All Forum Posts by: Tae Seung Kim

Thanks for the heads up. I'm also located in Northern VA area and I was just about to sign up for ReboGateway. I will keep looking.

He should have been honest from the beginning with his intentions. If he said "I (me) and/or my cash buyers will close" and state that he is looking for cash buyers and told you that he is a wholesaler (looking to assign the contract to end buyers with cash), it would have eradicated the unnecessary frustration. Also he kept dragging on with extra days pushed. That should only be used sparingly but he used it more than once. If the deal didn't work out well and he knew it would end like that, he should have been upfront with you and told you that the deal won't work in the much earlier phase instead of trying to push the days further thereby leaving you hanging like that and wasting your time. 

That goes to say, you can't buy (human) trust. Someone can lie (unintentional and/or intentional) and think they can get away with it but in the end, the lies will always be discovered. I also get the feeling that he didn't do his market research correctly before approaching you. (This is just my opinion). 

Also I would prefer the communication to be strictly via email. While there is nothing wrong with exchanging information by phone, you can't really trace back where else if the communication between him and you (as seller) is in email, it leaves evidence so there isn't any of "he said, she said" kind of situation. I know some people might disagree and say phone communication is better, I personally think email communication is much 'cleaner' (although time wise, it might not be good idea in some cases). 

 Wouldn't there be a better option than this?

Like put it in purchase and sale agreement stating that "seller shall not go behind the wholesaler's back" and have that stated in the purchase and sale agreement contract with the seller? 

If this option is not permissible then would I have to get separate affidavit and memorandum of purchase and sale agreement or would the county recorder have their own form? 

I notice that on wholesaling calculator on this BP, there are section for "estimated repair cost" and under that section, it has 

Exterior Repairs: Roof, Concrete, Gutters/Soffit/Fascia, Garage, Siding, Landscaping, Exterior Painting, Septic, Decks/Porches, Foundation

Interior Repairs: Demo, Sheetrock, Plumbing, Carpentry, Electrical, Interior Painting, HVAC, Cabinets/Countertops, Framing, Flooring, Insulation

General Components: Permits, Termites, Mold, Miscellaneous

Would this be good enough (complete) list in which I can represent this list with (columns of labor and material costs) to the general contractor and be assured that I would be able to get a good ballpark precise range of estimated repair value that would be valuable to the end buyer/flipper? 

What if end buyer happens to use different contractor and the two estimates (mine and the end buyer's estimates) are way off. Does that mean I have to recalculate accordingly to fit the end buyer's general contractor's estimate and work my way from there? 

First of all, 

A shout out to @Henry M. 

I like your attitude and approach to this wholesaling and ability to help new wholesalers.

@Will Barnard, 

I appreciate the lengthy posts and the time you take to educate new wholesalers into avoiding big mistakes. This long but rather educational thread has and will help me.

Also I"m currently reading J. J Scott's book on Flipping Houses. Even though I"m starting off as wholesaler, I realize this book has A LOT of good information that can be helpful towards wholesaler. In order to wholesale successfully I think wholesalers need to look at deals from buyer/flipper's perspective as well.

All other posts here were just as helpful and thank you for everyone here with their insightful posts.

@Bill Gulley

You said

"The truth?

By the time you learn to be a good wholesaler, with off the street stuff, you won't need to be a wholesaler. :)"

Can you elaborate on this?

Anyways, to narrow down the focal point of this thread, I would possibly have learned that as wholesaler

1) do not overestimate ARV

2) do not underestimate repair values

3) do your diligence and know the market place very well especially days on market

I also believe that it's important to line up buyers first but some buyers I contact tells me "just bring me a good deal" without being specific.

@Hattie Dizmond

The 70% rule ... (ARV * 70%) - Estimated Rehab Costs = Maximum Allowable Offer

The idea is that the 30% you are deducting from the ARV will cover...

Buyer's Closing Costs to acquire the property

Holding Costs (PMI, accrued taxes, insurance & utilities) for the duration of the rehab & marketing time

Seller's Closing Costs to sell the rehabbed property

The difference between the Sell Price and the total of the costs I just outlined is the potential profit for the deal at the price of the Maximum Allowable Offer.

As a wholesaler, you have a duty to your Buyers. Your duty is to provide them with profitable deals. Remember, they are the ones accepting all the risk in these deals. If you are providing them with high quality opportunities, I can guarantee you they will have NO problem with however much you are making. Remember, the 70% Rule is just a rule of thumb. Most buyers will be thrilled with a 20% ROI.

Don't be greedy. Make your profit, but leave margin to ensure your buyers not only profit appropriately for the risk they assume, but also that they have extra "wiggle room" in case something goes south with the rehab.

My reply:

Is it common that wholesalers will just use 70% rule and start off numbers and offers like that? Maybe is that why (in addition to getting ARV and Repair values wrong) that wholesalers get their name and reputation destroyed?

How many wholesalers use the "Fixed Cost Method"? (If any of you guys read Brandon Turner's The Book on Investing in Real Estate with No (and low) Money down, I think you will know what I mean by that --> "Fixed Cost Method")

Is it that wholesalers can figure out all those closing costs, holding costs? seller's closing costs, etc?

I know the wholesaling calculator here in BP requires you to input all the figures for that. 

For any wholesalers who are worrying about seller possibly suing you for specific performance or for whatever reason because you didn't/couldn't find a buyer and you weren't able to buy their property or fulfill a promise, then couldn't you include this following into your purchase and sale agreement? 

"Buyer and seller agree that, upon any default by the Buyer, Seller will keep any earnest money as full liquidated damages as sole remedy."

That way, the only worse case scenario would be that you would lose your earnest deposit money. I mean of course it wouldn't and shouldn't be a good practice to back out but this would be used as exit strategy in case you are in dire situation. 

Sorry to hear that this happened to you. 

You said you signed a contract. Did you read it fully to see what was on the contract you signed with him? 

I think it depends. Like you said that you found the daughter of deceased owner. In this case, I think phone call would be too overwhelming. Try personal handwritten letter. 

If the owner is desperate to sell, I would say phone call might be best option. Experiment to see what works best in your area. 

@Sean OToole

Thank you for the clarification. I really appreciate it. I been looking for this answer up all night. 

So basically I should lay off the "purchasing" lead lists from listingsource and/or agentpro247 because getting those lists possibly violate the FCRA rules.

Has anyone in here got caught and jailed by using these? I mean this is bold question. 

There seems to be a lot of laws regarding to wholesaling and I just want to make sure I"m not breaking any law by accident. This is pretty discouraging.