell for $175k now As-Is but with an additional $10k in rehab sell for $210k, it's worth it. However, if it needs $25k and 2 months of work to get to $210k, it's not worth it. Updating the kitchen and both bathrooms is some serious cash. Are those good updates to do? Absolutely. But based on the info I have from your post, I think you're tossing money into something that won't recoup when you sell unless it's current value is closer to $140k or down there? I assume not that low based on your list price. Did you have any offers when you listed it at $185K? 

Also- who are you trying to sell the house to? If it's in a college town, another investor may like it for a rental. If this is the case, that investor probably doesn't want/need to brand new kitchen with granite counters and stainless steel appliances. 

It's very valuable- there are companies who provide these lists to folks for a cost. Go compare what you have to what Listsource offers.  How is it different? Does it bring any new value or make more s nose financially? Just a few things to think about. What is the end purpose of your script- personal use or sell public ally?