All Forum Posts by: Jason S.

Let's say the blogger form Colorado is correct - he stipulates:

* The investor MUST make a FULL DISCLOSURE of the intent to make a profit off of the immediate re-selling of the home – to both the BANK and to the SELLER.
* The investor CANNOT have a simultaneous close – meaning: The home must belong to the Investor for a period of time before being resold to another Buyer, even if it is only for just 24 hours.
* The investor MUST have WET (available) FUNDS to purchase the home even WITHOUT a new buyer. Basically, each deal should be able to stand alone.

That's very easy for most to comply with. If you do not have enough personal cash to be able to borrow hard just in case your flip does not go as planned - then do 2 flips with someone else and voila you will have enough money.

It just takes 10% and you can line up some HML to back you just in case. As for holding for 24 hours.... hold for 48 and pay a little more to the transactional funder.

As for disclosure - well if you are not already fully disclosing to all parties then you are "crazy". Disclose! Disclose! Disclose!

And, for the record..... How is it that these multi billion dollar quasi public/private institutions like FREDDIE cannot figure out how to protect themselves against the little investor doing a flip? Is it really possible that they are not able to conduct a transaction where they know the true value of the property? Are they really claiming that we are smarter than they? Sorry for the rant - but really - the institutions are more than capable of protecting themselves without crying fraud at every turn. There are a dozen ways they could ensure they are protected ... the reality is that they want cash offers that will close in 15 days and they want the guy who is paying cash to pay full retail price as if they were financing the deal...... What B school did they attend? A friend of mine works with cars - he buys with cash at auction then re-sells to finance (payment) buyers at a higher price - this is how our economy works. A wholesaler works/creates a deal and then sells to a retail buyer for a spread - how is this fraud?

OK I am done. No more espresso for me.

Memphis is very tricky. I strongly suggest you talk it over with experts who specialize in Memphis. I have found several homes that I thought were deals in Memphis and after checking them out with local experts have decided not to buy.

When in doubt - go to those that specialize.

James - while this may be true - the bank still has a better/stronger position with a deed in lieu than without it.
With a deed in lieu they can sell the note for more or they can leave the person in for as long as they want, negotiate an immediate leaseback, there are many things they can do.
It simply makes their position stronger. Without extra expense of foreclosure. Now they own a property with a non-paying occupant, before they simply had a non-performing loan but had to dish out extra money to actually own it. Add this to the fact that once they have the DIL they do not have to worry about forensic audits, predatory lending lawsuits etc - and while these may not be very common or successful - the DIL makes it one less potential risk.

Last thing, A lender can now pull together a package of 1000+ homes, lease them out with property management, and re-sell the package to secondary investors on wall street that are buying cash flow (with potential capital gain over the next decade)- never know this may be the strategy! I have not run the numbers but this may well be a profitable strategy as these investors will likely accept a cap rate that is market driven if the risk is spread out wide enough - thus making the value of the packaged asset worth more than the sum of each if they were sold one by one.

As a disclaimer -I am just typing this out this morning and have not run the numbers - so my little theory may not pencil out.

I know it is a lot to ask but anyone out there know the Bakersfield market? I am having a tough time reconciling conflicting information between current comps, listings, etc. so I need someone local.

I do not want to post the address as this is a short sale and anything you put in this forum shows up on Google and I do not want that in respect for the homeowners privacy.

If you know the area let me know and PM me - it's in 93314 -

I finally read the Realtor's link.

It amazes me how the Realtor feels the investor is trying to skim money out of the deal - what does he think Realtor's do to every transaction?

Investors are moving product with cash from a wholesale seller (the lender) into the marketplace to a retail usually financed buyer. With extra value added in negotiating with the lender. That is what we call capitalism Comrade Realtor.

One last thing to add - Realtor's are always acting on the high road like they are special - they skim from every deal with the threat of enforcement of law behind them (read the CA civil code 1695) and now they have their fingers in the negotiation with enforcement by law.

Yet Realtor's call me everyday wanting me to buy as long as they get to re-list for a full 6% on the re-sale. Great ethics. (by the way we used to re-list with the same Realtor but no longer do so in order to keep everything "arms length")

Curt,

I think we are being a little hard on you for the "courting" of your investors. I did a little research on Memphis one time (I thought 18 homes for $18,000 each sounded great until I realized they were worth $5,000) and realized that the treatment of your clients is standard practice in that so many are bringing investors in from out of town - like California etc. In fact one guy I was referred to invited me to stay at his house. I can also see why you felt more attached to your buyers than some others - because your buyers are ones that you start from A-Z, from knowing nothing all the way through their first deal and on to their 10th deal. I have met several people who with $500 and good credit have been hand held by one of your Memphis competitors , actually it may be you for all I know, into buying 5+ homes and all are rented and cash flowing. They are very happy.

Anyhow just thought I would chime in as a 3rd party to show that this sort of treatment is very commonly practiced in the Memphis market and by many of the players of all sizes.

What a great thread for a reality check.

As has been said a new wholesaler certainly needs a day job - because you are not going to make any money for months - and in fact you may spend some -even if it is just gas money.

If you are new - find a person that is willing to talk to you - OK let's call it an investor/buyer/mentor. I spoke with a wholesaler a couple days ago, gave her a list of NOD's & NTS in her zip code (I am buying short sales), I am going to give her a box of flyers, and she is going to pass them out and also get back to me on which ones were vacant - so we can track those owners down. Is she a wholesaler? or someone that is willing to take action? Not really a wholesaler in this instance but if anything comes of the marketing she will be a party to the transaction and learn A LOT in the process. And if nothing comes of it and she was willing to put in the effort - then I will certainly point her in additional directions and work with her.

I use this as an example to wholesalers - if you know very little - then ask yourself - what can I offer when I get off work? Maybe you can track foreclosure sales - these days things are more automated but years ago it would have been great to have someone update my foreclosure list daily by calling the trustee sales lines.

I guess what I am getting at is if you are new - you are not really a "wholesaler". You are someone that wants to learn the business - that means you bring nothing to the table except your effort. Find someone that is willing to channel that effort into productivity and you may get a couple transactions in the works and start learning.

or - become a Realtor.

I do not think it is a game changing tool because it offers nothing more than a smart phone, iTouch, or lap top / web book with wireless card can get us already. Yes it is a nice tool but not a game changer.

I would be interested in what people believe could be a game changer.

I certainly did not aim my "skirt the law" at you jawsette and I apologize if you took it as such.

And I am no expert in the EPA regulation. But I did not think you could test it yourself. I really recall the regulation stating that the test had to be done by an EPA licensed "certified renovator" according to § 745.82 and that "certified renovator is defined in § 745.89 .

I am not here for a debate or fight I am just going by how I remember everything and certainly do not feel like reading the whole regulation again this late at night.

When I said "pretty much all of the time" I was stating that in some way you must document compliance in any pre-1978 home. Unless you are a homeowner doing the work yourself. But if you hire someone then I recall that it was necessary to document the exception to the regulation.

But whatever, if a lab can get you off the hook, then where do I find a lab?

With the law you have to have an EPA licensed certified person do that lead test.

You ask what are we doing with the rule? Hiring a certified person if/when the law requires. Which by the way is pretty much all of the time.

The best part of the law . . . . any citizen has "standing". So any "do gooder" can sue you if you are not in compliance. So I would not try to skirt the law.