All Forum Posts by: Joshua Durrin

@Nick Sandt 

Regarding the proof of funds, generally a simultaneous close will require certified funds (written verification that the cash is safe and secure for the transaction).  You could accomplish that by depositing the full amount into the transaction escrow account, but generally folks are pretty tight with their cash unless the trade is made in hand (hand over cash and get the keys in the same instant).  You'll have to work with your title/escrow company.  Most importantly, BE HONEST, don't try to hide anything or pull a fast one... you will be caught and you'll damage your reputation and burn the bridge.  You've heard... "don't bite the hand that feeds you."  Well, your partners (title company, investors, sellers, lawyers, agents, etc) are trusting you to keep your word in the transaction.  If there is a longevity requirement for the money, ask your title rep or lender up front and then get creative as necessary to meet the requirements of the deal.  No one likes surprises in these kinds of deals.  You're better off just laying the cards out on the table (in front of the right audience of course).

@Nick Sandt Seasoning is a term that refers to the 90 day requirement mentioned by @William Cunningham  and @Tom S., but moreso has to do with the stability of the title.  It's tough for lenders to protect themselves from pending liens that haven't recorded at the time the property is put under contract.  Seasoning, with regard to title, enables the county and/or state to process any pending liens within a reasonable timeframe and give the lenders/buyers more confidence that the title report is more likely to be accurate at the time of closing.  There are insurances for these types of things, but unless you get the most comprehensive all-inclusive insurance (costly) then there is still some level of risk the lender/buyer has to accept.  Seasoning helps them reduce that risk. 

A simultaneous close is probably one of the easiest ways to wholesale because the seller and your buyer never have to meet.  The deals are between you, the wholesaler, and the two of them.  You're closing with the bank, not your buyer.  Your buyer is closing with you. There is no seasoning of title required (usually) because there isn't any financing requirement... and thus no new lender looking for seasoning.  

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Thanks Nathan.  That certainly makes sense.  I don't have much experience in investing in real estate as of yet.  I'm just starting out.  But I can definitely appreciate that the variability is in the approximation of rehab costs as each investor would put their own unique perspective in on that piece of the deal.  The remainder appears to be more formulated from the sounds of it (not that a formula is the end-all be-all). 

My understanding with a wholesale deal is that it's much more streamlined and less prone to hang ups in closing when it's presented as an all-cash deal. My plan is to target the 70% ARV (minus repair costs, fixed costs, and my wholesaler's fee). However, I'm curious first of all if 70% ARV, being a rule of thumb, is actually a "good deal" or not to most investors. Secondly, I'm curious if the primary deal (with the seller, not the investor) has to be structured as all cash or not or if I can structure it as subject-to and cash for the difference for instance. Seems to me that the best deals to an investor are the ones where cash isn't transacted, but rather financing is leveraged. Thirdly, what kind of closing period would be typical? Retail markets typically target 30-45 days. That's usually to secure financing and address contingency inspections. Investors, I assume, do their same due diligence inspections but would typically close much more quickly due to having the cash (and a network of relevant inspectors available), no?

Thanks for the insights J Martin. I appreciate your feedback. Great point on the scalability of the costs too. 

Hi there,

I'm looking to do some wholesaling in the east bay. However, when one considers the discount on the property after applying the 70% ARV rule of thumb, that's a pretty sizable chunk of money in this inflated market. Given a retail value of $600k, 30% discount on that is $180k. Is that still a reasonable discount or is the rule of thumb to be adjusted for higher ARV properties?

My understanding is that the rule of thumb is typical on a ~$160k property, thus equating to about a $48k profit margin.  Naturally, $180k is far different than $48k.  One can also argue that the risk is greater with a $600k house versus a $160k house.  But does that alone justify the huge margin in comparison? 

Thanks all. 

I'm not necessarily looking to manage a blind pool investment group quite yet.  I do rather enjoy my full time occupation.  But I'm more looking to tap into the market and trying to do so alone is far more difficult than doing so in a pool.  I've chatted with a few friends and colleagues about it as well and have stirred up quite the interest.  However, having brokered a few side deals, I'm aware the process is worthy of "full-time" attention... which I don't have.  So, I'd much prefer a group who time and capital I can leverage just the same as they would leverage mine. 

Thanks for the idea on the meetup.  I'll certainly check it out.  Looking forward to it. 

I'm trying to find a pool of investors in the SF bay area to join.  I've also thought about creating my own with my own network but it is not currently deep enough.  How do I go about finding a blind pool investment group in the areas I'm interested in investing in particularly if investors cannot be solicited publicly?  It seems to be the classic case of "who you know."