All Forum Posts by: Jacob Floyd

Thank you Todd! Very Helpful.

Do I have Money, Equity, Knowledge, or Experience?

Hello Andrea,

Yes. What your wholesaler is talking about is completely normal; in fact, it is the whole idea behind Real Estate Wholesaling. Though the "fee" is not legally a finder's fee, he called it that because it is the payment he will get due to all of his hard work to find the seller. And yes, you would give the deposit straight to the Escrow Company and they will give the amount due to him upon closing.

The only thing about this that would seem shady is if he asked for the deposit directly.

Wholesalers find sellers, negotiate the price down to a nice-sized discount, and remarket the property to investors for more. For example, I find a buyer who has a house with an ARV of $100,000, I negotiate the price down to 60,000 less repair costs (20,000) for a net price of 40,000, and I market it to you for $50,000. Upon the date of closing, the seller will receive $40,000, and the Wholesaler will take the extra $10,000.

Hope this Helped,
Jacob Floyd

Hi Matt,

First off, I would just like to say that if the condo isn't in need of any repairs and there is no way that an investor can add value to it, it's going to be difficult to find a buyer. Also, if you are trying to find a buyer that will do a wrap deal via subject to on a property that has 600k worth of mortgage, the monthly mortgage payments are around 4,000 and the buyer will only be able to get 2,000 for rent; you have a math problem. However, if you think the numbers work, then continue reading.

I agree that a seller like that sounds like a good candidate for a Subject to. However, before you go about doing that, make sure that you have a title company that has a servicing company and knows how to operate a Subject to. Now, it looks like they have a substantial mortgage to pay off, and they obviously won't want to do any business with you if you can't do that for them -so anything below whatever the bank will MAKE you pay (without negotiation is $600,000) is non-negotiable.
Therefore we have two questions: How low will the bank settle for, and How much money will our buyer be okay with getting out of this deal?

Try to negotiate both of those numbers down as low as you can. I'd say that if you settled the mortgage to 550k, the buyer's down-payment to 50k (the lower the better) and you could market the property for 620k subject to the 550k mortgage with a 70k down payment, you could take 20k and the buyer takes their 50k, that should be a good deal.

Now the contract for a Subject to is simple. On the purchase agreement, you would write "Subject to the first mortgage balance of approximately ____." in the area you believe is most appropriate. You would also state the amount of the down payment the buyer is to pay. Your purchase agreement should have a "Payable" section in which you identify the mortgage lender.

After you get an Authorization to Release from the seller bring it to the bank. Make sure to get a "Payoff" and that you account for a pre-payment penalty.

That's just about it. Hope it helped.

Jacob Floyd

First things first, make sure you have enough people in the desired market -that is the most important. Yes, I know deals can be found everywhere, but having a large market will make everything so much easier. A nice number is at least 200,000.

Second, find out what is being bought. If you are a Real Estate Agent or an investor who does fix-and-flips and targets retail buyers, its easy. Visit Zillow.com (my favorite) and find out what type of property is selling most and for how much. If you are a Wholesaler, it's a bit more difficult. Work with a Real Estate Agent and see if they can search the MLS for recent cash transactions in your area -this will bring up every home that has been purchased with cash in your area recently; those are usually investors.

Third, find the crime areas. NO ONE purposely buys in a bad neighborhood. Investors hate them and so do retail buyers. If you visit trulia.com and click the "Local info" option that shows in the "Local info" drop box you will be able to check out the crime map for your desired area.

Fourth, now that you've got an idea of what's around the city, call other investors and wholesalers in the area and visit the REI groups -if you can- to find out what and where they LIKE to buy. You already have a good idea, but gleaning information from the investors in that area is ALWAYS a plus, in addition, you get the chance to grow a relationship with them and -possibly- putting them on your buyers list.

Fifth, use the information you've gathered to find the best areas to market in. With this, you should be able to target motivated sellers in "hot" areas. If you do this correctly, when it comes time to selling your house, you will have a property that buyers will be scrambling to buy.

Hope this helps a bit, I am in a small market, so I do all of my marketing online in areas that are pretty far away. I usually miss out on the REI club meetings because of this and that is a major setback for me and my business.

I find Access much more helpful, that way I can run queries or sort by keywords, and create different tables all in one database...