All Forum Posts by: Danni Catambay

Hi fellow investors! I have a real estate planning dilemma and I was hoping to mine your collective experience for solutions. Here's the set up:

• *12 acres of wooded land. Geographical features mean I can only reasonably build on five to six lots
• *tax value is $170K, owned outright
• *personal income is about $55K/yr, qualifying me for a mortgage of around $1200/mo, equivalent to a purchase/build price of about $235K
• *am NOT comfortable with sharing my own personal living space, but am interested in duplex/multiplex living (limited house hacking)

I am trying to decide what my first construction should be. 

I have done some research already and explored a few options. The neighborhood of the property has a mix of singlewides and older homes, with a few newer homes approaching $300K value. I think my property could reasonably support a duplex if the interior living space/rent combination made the units comparable to a singlewide trailor. That is my ideal strategy, but the construction costs put it just out of the range of what I can qualify for as a primary mortgage. A second alternative is to build a single family doublewide/mod to the max specs that I can finance, however doing so means that I wouldn't be able to house hack effectively since I am unable to share my living space with a tenant. 

Are there options that I am overlooking for financing or building? All ideas appreciated

-Danni

I'm guessing it's going dormant, like everything else, for a while. My local ears are hearing that people just don't want to make big changes right now -- buying or selling -- because of the uncertainty. 

But what will happen for sure is that mortgage and eviction protections will lift and people who have destroyed their savings will be hungry for cash. I foresee a huge surge in supply of single family properties in the months after things open up again. 

I'm personally planning to rake in. I have access to enough cash to pick up at least three new properties as rentals and as a wholesaler I'm planning to move a ton of inventory. 

So all you investors out there: hold on to that cash cuz I'm gonna have deals galore!

Would you mind sharing details on the buy and sell prices, too? Did you but below market value?

A buddy of mine who works as an acquisition manager for a larger investor says he gets a 3% commission on either side of a wholesale deal -- once for when he contracts the purchase, and another when he closes with the final buyer. But this guy's commission comes out of the pocket of the investor that he works for, not the seller or the buyer.

So I think you have a lot of leeway. Your PM gave you a lead that you ultimately want to move on, which is great, but he didn't tell you what his claim in the process was. My opinion is that you have to advocate for yourself, meaning that your PM did not establish that he was doing it for money and you had an existing relationship so he left it vague. That leaves the choice entirely up to you and, I think, puts you in a "tipping for service" scenario. I neither like nor understand the American practice of tipping people for doing their jobs or just for doing things they wanted to do, but certainly it is widespread.

What would you tip for this service? Maybe you could offer him something like1.5X( 2-3 hrs) worth of his estimated hourly wage as your PM? As "overtime" pay? I guess in the end you just have to find something you're comfortable with. And don't be afraid to ask your PM if what you're offering would be satisfying to him given his effort.

Thanks to those who have helped me wrap my head around wholesaling just a bit more. I'm still trying to figure out what my best approach is, and a local (guru?) investor told me his strategy is cold calling plus offering $X cash and Yx$1000 monthly payments. It's a formula he's apparently used successfully for several years and I'd like to try it.

...BUT! Where I get caught up is here: you have to call 50 places to get 4 people to be willing to talk further and then how many of those can you close? If you have millions in cash/equity to draw from, I imagine you can close on any deal that passes your analysis filters, but I'm working with $20K cash available and no disposable income. Is it still worth trying to search this way? What do I do if I find a great deal that requires more cash than I have on hand to close? Is there a window between getting a contract and closing that I can go find more money? or a buyer? Or do I have to have all of this arranged before I make my purchase offer?

I'm mostly trying to understand the logistics of how people do this. If other investors could share their experience with me that would be most helpful.

Thanks

Hi @Tiffany B Alexander! I just heard of some really cool advice for getting a "mortgage" without a bank. You can do seller financing...without telling the seller that's what you're doing. Essentially find a for sale by owner property and offer them cash on the spot to contract with you. Then offer to pay the remaining balance of the purchase price in fixed monthly installments. It turns out to be a 0% interest loan, but you can fudge around with that by offering more or less cash up front or more or fewer or larger installments. But it makes the math very easy for you and the seller to understand and it takes the bank out.

I'm personally working on doing a deal this way. I am in the process of researching the legal side of how to contract and still get my due diligence period (if indeed I need one). For me, because my cash stock is high but my income is low, this is an attractive path. 

Thanks for the replies. I was lucky enough to meet some new investors at my local REIA meeting last week and they have chosen wholesaling for their start. Personally, I think that's jumping in to the hardest part butt first, but they were really comfortable in their choice. Works for me, I told them to send me deals!

But basically, we had a dude (guru?) come in and tell us to call people listing rentals off of Craigslist and ask them how much they wanted to sell their property for. And he told us the typical negotiation tactic he uses to get seller financing at 0% interest. And I think, after reading these comments, that wholesaling is basically doing that and other off market search techniques, but instead of buying and holding, you contract and "sell" to an actual buyer who wants to do something like flip or rent the property and you take a commission or a finder's fee. Did I understand it right?

Originally posted by @Tamara Deering:

The way that a wholesaler will work with you is if you close on a deal.  You will need to buy one of there base hit deals first to show that you can perform.  The home run deals are given to their clients who have proven they can perform and close a deal.  You won't get that sort of preferential treatment until you show that you won't be wasting all their time and effort by not being able to close on the property in the time frame given.

This language right here -- what does it mean? What is a "base hit"? And what does "perform" mean?

In trying to make sure I know everything about my options, I've been trying to figure out what wholesaling is all about. I get the basic premise: buy a dirt cheap house and then sell it for less than dirt cheap to someone else so quickly that you are never the legal owner and you get your cash investment and return almost immediately. Lather rinse repeat...

But how exactly does this work? Where do wholesalers find these amazing deals that are so cheap that they can sell them to other investors who would still find them profitable? And how does one go about analyzing a wholesale deal?

and for me, perhaps most importantly, how do you find a wholesaler and convince them to work with you as a buyer?

I've done quite a bit of keyword searching here on bigger pockets and these basic questions remain elusive. Any wholesalers around here who could shed some light on this process for me? Opinions on what kinds of buyers you look for when you're closing a wholesale deal?

*sellers, not buyers