All Forum Posts by: Breland Almadova

 You have a fantastic way of expmaining things brother, but allow me to modify a few details.

See what you explained is not "REA::Y" wholesaling... What you explained is how most people wholesale.

And I will explain in a little bit. But first allow me to give  explaining wholesaling a go.

A wholesaler is someone that ideally finds a property and puts it under contract either lower than market value (so that the back end buyer can buy that contract "purchase and sale's agreement... or the sole right to buy that house... from you, (at a discount) so they can improve the property flip it (or hold it) for sale or for their own purposes.

The logic behind it is as follows. It is really difficult to find properties at a discount. Really hard. So most people have no idea how to do that. They may be awesome flippers, but marketing for those kind of properties is not their thing.

So a wholesaler is supposedly good at finding such great amazing deals, negotiates the price, puts it under contract and then sells that contract to that back-end buyer.... for a fee.

That is the relationship of a wholesaler and othe rinvestors.. (very basically put).

Now, the reason why I don;t fully agree with the gentleman I responded to is as follows.

Usually, wholesalers indeed, are manipulative, not very transparent and they lie about their true intentions "buying" the property. But that is not "wholesaling" That is wholesaling BADLY.

The way we wholesale and how it should be done is we let the seller make that decision. We tell them that we will wholesale the house. We tell them we have no intention of buying their house. We tell them we will put it under contract and sell that contract to an other buyer.

Then why on Earth would anyone accept this?

Well because wholesaling TRULY is an AWESOME benefit to the seller. Absolutely.  I never understood the reason for hiding it.

We tell the seller everything, the risks involved, advantages, disadvantages and what they can expect, and what will happen if things do not work out.

More than often they RATHER us wholesale than us buying their house in cash.

SO...

The way it has been explained up there shines a very negative light on the strategy of wholesaling and that is not fair.

Wholesaling wrong.. is wrong. Wholesaling in itself isn't!

 Nope, no cash on hand needed. That's the best part. To get a property under contract, you don't need any funds (Unless theres a deposit required). You only need funds to close on the property. Although, it is good to have cash if sellers want "Proof of Funds" or a "Pre-Approval". But by going off market, hopefully a seller wont ask for that.

Also, during the inspection period, you can back out the contract for any reason without penalty.

Breland Almadova, here's my take (I've never wholesaled, but have been actively investing for a couple years)

Wholesaler: "I will like to buy your home for $100,000. I have cash and can close in 45 days with a 10 day inspection period"

Seller: "Yes, that will work. Lets fill out this contract that with the terms" (Wholesaler makes sure to mark that the contract IS Assignable)

     Conversation Ends

Wholesaler: "Hello Investor, I am a wholesaler & I have a great deal for you. You will need to close by this date, and you have this many days for inspection. Here are the numbers: 

      Purchase Price: $110,000

     Rehab Budget: $5,000

ARV (After Rehab Value): $150,000

Investor: "This looks amazing, I will like to purchase this property for $110,000"

Wholesaler: "Great, here is the assignment addendum which says that I am assigning you this contract (Original contract) for $110,000"

The wholesaler will then send the closing company the addendum, and the closing company will take care of the rest. At closing, the seller will receive $100,000. The wholesaler will receive $10,000. And the Investor will pay $110,000. Exact numbers for simplicity. Depending on the terms of the contract, there will be closing costs on both sides, but usually the wholesaler will take the difference between the contract price with the seller & the wholesale price with the investor.

Also, different states have different laws regarding wholesaling. You may or may not be required to let the seller know that you are a wholesaler, talk to experts in your area.

Im not trying to be rude, just trying to explain as simple as possible lol! 

I’m new to real estate so I can explain this in newb terms since I am one.

You basically cold call a bunch of distressed properties or go door to door or put up “we buy houses” signs all over town. If someone is willing to sell their house for a less than market value you get them to sign a contract with you. You then sell the contract (not the house) for a mark up. The seller gets quick cash, the buyer gets an undervalued house with no competition, the whole seller gets a finders fee.
It’s basically doing the research for people interested in flips or brrrrr

Breland,

If you are not occupying the dwelling then the proper form is not a Homeowners policy.  Most Insurance companies require owner occupancy for their Homeowners form.  The normal form used for a Tenant Occupied 1-4 family house is the "Dwelling Fire Form" (also called a Landlord form by some companies).   I echo the advise to shop it.  I would recommend looking for a couple of Independent Insurance Agents (they represent multiple companies) to quote this.  Often, the Regional companies (just write business in a limited number of states) will come up with the best rates if the property is in good condition and has its systems updated.

Hey Breland,

I would recommend getting quotes from all of them!  I've found that investment property insurance can vary widely, much more than owner-occupied.  

Go get quotes from them all and have an honest insurance agent help you compare coverage rates.

Good luck!