All Forum Posts by: Jaremy Moritz

As long as you're clear and transparent with the seller about your intentions, you should have nothing to worry about. If you are able to make more than $10K on a wholesale deal, or any amount the might be considered extreme, you might want to double close it. It all depends on how comfortable you think the seller, and buyer for that matter, will be in knowing how much you're making on the deal. Keep in mind that when assigning a contract, your fee will be right on the HUD for all parties to see.

The last thing you want to have happen is for the seller to think you are buying the house and then find out at closing that you assigned the contract for a crapload of money. I've had sellers that I felt wouldn't care about what I made flip out and try to back out completely when they saw my profit on the HUD. My rule of thumb is anything $10K - $15K or higher, depending on the situation, gets structured as a double closing, not an assignment. I'd rather have to spend a grand or two doing the double closing than lose the whole deal because someone got their feelings hurt about my profit.

From my personal experience, anything will sell if the price is right. Doesn't matter if it's 800 sq.ft. or 1800 sq.ft. A big factor to consider, though, is how common a house of that size is relative to the neighborhood it's in. If it is a house that's half the size of everything around it, be cautious. On the other hand, if it's twice the size for the neighborhood, don't value it at the same price per square foot as the comps.

I agree with Ryan in that most 2/1's will be found in the 'hood or in older parts of the city. Very rarely do you find new construction that size. But just because a house is small or old doesn't mean it won't sell or be desireable. About 1/3 of all the houses I've done have been 2 or 3 bedrooms with only 1 bath. In some areas, 2 bath houses just aren't common.

I think it depends on how you set up the partnership to begin with. Some folks feel that a 50/50 split is the way to go and others might feel like a 75/25 is the fair way. It all depends on how you negotiate the deal.

I've done deals with a parnter on a 50/50 split. I found the deal, managed the rehab, and got the property sold. My partner bought the property in his company name, financed the deal, and put up all the repair funds. He had all the risk and I did all the work. 50/50 was fair for both of us.

I've also done deals with different partners on various other splits, like 80/20 and 75/25. It all depends on who does what and the amount of risk/reward each person is comfortable with.

If you want a larger cut of the deal and your partner won't budge, find a new partner or do the deal yourself.

When in doubt, measure it out! I learned that the hard way, too. Now, any house I look at that doesn't feel like the listed sq. footage is correct gets measured, not just once, but twice. Learned that the hard way, too.

The quickest way to questimate the size of the house is to "walk" it and draw it out on a sheet of paper. Measure the distance of your average stride and count the number of strides per side of the house. If you come up with a figure that's way off from the size posted on the tax roll or listing, take the time to accurately measure it out with a tape.

Or you can buy a "distance counter" or whatever it's called. It's a wheel attached to a pole that counts the distance covered in feet. Sorry I forgot the name of the thing - I'm having a bit of a brain fart right now...

Saying there are no "good wholesalers" is relative to your position. If you are the wholesaler and can consistently sell properties above a % that most buyers want, you are successful. But to an investor looking to buy a good deal to fix & flip, they might think that you as a wholesaler have nothing but crap deals because your numbers don't fit their criteria.

Here's an example: I just closed a deal this week that was sold at 80% of LTV. ARV is $75K, repairs were $17K, and sale price was $43K. My purchase price was $25K and my gross profit was $18K. Is this an example of a "good wholesaler" or a "bad wholesaler"? Depends which side of the deal you're looking at. Most of my deals aren't like this, so don't get me wrong. This just happened to be one of the times when I was able to sell to an investor that lived on the same street as the property and he really wanted it and was happy with the price.

I try to keep my asking prices in line with what my buyers are willing to pay, but there are times when "premium" houses bring "premium" money. Don't blame me as a wholesaler for being able to sell a house for more than what you'd pay. I have investors that actually criticize me and think I'm crazy for having such a high asking price on some deals and having others that fit the 65% rule. Each property is evaluated and priced accordingly.

As a wholesaler, you don't make what you deserve, you make what you negotiate. Obviously, the better you are at negotiating (both on the buy and sale sides), the more you can make.

A lot of the wholesalers in my market do have crap deals, I'll admit. Many of their purchase prices are what I'd sell them for. But hey, to each his own.

To me, finding a good wholesaler is like finding a good realtor - you have to go through a lot of crap to find the good ones, but you can make a lot of money once you do find a good one. I've got one particular buyer that I've sold about 75 houses to, and all were sold at 75% of ARV, minimum. He's happy, I'm happy, and life goes on. Why sell for 65% when there are buyers willing and able to pay more?

The point of my ranting here is that while most wholesalers do have crap deals, there are good wholesalers out there that successfully close deals at prices and percentages that you wouldn't consider buying. That doesn't mean they aren't good wholesalers, it just means they've found a niche that you aren't in.

This is really a common occurance, at least it is for me. I usually tell the prospective seller to inform the tenants that I will be coming by to do a "property condition assessment" for a potential lender, even though this isn't the case. A lot of tenants are real cautious and nosy when I'm there, but I do my best to put them at ease by explaining that the seller is considering adding properties to his rental portfolio and his current properties have to meet our "condition standards" before we approve him for additional funding. I ask the tenants if they know of any problems or issues that need to be fixed. This way the tenant is more than willing to divulge any problems or issues with the property and it is a great indicator as to whether or not you would want them to remain as tenants if you buy the property. It also opens the door for you to come back to the tenant (if you successfully buy the property) and let them know that the owner decided to sell the house to you instead of going the other route. Then it doesn't make you seem like you mislead the tenant on your initial visit.

I've used this technique for years and I've never once had a seller not be fine with it. The key is to explain to the seller ahead of time what you will say and how you will handle the sensitivity of the issue.

Wholesaling as a concept is pretty simple. Not easy, but simple. Actually doing it and getting good at it takes work. It is NOT a get rich quick scheme. Just like anything else, you'll get out of it what you put in it. If you treat it like a fun hobby, you might make a buck or two. If you treat it like the business it is, learn all you can, and don't expect to get rich overnight, you might succeed. It's all up to you.

Anyone who says wholesaling is easy is either not being truthful or hasn't done enough deals yet to encounter some pain in the @$$ issues.

Larry,

You can always just use a one page Option Agreement until you know whether or not you can get the deal done. It's much easier to explain an option agreement to a seller than a full 8 page TREC contract, especially if you're new and are still learning. Yes, a TREC contract is the better way to secure your position, but it can also be pretty daunting if you don't fully understand it yourself. You can also get into a bind if it's not written properly. Better to be safe than sorry.

Make sure you do your research on the market. Call other investors and get a feel for what to expect. You may even want to set up a working partnership with someone in the area who can help you get your deals done. Half of something is better than all of nothing.

Fidelity National Title
2400 Augusta Dr. Ste 300
Houston, TX 77057
713-587-2025

I use them quite a bit. Trisha Slay-O'Keefe is the closer I use. Feel free to drop my name if you'd like.