All Forum Posts by: Eric F.

How did you buy the house? Was it through a broker who represented it as a 4/2? 

Thanks @Jorge Zea

Does anyone have a company to recommend?

If you manage the property you might have a fiduciary duty to the property owner and attempting to profit (without the owner knowing) may violate that. I do not know your state laws. I would also consider it unethical as you technically work for the owner. To profit without his knowledge seems wrong to me.

Is the LLC a single member or multi member? If it is a multimember you need to file a tax return for your LLC and the income flows through to your 1040.

Is the property you are offering on listed on the MLS? If so, did the agent make your offer? If the answer is yes, then they are entitled to get a commission, that is the whole reason agents exist. If you are making offers on off market properties directly to the seller, then there is not an agent involved in the process so you do not need to pay one.

If your plan is to make offers through an agent then not pay them a commission, then no one will work with you. That is dishonest and just bad business. 

TREIA Advanced and the Main Meeting are free if you are a member. TREIA North is also free but you are expected to purchase a meal. 

Hi everyone,

I am about to purchase a property in SE Raleigh. I intend to rehab it and hold it as a rental but I am also considering selling it. I have never done a flat fee listing before but I was thinking about paying for a flat fee listing for 15 days or so, seeing what kind of offers I receive, and if I get one I was happy with selling it, otherwise pulling the listing and starting to rehab it.

My questions:

If I do this I understand I still pay a buyer's agent 3%. Do I have to make it clear in the listing I intend to pay this?

The listing agent does not do anything beyond putting the property on the MLS, correct? I would handle all inquiries, contracts, etc.

This property is not that bad, but it needs cosmetic work at the minimum (10k total rehab costs with 15% overrun built in). Can I stipulate cash buyers only? I feel like financing might be tough due to the condition.

Has anyone done this before? How was your experience? If I was 100% intent on selling it or if it was move in ready I would probably go with a broker, but since I am neutral on selling it or keeping it I don't want to waste anyone's time.

When I list it, I can make it clear if I do not get interest quickly I can cancel and pull the listing, right? Obviously I still pay the broker their listing fee.

First, I doubt you are going to be able to wholesale it to someone else while the seller is still in the house. If I were you, assuming you can, I would close myself, wait to get them out, and then sell it to your buyer. I have trouble imagining anyone buying a wholesale property with someone in place for an unknown amount of time. I would not do it unless it was an insane deal. Also, if I bought it I would do so assuming eventually I am going to be in an eviction situation. 

I have bought a couple of houses where the sellers needed a couple of weeks after closing. What I did was put a substantial amount of money, like $7,000, in escrow until they moved out. If they did not move out by the promised date they forfeited the money and it covered eviction costs (time and fees). This was not difficult, however we were talking weeks, not months.

Honestly, she wants you to buy it and let her stay in it for 3 months? Just because she is tired of hearing from the tax office? I would not do it. In 3 months she still probably will not have found a place and then you have a massive headache. I would stick to your approach of setting a closing date off in the future and give her time to find a new place. No one else will do what she wants either so it won't cost you the deal.

Where you live might be different, but what makes you say pulling a permit to replace your panel will get the entire house inspected? I just replaced a panel in a property and the inspector did not even take a glance at anything put the panel, and we probably did 15k of work throughout the entire house. The city would need 3 times more inspectors if they did a full house inspection every time a permit was pulled for electrical work. 

I've had this happen a couple of times for various reasons and I just ate the time and money. Technically I could try to recover the money I spent on a title search, etc. but I don't bother. I even let them keep the $200 earnest money (1 might have been $100). Now I usually do more earnest money so I would maybe go after it, but back then I didn't. If the seller backed out to went around my back or something that would be a different story, but both times they ended up not moving in with their boyfriend/girlfriend or whatever their plan was. I can afford to put the closing money in escrow if I really want to and fight it, but the time + legal fees are not worth it. Take that time and effort and find more deals!  

I would just chalk it up to the cost of doing business. If it turns out the investor went around your back, then don't work with them ever again. Since they understand the situation and are not mad about it, I'm assuming they are a professional and did not do this. These things happen, deals fall apart, everyone knows it, professionals don't get upset about it. It is no different than thinking you have a deal on a free and clear house and then BOOM huge liens from the title search no one knew about, the seller included. This is why I only show deals to people I know are pros until I close. Everyone has had a deal fall apart due to title issues at some point so they know it is all part of the business. @Jeff B. mentioned the buyer getting mad and trying to get you in trouble. This is another reason to only deal with legit real estate investors until you have closed. They know this stuff happens, they are not going to get mad at you over it. Don't post it on craigslist or anything until you own it. 

Keep your chin up @Anita Gee . I like your last part about getting more deals so type of stuff doesn't bother you. My first wholesale I got under contract fell apart due to some title issues. I was going to make 15k. The deal fell apart, but I still got the confidence I could do this business from it. I still feel bad for the seller. They inherited the house, it was worth 50k then (probably 70k now depending on condition) but there is some lien on the house for like 100k so they flat out cannot sell it. I drive by it every now and then and they still live in it.