All Forum Posts by: Corbett Brasington

The radius approach could include more than 1 neighborhood (especially if there is an "accross the highway" scenario), I have access to propstream, flipster, and others but none of these tools actually have neighborhood data what tools are you all using to get comps in the same neighborhood? 

What is the best way to prequalify that a property is clear and can actually close, assuming its a good deal?  I have prop stream and have can use their service to pull warranty deeds. 

 The assumption is I am dealing with a motivated seller and this is off market.  While I do ask questions about leins, ownership etc, I want to be able to have a high level of confidence that the property can actually close before I spend any money on inspections or appraisal etc and ensure that the closing duration is long enough for all this to properly happen. 

I do not mind reimbursing the seller for closing costs or a title search or something but I want them to front the money for title search etc and if it comes back that title is not clean and we cannot close then I do not reimburse them.

How do you all go about this?  My title company said they do lien searchs only outside of the title insurance, no death records search or probate or anything.

@Evan Polaski thank you for the reply, I also had an interesting conversation with an appraiser the other day who told me "We only include things we can see, so any electrical updates, plumbing updates, insulation, etc have no bearing on the valuation of the home."  

I was rather shocked to hear that myself but it makes sense.    It does put me in an....ethical dilemma, which maybe can be solved through proper disclosures, that if a house has been rehabbed...have the major mechanical systems, and capex been updated also?  

Case in point the area where I live has many houses downtown built on cedar post foundations, which are at end of life, and its a hot market, so what it appears is many investors just do nothing with the foundation if the house is within a couple inches of level even though the posts are rotten and will cause structural issues a few years down the road.  That really rubs me the wrong way to play this game of "well we didnt do anything to fix the foundation so we are not liable".  


What I think I would be OK with is full disclosure on what was and was not done to the house.  The the sellers can properly make an educated decision, but then how many people would want to buy a house where the foundation is end of life and to fix it is a 20k expense.

The void wall is not that big of a deal as long as the home can properly cool or heat, which I believe just roof insulation and the right tonnage will accomplish.  Really my biggest issue is with the cedar post foundations that are end of life and showing signs of no longer doing their job.

See title.

@Bruce Woodruff I understand that my concern though is when the project is only 2 or 3 months long using your model means that the investor is fronting a third of the total project so if it’s a 70000 total bid that’s 21k I would have to front the contractor of which they could just walk away with and there is no legal recourse other than law suits.  

So if the reality is the GC really needs 1/3 upfront to pay their people and materials but I don’t want it to be so liquid that they can just walk with it….meaning I am not giving them literal cash.  What options does that leave me with.

I would love is there was something like a title company for rehab. The money goes to a third party for protection and payments are made directly to the sub (which I believe is called a two party check) and profit which is CSI code 00010 can go directly to the GC. Does something like this exist or are their other arrangements that I am not aware of that are suitable. 

What I have in my standard operating agreement with GC is that I will front 25% of materials costs per milestone at each milestone.  Billing is also done at the end of each milestone in full.  So a 4 month project will likely have 4 milestones as an over simplified example.

I am asking because I have have some GCs ask me to front them money for LABOR of their guys who they pay weekly.  They say things like "I have multiple jobs going on right now I need more in advance to get your project started"  I want to figure out how I can eliminate those people in when I prequalify general contractors.

Additionally I have been asked by more established GCs for me to provide them a financial resume.  Funds in the bank, sources of all lending for this deal, how much is financed for construction etc.  Which I have been happy to provide.  So if they are going to ask this of me how can I also reduce that same kind of risk of them

What do you all find as best practice for evaluating the financial solvency of a GC you want to hire?  If they can bear the cost in full of materials up front or is there anything else?

Building a real estate business where a significant part of my business comes from wholesalers feels unsustainable and here is why:

- They have no legal responsibility to anyone other than themselves, not the buyer, not the seller.  They actively prohibit you from having access to the property until close once you have but money down and are under contract. (b/c they don't want you to find anything or have any way to back out).

- They create a "crazy circus" to get the most for the property without allowing enough lead time or prep to do proper due diligence.   What seems to be common is something like "highest and best" properties that come on the market and go under contract in less than 24 hrs.  That is not enough lead time (by design I am sure) to get GCs, or engineers, or inspector or any of those people there consistently to do the due diligence on older homes.

- When you make reasonable assumptions based on the years of the home, like its built in 1920 so the cedar pier foundation and the sewer all likely need to be replaced, then your numbers never work. 

- The lack of lead time make its nigh impossible to evaluate if you have a normal day job.

I am sure there are deals that are good, and there are reps who are ethical....but by in large it does not feel like a sustainable or practice "leads funnel" for building a sustainable real estate investment business and I would rather just completely ignore the use of wholesales and create my own marketing efforts for off market deals where I CAN do the proper due diligence.

Is my opinion of wholesalers as a reliable and time effective way to get investments properties while properly being able to reduce risk on point or am I missing something?

Thanks for the reply @Reggie Nworie I personally like that term much better as its in no way possibly some other form or earnest money paid to a lender not through title.  Additionally if you had a way to have your operating cost fronted and not require cash up front, like taking their CC number, doing a hold or something, and then just use it up to $1500 now both of us don't have to deal with the upfront burden.  Depending on time to close 30 days (as an example) is 2 more paychecks and more time to get that needed $1500 or whatever that traditionally....would not be due until closing settles and gives you that 30 days anyway.

@Alex Bekeza the lender is Nworie Capital. My dealings with them have been very professional and bigger pockets show them as doing 44 deals. One of the things that attracted me to them is they do not require experienced based LTV if you have very high credit (which I do). https://www.biggerpockets.com/...

I talked to the CFO there who said that the $1500 goes towards appraisal, credit check, and a few other costs (which get settled at closing).  They are things that I don't get the full amount back if they already order those things and I for whatever reason back out of the loan and they are already ordered.

So to me it feels like this is being used to front the their operating costs and not have to settle these expense at closing which....I don't really have a problem with, it just felt weird to not go through title and to go directly the lender with the term "Good faith deposit".   Its more like...."Prorated Closing Fees" or something like that.