All Forum Posts by: Account Closed

Thanks for the feeback!

After closing more than 300 deals to this point in my career, I've just come to expect wholesalers to never get ARV's or rehab budgets correct.

I've bought a less than 10 deals from wholesalers, one from the MLS and the rest directly from owners.

Become a master of marketing for sellers and you can do deals forever, no matter what type of market we are in.

I've Done a Ton of "First Deals" with Newbies and I've Observed a HUGE Enemy of Future Success.  Greed.

A lot of these "First Deals" are brought to my company by new wholesalers just getting started.  Here's how it works:

For newbie wholesalers in one of my markets (Philadelphia, Chicago, & Tampa Bay), we offer assistance with getting started,  The newbie is responsible to generate seller leads.  One of my partners will guide the newbie through the process of visiting the house, preparing rehab estimates & creating the offer, and negotiating the deal.  We then get the deal sold, title cleared, and the check from closing-which we split 50/50 with the newbie.

This works well except for one challenge.  The newbie immediately believes that the business is SO EASY and they DON'T NEED ANYONE'S help.  They decide that on future deals they want the whole assignment and keep the details of the next leads to themselves.

I know this feeling because I started my career the same way.  I closed a bunch of deals, got greedy, and decided I wanted to close all the deals myself.  It didn't work out well for me.  

I'd close a few deals, but by far I am always more productive when I have partners.  It helps me with accountability..

The other challenge comes when you're consistently splitting deals in the $5K-$10K range and then a $30K-$50K profit deal (or more) comes up.  I've watched people's minds become very unreasonable when this situation arises and there occurs "a money grab".

I've watched partners flat out steal the whole deal.  I've watched other partners attempt to re-negotiate splits.  The larger the dollar amount on the table, the greater the temptation to attempt shady business.

I'm aware of this phenomenon now and am able to warn new partners who have not experienced profits this large.  If you have big deals in the works, be aware of this challenge and get everything in writing.

I started investing in 2006 with no money, bad credit, & no car.

I had no reason to believe I could succeed.  Through luck, I found myself attending paid seminars and receiving top notch education about the business of real estate investing.

Armed with nothing more than REAL WORLD KNOWLEDGE, I set out to begin my new career as a real estate investor-from my mom's house where I was living.

I desperately wanted to flip houses and I tried raising money first.  Big mistake.  Everyone said "NO" because I was inexperienced and no one knew if I could succeed.

I tried a few other things and finally had some progress when I wholesaled my first deal and made $6,000.  I made that deal directly with a seller-who found me in a $79 newspaper ad which I placed for 7 days.

That ad produced a few more wholesale deals and people began taking me seriously in the business.  I began to get a good reputation as a source of Off Market Deals.

On the 5th deal I decided that I wanted to close & resell the house at a purchase price of $117,500.  I didn't have that kind of money, but I did have the attention of another wealthier, more experienced investor.  I brought the deal to him.

When I proposed that we should purchase & resell the deal for a profit, he said, "Why don't we just assign this and make $10,000 real quick?"

To which I replied, "I don't need you to assign this deal, I need you to bring the cash so we can close on it, mop the floors, clean out the trash, and resell it for $160,000!  Then we make $40,000 and split THAT profit 50/50"

We subsequently did exactly that and split $38,000 after all costs.  It was a good deal and I was flipping houses.

On my 6th deal, that same investor lent me the funding at 15% interest APR to close on and complete my first fix & flip deal. I still do business with this investor on a regular basis.

When I received that private money, he never did a credit check.  He looked at the deal and gave me the green light.  

THE REASON THIS PRIVATE LENDER FUNDED MY DEAL WAS THE RELATIONSHIP I BUILT WITH HIM.

I built that relationship by calling him first with every Off Market Deal that I dug up.  My 3rd wholesale deal was one where this investor/private lender and I split a $16,000 assignment 50/50.  My 4th deal was a "fix & flip" I assigned to him for a fee of $13,500.  The 5th was the one we closed on with his money.  We shared a few deals where we were both making decent profits BEFORE I ever asked for the money.

If you're interested in finding private money, ask yourself

"HOW CAN I BRING VALUE TO THE TABLE FOR THE LENDER?

For me, the resounding answer to that question is and has always been to BE A SOURCE OF REAL, PROFITABLE REAL ESTATE DEALS.

Great perspective @Joel Owens.

I've done plenty of low-end, low value deals.

As a fix & flip investor and wholesaler, over the past two years, began gravitating toward houses in nicer neighborhoods with higher ARV's, higher capital requirements, etc.

I have been CAUTIOUSLY doing this, as I remember 2007-2009 when the higher price points damaged many investors due to their overexposure when the crash took place.  

The calculation on your INVESTMENT OF TIME is a calculation many don't consider.  My ability to leverage my time investment on deals through partnering with high caliber, trustworthy individuals has increased my income more than any other single factor.  

Marketing, negotiation, and access to capital played a close second, third, & fourth in my recent income multiplications.  

One benefit of attending paid seminar education as opposed to trying to find it all free in books/websites/asking questions in forums, etc. is that the Paid seminars, when designed by a master of their craft (the craft you're expecting to learn), is designed to provide the information in a step by step methodical approach which helps with comprehension.

I did not attend Than's, but I did attend Russ Whitney's a few years ago for roughly $13,000.  The things I learned in that multi seminar, paid education environment placed me years ahead of most "beginners".  I am grateful that I was able to take those seminars.

HOWEVER,

There are usually some high performing, local seminar providers in the major U.S. markets that hold lower cost seminars ($100-$500 or less) that potentially expose you to localized strategies which WORK IN YOUR MARKET.  The national seminar companies often teach tactics which worked for them in specific markets.

Here's my Perspective

I close about 20 deals per month between Chicago, Florida, & Philadelphia and some of the highest performing people I meet in the industry ( & do business with) often tell the tale of investing large sums of cash in high priced & low priced local seminars.  

My Florida partner took Than's training against my advice.  I told him I'd help him get started.  Truthfully, I'm actually glad he went.  He brings an entirely new level of performance & knowledge to my team which I was unaware existed.  He has gotten his money's worth, as I also have from attending paid training events.

WORD OF CAUTION

If you are seeking a RESULT in your life at the feet of a mentor.  Or taking advice from a person about obtaining a RESULT in your life, MAKE SURE the PERSON giving the advice of selling the information ACTUALLY HAS THE RESULT IN THEIR LIFE that they are teaching you how to get.  In other words, anyone who is talking the talk better be walking the walk.

I use Cama-Plan from Blue Bell.  They offer a lot of free education and have been a valuable resource for my funding partners.

I started wholesaling in 2006 when I first got into the business.  I had no money, bad credit, & pretty much no reason to expect to succeed.

I figured out pretty quick that by becoming the source of deals, I could bring something of value.  It was the deals I brought to the table that gave me a reason to be in contact with other players in my market.  Through my wholesale deals I met my partners, private lenders, contractors, etc.

I operate in Philadelphia, Chicago, & Tampa, FL, so I experience "boom & bust" markets and "stable" markets.  I personally have much more success, predictable success, in the stable markets in Philadelphia & Chicago.  In my experience, sellers are much easier to deal with in markets that are NOT on fire.

Congratulations Bigger Pockets!

Here's an article I wrote on the subject:

http://www.biggerpockets.com/blogs/6614/blog_posts/44440-dont-be-cheap-invest-in-off-market-deal-sources

I buy houses and I also "wholesale" a few deals here and there.

Whenever I wholesale, I actually think of myself as a partner on the deal with my buyer-however my buyer is paying my profit up front to get me out of the deal.  

See, I have the money to close all of my deals.  I choose to allow a buyer, like you on this deal, to step in and share MY PROFIT on the deal.  My buyers are lucky that I even offer them any of the profit-I could just close & build all the deals myself.

Whatever price you believe is a good deal, and the best you can offer, just stick with it.

Many of my big fat assignment deals end up being split several ways for the referral partner and often daisy chain of wholesalers to get the deal done.

REMEMBER THIS-That wholesaler has proven his ability to produce a GREAT DEAL and will probably be a GREAT SOURCE OF DEALS for you going forward.  Don't rock the boat and you'll probably do many more deals with that wholesaler.