All Forum Posts by: Irina Belkofer

So, how the wholesaler improved the property that it worth $100K more?

All he did - found elderly lady who didn’t know real value of her house in as-is condition.

How it’s not taking advantage? What if it were your mom or grandma? 

When rehabber makes his money, it’s justified: the property gets improved, the value increased - that’s why it’s sold for $520K.

The wholesaler in this example is a scam bag and I hope his family will get scammed as well......there is such thing as karma 

 Try staggering your lease agreements: make different due dates. Usually all rents are due on the first of the month that’s why it’s over limits.

If your rents due on 7th, 14th, 21st etc - then it will be transferred without hassle.

However, if your rents are totaling more than $90K/month, this won’t work either

 I don’t think the goal is to beat stock market: for me RE investing is more real and recession proof.

As for 8% - it’s usually these who sell MF and their agents fudge the numbers. Only water/sewer bill for 10 unit building could be $800-900/mo easy if nothing leaking, because rates are twice higher for commercial buildings. MF is a commercial. When you Rent for $650-700/unit, it’s a lot. Because there is no submetering as a rule, it’s going off your cash flow.

Next famous thing in Cleveland - taxes. Only Cleveland has lower taxes but it shows on their streets, neiborhoods and quality of Tenants. All suburbs in Cuyahoga County have pretty hefty taxes and for MFtaxes are double.

Last but not least: gas. Heating is really important in Cleveland as the winters are cold and if the building is not submetered, it’s on the owner again.

All these utilities, taxes, city rental inspections etc will get your rents cut in half.

Now, from the leftovers, consider vacancies. Tenants who can afford to live in a houses or townhouses, won’t go to an apartment to deal with loud neibors, dogs barking, no elevators, quarrel about parking etc.

Most often apartments house the lowest part of the Tenants: criminal record, unstable income, low or no credit etc. All that double or triple in Cleveland proper. So, when someone shows you 12-14-15% cap, dig into their number, look at the vacancies for last couple years, check out water, gas, electric bills, landscaping and parking lot fixes.

Don’t forget that right now Market is pretty high and there is no vacancies per se: I’m signing a lease before my tenant moves out. When market corrects it will be different ball game

@Elbert D. you get all the things together but it’s specific only to wholesalers.

Flippers are buying houses, improve them and sell - under their name (LLC etc)

Wholesalers are marketologostsjust like RE agents: they are looking for listing to sell and of their main point is “cut off unnecessary comissions and sell for cash”.

Do sellers realize what kind of comissions the wholesaler will makeoff them? Besides, 90% of my investors are cash buyers. So, when I find the property to sell, I offer to the seller 3 options: 

1. I can list your house for $100K

2. I can sell it off market for cash and no inspection for $75K

3. I can buy it on terms for $110K (no money down)

They know what's the market value is because just like any agent, I do CMA for them but including distressed sales if their house in such condition. I can offer them even to flip their house which adds time, money but will be sold, let's say $180K.

When people make an informed decision, it’s not a crime. When you tell them your house worth $200K when you know it’s $300K - you’re preying on their vulnerability. 

Your “they are adults and should know better” won’t stand a trial in a court or at RE Board, Division or whatever the authority is in your state. If you’re a licensed professional. That’s why it’s easier to get people out of their money and hide behind that mantra

@Chris DeSisto not in Ohio: once you’re licensed professional, you must disclose it to all involved parties.

Your broker is responsible for you actions in real estate even when you buy your own houses.

When I tried to get E&O insurance, one company refused to because I'm buying and selling my own properties as well. The one who I found by referrral of my title company, made my own transactions not insurable because of it - so the insurance covers only my clients.

That’s why I don’t want any agents work for me - it’s too much responsibility. I work with investors so would be my agents....they will buy their own properties to flip or to rent....that’s how I can loose my license - I can’t control what I don’t know about.

First of all, people should get a definition of cap rate, NOI and even the price.

Cap rate=NOI/price, however, some count gross income instead of NOI, some countnot purchase price but their money invested and fridge the number to look sexy.

Cap rate won’t tell much unless you know how they count it.

Usually, MF is much less ROI than SFR because the owner pays water/sewer and heating if there are no submetering.

Also, in SFR tenant pays everything (water, landscaping etc) but MF owner pays parking paving, trash and landscaping, which is very expensive

License is the thing to loose if you gave wrong estimate and bought the property by yourself instead of listing it on MLS. Once your client find out that you've cheated - the Division of Real Estate of your state will take care of that.

If you’re not licensed, the seller has to go through the court to prove that, which is much more complicated and you don’t lose much - maybe some money you’ve got from that deal. 

I’ve had a listing with very tired landlord OOS who wanted to sell. It was on MLSfor market value (which I believed was reasonable). Couple offers wanted it get fixed or some other conseccions. Cash buyer came along and bought it for $50K, which I’d like to buy myself - but I can’t because of conflict of interests. This buyer sold it 2 weeks later for my listing price and he only replaced carpet - maybe $2-3K....easy $10K at least

@Chris DeSisto well, what people want not always what is legal, isn’t it?

The other way to get out of rat race is to buy houses, fix and rent them. 

Why would you nessesary do something which is not legitimate? More and more states will enforce existing fines, especially in the state where NAR is strong and lobbying it.

Personally, I don’t care if people trying to make money unless they hurt someone.....and these “someone” usually less savvy people, elderly or not understanding this business.

Besides, in this market, there are very few deals anyway. Why don’t take time and prepare for next recession when deals will be everywhere? 

Once I bought a house from wholesalers (they didn’t cheat anyone, they bought it at auction and just wanted fewK’s for the hassle) and I was willing to pay, however, a title company refused to conduct the deal because it’s illegal to pay “finder fees” to an unlicesensed person in Ohio and they wouldn’t get an underwriter for the transaction. Off course, there was another company who did but nevertheless- this is not how it should be done.

Take title in your name, then sell it as an owner: happens more often than you think, no license required - just $$$

That’s brokering real estate...without license - in your case.

Alternatively, why don’t get a license, sell real estate to get experience in this business, and after couple years get broker license? Same business doing legally

Somehow, you have misinformation big time.

I work with investors and distressed properties all the time as a broker. Any house can be marketed on MLS once the owner agrees. Why wouldn't the owner agree to have much better marketing vs some wholesaler network?

Listings from MLS are automatically fed into Realtor.com, Zillow etc - the more potential buyers - the better service to the seller. The worst case scenario if agent listed a house below market: buyers will come up with multiple offers!

Real estate agents work in all areas: REOs, short sales, vacant houses, land - you name it.

I don’t see how all that marketing could be beat by “marketing contracts” on FB or CL.

I do understand that everyone has to make money but there are plenty of legitimate ways