All Forum Posts by: Brian Wall

**Disclosure: I am not a CPA or other tax professional, this is just my opinion/experience**

I am in a similar situation where I have only a few thousand in my SDIRA.

Aside from the low funds, another major concern on doing flips within an IRA is the management, and paying out of funds. You can directly be "handling" the money from you SDIRA. Now, if you could find a good contractor that will manage the rehab for you that would probably relieve that problem.

One strategy that COULD work well is for wholesalers. Think about this. My SDIRA gets a property under contract, then I turn around and wholesale for a $10k fee. That $10k goes directly back into my SDIRA and is never taxed. I (me personally) did all to "pre-work", but then the SDIRA goes on title, and I am just the coordinator, where I (personally) am not getting compensated.

If you are doing wholesaling for a living (your sole source of income) you could just alternate deals, so one deal you do in your SDIRA, and the other you "keep".

For me, I have other sources of income, so I would keep only as much deals (in terms of regular income) as I have in expenses, so my regular income would net zero for the year, and ideally, the rest of the money I made on wholesaling would go into my SDIRA where I would not get taxed on it.

In this case, you would not need to get the property Sub2 or lease option, nor pay an option fee. The most you may have to do is put down a deposit, from your SDIRA (which you will get back, and should be less than $5k). And even if you did not have that, your SDIRA could "borrow" the deposit from the end buyer.

My 2 cents!

Brian

Hi Folks,
So, I started getting probate leads, and am currently doing direct mail.

To get the "optimum" results, I know that I should also go door knock.

I do not have the time to do that.

I am looking for someone that I can work with that is willing to go out and visit the property, and gather as much info as possible.

I get about 100 leads per week, but these are spread all over LA and OC, and would not expect 1 person to visit all properties in a week.

Here is what I am thinking (I am open to any other suggestions):
1) Every Monday I get leads.
2) I send you the leads for your area
3) I also send out some direct mail
4) You go out and visit the property to see if its vacant or occupied, and attempt to get in contact with the "decision maker".
5) You report back to me delivering a picture, and some comments about the property.
6) Once you are able to get a hold of the decision maker (I will provide their name), find out if they are interested in selling. If they say "Yes" or "Maybe" I will take it from there.
7) I will attempt to either buy the property, at a discount, OR at least list the property for sale (if property is already fixed up, or the decision maker wants to maximize money).

If you are interested learning the investing portion, I will keep you involved so that you can see what I am doing, and train/mentor you.

Ideally, I would pay you a fixed amount of money, as a "lead generation fee" (unless you are an agent, then I can pay you a commission) when I purchase the property. However, I am open to suggestions. I also recognize that you will use quite a bit of gas, and would consider paying your gas money.

This is a great opportunity for a college student, or anyone that is looking to learn real estate investing.

It would be a bonus, if you are a licensed real estate agent, but it is not a requirement.

As you can see, I am just starting this portion, and am open to suggestions from any of the more experienced folks out there.

Thanks,
Brian

Never heard of TLO.com or accurint (although I have heard of Lexis/Nexis).

How does those compare to Merlindata.com?

Brian

Hard money is great when starting out, IF you are going to flip, but not for buy and hold.

Not only you can leverage the cash you do have, you also have a 2nd set eyes checking the deal. Basically, the HML will not loan you money, if its a bad deal.

15% is not really that much. That is the annual rate, you should be targeting to flip deals in 4 months or less. That is 5%. So, if you borrow $100k, that is only 5k.

I would say that is not a bad deal.

Brian

As Justin Silverio said, there are so many ways.... However, if I had more time than money, and I did not mind door knocking (which I would hate to do, personally, but I know for others like Anthony E Russell is the preferred method), I would get a list of non owner occupied properties from the title company, and then drive around and see which ones are vacant. Then, talk to neighbors and get the contact info for the owners, and make contact that way.

This method should only cost you gas money.

Probably not the most efficient way, but it is effective.

Brian

Derek,
Here is a how a recent transaction worked recently for me, where I was the wholesaler. Property was an REO, and my offer was all cash.
I partnered with a local Hard Money Lender to find me an end buyer.

The transaction is called a "back to back" closing.

It is a A-->B then B-->C.

Where
A = Bank/Seller
B = ME/Wholesaler
C = End Buyer

1) I secured the original purchase contract on the property. I had a 7 day inspection period.
2) Once I received the accepted contract, I put my $6k deposit in escrow. I then contacted my Hard Money Lender, who sent out an email to their buyers list. The email gave the details of the property, and the purchase price (purchase from me).
3) The buyers then went direct to inspect the property.
4) within 24 hours I had an offer, with no contingencies, with a $25k deposit, for my asking price. (The transaction will not complete if I cannot deliver clear title, so that is the only option for the buyer to get his deposit back).
5) I accepted that offer (duh!).
6) The end buyer opened escrow and put the non-refundable $25k deposit.
7) So, I had the end buyers deposit in escrow, before my inspection period ran out.
8) I then signed off contingencies.
9) Once clear title was determined, the end buyer put his cash in the B-->C escrow.
10) then the hard money lender put the purchase money in the A-->B escrow.
11) The A-->B escrow then closed.
12) about 1 week later, the B-->C escrow closed.
13) I then received the spread, between my purchase price, and my asking price to the end buyer, PLUS I got my deposit back.

I relied heavily on my HML to handle the transaction. For the B-->C escrow we used their recommended escrow company.

It went relatively smoothly.

This is certainly not the only way to do it, but it is one way.

Hope this helps,
Brian

Definitely not ethical.

I would focus more effort on finding deals. If you have deals, that are really deals, you should be able to find buyers easily.

Here are some ideas for building a buyers list, but they are worthless until you get a deal. So to me, building a buyers list before having a property to sell is putting the cart before the horse.

So assuming you have a property to sell.

Here are some relatively easy way to find buyers:
-Attending a local REI meeting. If you have a property now, and the meeting is not for a couple of weeks, then look on the club website, and call the organizer, and let them know you have a property to sell, and does he/she know a few people that may be interested.
-Get a "farm list" from your title company showing recent property transfers in your zip code, or city. Then look for owner names that have an LLC or INC. Those are your buyers.

You should not have to do much more than that.

Thanks,
Brian

Shara,
Can you explain more about the proposed transaction?

Are you looking for an agreement where you are the "middle man" and you are introducing the end buyer to a wholesaler? For a one time deal, or long term.

Perhaps what you want is an agreement between you and the wholesaler that says, if you bring him/her a buyer, he will pay you a commission. Well, that really doesn't work either. A different way to structure is for you to talk to the wholesaler, and find out the bottom line purchase price, then you tack on a small fee for you, and offer to your buyer.

What I usually do is send a potential buyer the area (main cross streets), and the numbers. So, they can verify if its a deal for them. Then once I get their agreement, I send them the actual address.

You have to trust somewhat, anyone that would go around you, would ignore the non-circumvent agreement anyway.

my opinion,
Brian

I would recommend Real Estate Options, by Tom Lucier.

Gives you another view of structuring deals.

Brian

Hi there,
I just posted some similar answer here :
http://www.biggerpockets.com/forums/93/topics/78869-inheritance-list

Brian