All Forum Posts by: Hugh Wagner

I am a real estate investor that does 1-3 deals per year.  Lately I've seriously been thinking about doing some wholesaling.  I understand the process - I've bought from wholesalers in the past.  But I am missing a logical step in the negotiation with the seller that has stopped me from going further.  I would like to know how people get through the assignment discussion with the seller.

For example, let's say I do some sort of campaign like direct mail or driving for dollars to locate properties, and in the process I find leads that I don't want but others might - logical candidates for wholesaling.  How do you discuss the assignment part of the process with the current owner when you're putting it under contract?  If somebody told me that they wanted to put my house under contract for a few months with $1 option fee, I'd tell them to take a hike because I wouldn't want to give that exclusivity to the wholesaler.  Most wholesaling communication emphasizes closing quickly for cash.  That's entirely possible for a good deal; however, many houses that wholesalers are trying to sell just sit there.  I could tell the homeowner that I work with investors and that they need to sign a contract with me if they want to use those investors, but that's not quite as sexy as saying that I can close quickly with cash.  I'm guessing there must be a more efficient way to handle this process.  I would like to be as upfront with them as possible.  If anybody can share some of the secrets of wholesaling with me, or a good online resource, I'd be very appreciative.  

Thank you,

Hugh Wagner

Guys,

Thank you for sharing your knowledge and experience.

Here is how this one turned out. I took all of your suggestions down in a notepad and met with the borrower. He was OK with all of the requests. He had already purchased the lot for $70K cash and was planning to build a house that he had previously built two doors down. That house sold for $315K before he was completed building. He wanted to borrow $125K and it was going to cost a total of 165K - he would put up the other $40K. So LTC and LTV seemed like no-brainers. Everything else seemed to be checking out, and he seemed to be a great person to to business with. Unfortunately for me, his current hard money lender found out that he was talking to someone else and insisted on doing this deal with him. So, he backed out.

@Jeff Cichocki

@Nick C.

@Tom S.

@Derek Dombeck

I purchased a house in 2010 and sold it for a large gain with a 1031 Exchange last year. The exchange was done on 4/5/19 for a large lot which cost a total of $270K. The large lot was subdivided into 3 smaller lots, one is now under contract for $150K. We would like to do another 1031 exchange.

When I discussed with an accountant last year, I believe that he told me that I could do another 1031 exchange without waiting a year because the original property was purchased in 2010 and that was the date that counted for the exchange - not the purchase in April 2019 - and the original date is the date of significance. Can anyone confirm? We want to be sure that we do not create a taxable event.

Thanks!

Thanks guys! This makes me feel a little more comfortable that I understand the landscape of the deal. I thought of most of these things, but not all. Most importantly, there don't seem to be any big gotchas out there that I haven't thought of. It seems to me that if the investor has enough skin in the game and the ARV is sufficient, that mitigates a lot of the risk. I will begin due diligence tomorrow. I've got a contract that I'll have an attorney look over. Is there any reason to do this from an LLC, or is it OK to do in my personal name? As far as a checklist, how does this look?

Property

• Lot cost
• Renovation costs
• Budget breakdown
• ARV
• Calculate LTV & LTC
• Confirm that I am lender in first position
• Confirm lender title insurance
• Confirm that I am listed on other insurance policies

Builder

• View past houses
• Summary of past deals
• Credit check

I've got an investor that would like to take a 125K hard money loan from me. This is my first time doing a hard money loan. Is there a check list or something that people commonly use before giving a loan to be sure that they are protected from common issues?  I'm excited to do the deal but I have fear of the unknown.  Any help would be great.  Thanks!