All Forum Posts by: Jason Windholz

Yep, the list is only available to members of that MLS, but some will pull it for you.

If you want access to the best MLS in your area and you can't find a local Realtor to work with (its hard to do) then you might just get your license and pay the fees to join that particular MLS. You have a few extra disclosures to make when you buy and sell as an investor who is licensed but the stack of paperwork for real estate is thick already, so whats a few more pages to disclose that you are licensed, but acting as a principal (buyer or seller) and not as an agent in the deal.

I had a similar problem when I started out in Texas, its a non disclosure state so the only source for comps was the MLS. I got my license just for MLS access. The big Realtor companies may not like you since they want traditional agents instead of investors who have a license, but there are small mom and pop brokers who will let you hang your license with them.

When I moved to Oklahoma, I took the test and activated it here, but its a disclosure state so comps are public record and you can get them for free or even pay 3rd parties for it if you want a pretty report of the comps. It didn't keep it active since I don't need it for comps and I don't do licensed activity (real estate for commissions). But I still have to disclose that I was licensed by Texas and Oklahoma real estate commissions. I just add it into the special provisions section on the sales contract.

You don't need banks for getting lease options, subject to deals, and even cash deals funded by hard or private money. New loans are not needed to invest in real estate. Some people use them for lower interest rates, and sometimes just because they can. I did for my first few, but after that I have used hard money, private money, and/or seller's money/financing, and those are more on the deal itself, not your ability to qualify. 

I would start early, I started investing in real estate at age 23, I had already bought my own homes to live in at 20 and 22 but was 23 for my first investment property. You can start at any age, but most people who do it smart (successfully) always say they wish they had started sooner.

One more thing on points for owner financing, I haven't seen that you can't charge them unless its at the state level. The dodd frank on the federal level only mentions that if you charge points or any other upfront finance charge, then it is included in the total finance charge and affects your total interest rate (total) of the loan. 

An example you be if you want to stay in a high PRICE loan under dodd frank and not get into high COST (where borrower has to take a certified class to know that they are paying a high cost) and you are doing a wrap owner financing (where you have an underlying loan on the property) then your limit above APOR is 8.5%, meaning you have to stay under 11.5% roughly for today (11.5% is example of today's APOR and your 8.5% max limit for subordinate liens, and 6.5% on first mortgage liens where you are financing a free and clear house) and it can change daily, use government rate spread calculator to check for each loan) then if you charge 10% and 4 points on owner financing, you may over step into high cost mortgage loan which we want to avoid. The 4 points are spread out over the loan, so it doesn't just equal 14% (10% + 4 points). Its a complicated formula so you have to use the government calculator or have a mlo/rmlo put it in their software. However if you charge an owner occupant 6% and 4 points your total finance charge (less than 10% total) would stay under the (today's limit) close to 11.5%

If you are going to sell with owner financing to owner occupants, then you just need to use an MLO/RMLO to run the numbers and that is just an extra closing cost that you can pass onto the buyer or just pay the cost yourself since the real reason to comply is to protect yourself.

But none of that applies when we are buying with owner financing as investors, except for any state laws, and there are only a handful of states with strict investor limits. So check your state to make sure what your state laws are.

@Bill Gulley Yes, that is one thing to look into but usury laws are tighter for home owners but more slack on loans for investors. I thinks its up close to 30% for investors in Oklahoma. We are kind of in the wild west, we should be smart enough to know better. But everyone should check the investor usury laws for their own state. I think some states are tight. I know 18% is safe in Texas and Oklahoma.

The dodd frank rules that only apply to homeowners or people buying for their primary residence, not investors, are alot stricter than the usury laws from the state itself. The US government has is own calculator to compare the daily APOR and the rate you want to charge to a homeowner so that you can stay within, or know what category, you loan is falling under. Its on a .gov website so its a federal calculator to determine your rate spread limits, but remember, it only applies to people buying their primary residence. 

https://www.ffiec.gov/ratespread/newcalc.aspx 

I look at the area and the cash flow on the deal. Its not as important what it costs over the life of the loan, whats important is the return on your 5% down and that its has a positive cashflow. If you get your money (5%) back quickly say less than 2,3 or 5 years and also make money on the deal from cashflow, then its worth it. 

Many landlords sell with owner financing when they want to retire from rentals. Some are good deals and some are not. You still analyse the deal to make sure youhave some room in it and a decent return on your 5%.

One of my friends just bought 16 homes from a landlord who financed them. Both parties make money. The landlord got the sweetest deal, he bought most of them at the tax sale for $3-4K and fixed them up and rented them for about 5 years. He got all his money back (purchase and repairs) from the rent. He has over 200 but is getting close to 70 years old and wants to finance them to another investor. The ARV is $50,000 and my friend bought them for $40K with 10% down and 15 year notes. He put the down payment on credit cards and closed in May 2016. His cards will pay off in 5 years, the houses in 15 years and he still has a couple hundred a month per house for repiars and maintenance. He is in his mid 30's and they will be paid off when he's 50 so these are his retirement plan. In fact he is putting another 12 under contract from the same investor.

Its really no different from rehabbers using hard money loans, the interest rates are higher, I 've paid as high as 18% but its just another expense. If the deal makes money with all the expenses involved, then its a good deal. The cost of the money is no different than the cost of a new kitchen or bathroom,etc. When you account for all the expenses and can still make money then that is what a good deal is.

One more bit of feedback, Make sure you have some room by buying for less than its worth. 70% of ARV is most common for cash purchases on buy and hold properties,but you can go a little higher when financing is involved. Make sure you have cash flow, $200 a month is usually what is needed to break even over time (in my area), roofs, ac, and other big ticket items only need replaced every 15-20 years, but you need to build a cusion for it. Divide the cost of those items over 15 or 20 years so its not a suprise when it eventually needs replaced. I have found about $200 a month averages out their cost over time for big ticket items and even for smaller more frequent repairs. But thats in Oklahoma. Other areas may have different amounts.

Hey guys, just wanted to let you know the next Tulsa REIA meeting next week (Sept 8) is from a local investor, and real estate agent for Williams & Williams Auctions in Tusa OK. Nothing for sale, just what he does as a real estate agent and investor in Tulsa. He does offer services as an agent for Williams & Williams Auctions but there is no obligation to use them. So I hope some of you can come out and see what our normal meetings are about. Great for networking with the local pros, newbies, and hearing how others make REI work in Oklahoma.

Hey Ossie, I am glad you are going to come to another meeting to get a full outlook of Tulsa REIA. Next month is the Williams & Williams Real Estate Auction Company. A few of the local agents are going to talk to us. We vary the topics of all the meetings and like I was telling you in person, maybe 2-3 times a year we bring in a national guru who will also have products for sale. If you think about it, why else would someone take the time and money to come to Tulsa? Now one thing we do at Tulsa REIA is only bring in Guru's that one of us (officers and board members) have actually used for ourselves. Now occasionally be do get burned by someone new, but that has only happened 1-2 times over the last 14 years. Lou is actually one of the better Guru's out there, this longevity speaks for itself. You can even search his name right here on bigger pockets. Most of the bad Guru's don't last but a few years. They ruin their name and reputation.

I am really surprised you said we were using high pressure sales, maybe you haven’t been exposed to real High Pressure sales. There are some who won’t take no for an answer, some will actually ask you to call your credit card company to raise your limit (right there on the spot) so they can charge you more! I am sure others have more examples of high pressure sales. Lou said that if you don’t generate leads to produce people who might need credit repair, maybe you run across someone randomly and can refer them to us (The Hare’s and myself). Also the only reason he came to town was to help the Hare’s. Originally the meeting was the Hare’s who were going to present the FES Program. They have rentals all over Jenks and south Tulsa and they are full time real estate investors who run real estate investing as a business.

You mentioned that credit repair has nothing to do with real estate, thats not entirely accurate. Real Estate investing is very broad and some parts of it have nothing to do with people who need credit repair, like wholesalers, rehabbers, and some landlords. However there are other parts of real estate investing that has a lot to do with credit repair like Lease Options, Subject To deals, and owner financing. These are sometimes referred to creative real estate investing. The people we put in these deals cannot get a loan today, but they are not deadbeats. Now there are deadbeats out there, around 20-25% of the population, and since only about 20% of population can get a new loan today, half the people in the middle need help. There are many real estate investors who cater to those people and help them buy a house using the creative terms mentioned. Its done in other industries like buy here, pay here car lots, and rent-a-center for electronics and furniture. These people just need a little help and you can either offer it for them, to them, or ignore it. If you ignore it, they will also. Unfortunately its human nature, but when we offer help with financing to people who need help, we have to help them. I guess if they did things on their own, they wouldn’t be in the mess they are in. Investors can refer them to mortgage brokers and credit repair companies and let those people do all the work, and that is what many real estate investors do, especially the part timers or cherry pickers. But for the full time investors who run this as a business we can be a part of it. Here is a nugget of information that I picked up from Lou’s presentation, and you can get nuggets from information from almost all presentations, even with sales involved. That nugget was “monetize your leads” mainly the ones you may not use. A lot of us throw away our extra leads, the ones that aren’t immediate. For those generating Buyer leads, you are going to get a lot of responses from people who need credit repair. You can either monetize them or trash them. The same applies to sellers, some of us use marketing to generate leads from sellers. Some of them will not be motivated and most investors just throw them away. But you could refer them to a Realtor, if your licenses also you could get a referral fee. If not you could be building a good relationship. If a Realtor gets a few listing from the leads, and then later had a closing fall apart and they need an investor to step in and close the deal, they will probably contact you.

One more thing about pressuring people, when you generate leads, people are contacting us. We offer them a solution. They don’t have to take it. FES has been in Business for 12 years and has an A+ rating with the Better Business Bureau. If they were predatory they would more than likely have an F rating, especially after 12 years. Now an A+ rating and only 1-2 years in business is not as comforting because they are so new. But keeping an A+ for 5 years, or even 10 years or more, is good for any company.

Now FES and credit repair is not for everyone, its no different when our Speaker is a Judge going over the eviction process. Its not for wholesalers and rehabbers since they don't have tenants and evictions. Some of our topics are more general and some more specific. The real value for any REIA is meeting the other local investors in person, meeting the other local pros like Realtors, lenders, attorneys, contractors, and more. Friendships are formed and its nice to pick up a phone and talk to a local investor when you have a state or city specific issue or just to go over a deal or neighborhood.

I just closed on my best sub2 deal since I started doing them in the 1990s.  Most of them have 20+ years remaining on the loan but this last one was 10 years into a 15 year mortgage. It needed about $6K in paint and carpet, other misc. repairs/improvements like the outside AC unit was stolen, and it was just major nasty.  It was $1200 behind on payments and is a decent (structural) 3 bedroom 1 bath and 2 car garage with already updated windows and doors.

I already have rentals in this neighborhood so I am just going to keep it as a rental.

But the great points are $22,000 balance, 5 years 9 months left of a $400 payment. I already have a tenant lined up that wants it for $695/month in rent. I closed on it in late January and had to get the previous tenant hoarder out (6 weeks) and 2 40yard dumpsters of trash, paid $1600 in payments ($1200 back, $400 current) and about halfway done on mini rehab since I had to get the tenants out to start. I finally got it to the "time to exterminate" stage because it still has thousands of roaches remaining, which is less than the tens of thousands that it started with. Phase 1 of the exterminator starts on Monday and will continue with phase 2 and 3 over the next month. All thats left of the mini rehab is paint, flooring, mini blinds, and AC condenser. I should have it done before the end of the month so the new tenant can move in.

"when it comes to the assignment clause.... Is this something that is often frowned upon?"

It can be, it all really depends on the people you are dealing with. Even though the seller agrees to a price with you, if they see you make money assigning the contract, some people, as a seller, may not like that. They will see you as a middleman in the deal. Also some sellers will not care. They got the price they contracted with you and they are happy it closed, even if with someone else. It all depends on the type of person the seller is, as to how the seller will feel about the deal.

Also when the seller is a bank, or in probate, or with attorneys involved, or some Realtors, or any other traditional person in the deal, they might frown on the assignment. Example: they make a deal with a person who wants to assign it, and it never gets assigned and then never closes, the seller feels like they were given the run around because the deal fell through. And unfortunately, there are several investors who have not been able to assign the contract and didn't close the deal anyway. They used a weasel clause to get out of the contract and people frown on that. Many traditional sellers or pros don't want to take that chance and will frown on assignments.

With that being said, you should have a plan to close the deal if you can't assign it. If you use the weasel clause too many times you will get a reputation in your town as someone who can't close. Now with that being said, make sure you have a good deal to start with. Most newbies who try to wholesale miss out on many of the other expenses involved in buying and selling a house. What they think is a good deal, is really "not a good deal". That is the most common reason they can't wholesale it, and if its a marginal or thin deal, you may not want to close on it yourself. Remember the main objective of wholesaling, finding a good deal that other investors will drool over and want it! If other investors don't drool over it and want it, its probably not a good deal. Some wholesalers get greedy and don't leave enough room in the deal, but some just don't realize it at first.

Your next question "and so I have to make sure to have a contract with the buyer, dictating the when's and how's, prior to assigning the original seller's contract?"

Not really, when you assign the contract to a new buyer, the assignment itself will dictate the terms. The assignment is the agreement and it can be called an "assignment agreement" by some people and other names by others. But the assignment itself will say when you get the fee such as: all up front, some upfront and some at closing, or all at closing. It will also state what happens if the closing falls through, and what to do on "why it didn't close" such as the original sellers fault, the new buyer's (assigned to) fault, the title or properties fault, etc...

But really what you need is a good wholesale course and they are many available. Most courses will have the paperwork and most common scenarios that you will run into. I am not recommending any course per BP rules but even when you get a good course, you will still have many questions in the beginning so networking and BP is a great place to get your questions answered.

Think of it as college, there are ivy league universities, private universities, state universities, and even community colleges at the county or city level. Most all will give you a good education. Many people try the "Good Will Hunting" approach: [“You wasted $150,000 on an education you coulda got for $1.50 in late fees at the public library.” ? Matt Damon in Good Will Hunting] but what many people don't realize, he spent as many hours reading books and the students at the university spent in class.

OK, I'll stop rambling on...