All Forum Posts by: Greg K.

@Mark Bommarito low crime is more important than school districts. I am not saying that schools are not important. Just rember that you are not living there. Many people are not having kids and some districts get a bad rap because private schools have filtered out many top performers. My school district is in the lower 3rd in the state but we send all 3 of our kids to public schools and they are all doing well.

Steven,

Thanks for the DM, but I will answer your question here since you also asked publicly for the benefit of all. I preface this by saying, I have a rental portfolio, a retail flip enterprise and a wholesale business. So I touch many different aspects of the real estate investing market. I am giving you what is my experience and simply my opinion. It is worth what I am charging you (nothing) ..so here goes. I will also say, I’m sure I am going to make a few comments that may set some people off. I touch on these aspects to try to support some of my opinions and make you aware of things in the industry you may not be aware of.

It is great you are building your list of buyers. That is usually the easiest part. As if you have deals, people will come with cash. However, that is only one piece of the puzzle.

So let’s set the premise that when you are looking to wholesale, your goal is to find houses at a good deal, put them under contract and reassign them at a profit to others. If you do not have it under contract, it is actually illegal in Florida to market the property to others for profit. But if you do have it under contract, it can be legal. People can get into a debate on this, but for this discussion, hopefully we can all agree that if it is not under contract it is illegal to try to wholesale. So you really have to have the property under contract to wholesale it.

The piece that is usually the impediment to most is money.

It is hard to have the ability to in good conscious put a house under contract if you do not have the capital to actually close on it. I personally find it unethical to put a property under contract if I do not have the money or intention on closing on it. However, I know many wholesalers who will put a property under contract and if they can't find someone to wholesale it to, they simply back out of the deal leaving the seller in a bad situation and it is these types of wholesalers that give the wholesale industry a bad name. Some programs teach that as a way to get around the fact if you don't have the money to close on it, that it is no big deal. Just try to wholesale it for the 3 days before you have to put up escrow. Then if you can't wholesale it....it is no big deal, just walk away.

So in my opinion, you really need to make sure that you have the capital to purchase the houses you are looking to put under contract. Having the money not only allows you to properly put it under contract, but it also gives you the ability to make enough margin on a wholesale deal if you can’t wholesale it before you have to actually close on it. If you try to fund it by hard money, usually the hard money guy will make most/all the profit. For example, sometimes a homeowner is in distress and we have to close in 3 or 4 days. Maybe I don’t have time to properly market it and wholesale it before closing. Well, if so, no big deal. I close on it and sell it after I close on it versus reassigning it. There are so many variables it is hard to touch on them all.

By not having the capital to close on it, you limit your options on how to make money as sometimes you will see value in a property that others won’t. By being able to close on it, if you can’t wholesale it, you may be able to do a lipstick job on a property and realize a great profit by retailing it.

Anyway, if you do not have the money, that is where you will probably have to do some sort of joint venture.

Now do I know individuals who don’t have the money to close the deal who does this and can support themselves? Yes. Are they making 6 figures? No. Will they hopefully build up enough capital to the point where they can expand their business from just wholesaling to also include retail flip where usually you can make more money? I hope so. Are there exceptions to what I have seen? I am sure.

Now to dovetail into going from wholesale to retail per se. Some people will tell you to just get hard money and if you can’t wholesale it, just flip it at retail But in my experience, if you do not have your own guys on your payrolll for the rehab and you have to pay a general contractor retail for a rehab, plus the hard money costs, plus the selling costs.....I think you will be hard pressed to make money ( or maybe I should say you will be hard pressed to make enough money to make this sustainable). So how do I know this for your area? I am active in Pasco and Pinellas so I am pretty in tune with the market. Most sellers are willing to sell their properties below market if they are in distress, but at an amount that will cover all these costs and still allow you to make a healthy profit on of that? They are few and far in between in my experience. They way we can make money on flips is rarely having to use hard money (unless we have too many flip going on which is when we start to wholesale) and to have our own GC license/crew to do the rehabs so we are not paying retail for the rehab.

You may ask am I trying to scare you away as you would be competition? Absolutely not. If you are wholesaling and you have a good deal, I would hope you would call me and offer it to me so I can do the retail flip as that is one of my lines of business. I do buy from other wholesalers and at times. If I have too many properties, I wholesale. So again, various lines of business as I don't pigeon hole myself into only doing one type of transaction wholesale or retail. I get my leads through how I advertise. You are cold calling. I don't do that, as I don't have the time for that. Time is money to me. I am happy with the deals I get through the way I get my leads so I am sure you will pick-up deals that way that would never hit my desk.

So you also mentioned in another post you did not know what contracts to use and some other what I consider really basic questions. So you asked should you spend the money on a real estate investing coaching program, go private mentoring. or just learn as you go?

I don't find a ton of value in those programs when I consider the cost of them (I am not saying they don't have value, I just think you can get the same info from a book at the bookstore versus $5K, $10K, $20K some of these programs charge). I say that knowing some of the guys who write and market some of the local REI programs ( I won't say which ones). Do they have people who are successful? Yes, but they usually have the capital to fund their own deals.

I am giving you my advice on how I would approach it if I was you. I will do this using a scenario.

If you came to me with a wholesale deal and you did not have your paperwork in order and you don't really understand a closing and the costs associated with them and you misunderstand or miscommunicate some of those costs to me….I am going to be very upset (as will any other buyer). So since you admit you don't know that stuff…instead of having someone like myself spoon feed it to you….do yourself a favor and instead of spending $5K on a REI course, get your real estate associate license. For a few hundred bucks you will learn the basics you need to know. You can then for the most part, not have to worry about the legal/illegal aspects of the grey areas of wholesaling and you will have the great foundation on which to start.

Then it is my opinion that you can supplement from your new found knowledge by reading all the REI books to help you fill in the blanks. If I was you, would I still be looking for a JV partner? Absolutely. But I think others will be much more receptive to it if you have a license. That will show that you at the very least know how to fill out a contract correctly. As messing up a contract can cost you and your partner thousands of dollars. Do people wholesale and make money without a RE license? Yes, but it is much easier with a RE license in my opinion as I do get stuff off the MLS here and there and the knowledge you will pick-up from getting your license will help you be confident in what you are doing and making sure you are doing it right.

Anyway, best of luck. I hope you will find my insight helpful.

@Greg Kapourellos I don't know the bad stories you've had with real estate agents but I perceive some resentment in your words.

Misinformation is dangerous for the average person that can't see the whole picture. This companies base their marketing campaigns on avoiding the agent comision basically implying, we agents don't add value.

Good agents...

Empathize with their clients and make them feel comfortable in stressful situations.

Good agents...

Make their customers have a clear understanding of the transaction process so they know what's next.

Good agents...

Communicate effectively so the client has full knowledge of the situation at any time.

Etc.

Not all agents are good. I believe the ones that are good if they become underpaid they won't be able to provide the best service possible and the process of buying/selling a house will become tougher for the average person due to the lack of humanity.

The whole digital transformation, it's a bit scary, if we lose the human factor, we will become robots as well.

Just look at the kids with their iPad's...

I think good agents are here to stay without dropping comisions.

No idea why you’re conflating title fees with real estate agents. 

@Greg K. are you seriously using Carvana as an example? I am looking to trade in my car and they offered me $1000 less than I could get on the spot from a local dealer. I am not even talking trade in from the dealer, literally they would write me the check regardless of if I buy from them or not. Carvana is a rip off for sales prices too. You are skipping the dealership, but not saving money. So I guess the perception is that it is a good deal, but it isn't in reality. 

That is no different than what is going on with Zillow. They will give you near nothing for your property. So you avoid the 6% commission, but they undervalue it by 20% or more. Maybe some consumers are dumb enough to fall for it. Maybe younger people who would rather use an app than talk to another human, haha.

The reason realtors are needed is because buyers and sellers are emotional and irresponsible. Here is an example. I purchased a house last month. Looked good when we made the offer, but lots of toys laying all over the place. We went for the walk through after the house was empty and the carpet is stained all over the place. Every room and over 20 stains, red and brown and yellow! They covered up the stains with toys. Our agent ended up negotiating with theirs. I am pretty sure had I talked directly to the seller, that the deal would have just been cancelled. How do I have a rational discussion with someone who believes 20+ red and brown stains on carpet is acceptable? I have lived in properties 25 years and never even had one stain, let alone that many. Their agent set them straight and mine kept it logical. He just kept saying, it is only about money, nothing to be mad about. Let's give them the number and they take it or leave it.

Here is the bottom line. An app just wont cut it. You need humans in the middle and eyes on the property. Who is going to want buyers walking through their house un-escorted? What buyer wants the seller there following them around? A house purchase is way more money than a $10 a month Netflix subscription. It is way more than a $22 Uber ride. I am not saying there won't be changes in fee structures as technology automates more. I am just saying the idea that the agent will be replaced by an algorithm is not possible for a transaction this emotional and high dollar value.

As far as the MLS lawsuit, it is a money grab simple as that.