All Forum Posts by: Jeff Rappaport

@David Marwil, first of all, it is truly only my opinion!  I have not looked at any statistics that would make me think one way or the other.  However, as a real estate investor I am looking for a couple of different things.  First, if I am looking to wholesale properties or rehab properties I want to know there will be buyers for me to sell to.  I have not done any single family homes in Idaho Falls but have been told by a couple of investors and realtors that the single family home market is a bit slow.  I have worked in Pocatello quite a bit and found that to be a similar situation.  

Second, if I am looking for buy and hold or to wholesale income properties I want to know about the rental market.  Where is the vacancy rate?  Are the rents rising, dropping or staying stable?  Are there new businesses moving into the area creating jobs thus creating a need for housing?  Again, I have not looked into these factors but I would if I was doing a lot of business in your area.  I wholesaled a couple of multi-family properties in Idaho Falls last year and earlier this year.  What I noticed is there was quite a bit of vacancy around these properties.  I also noticed that many of the properties were distressed in that no one was taking care of them.  

I had no problem moving the properties I had but my potential buyers raised a number of concerns regarding the market.  Most of the buyers I have wholesaled income properties to in Idaho do not live there.  The reason I was interested and they were is that the cap rates, return on investment and cash flow were significantly higher in Idaho than in the areas they were from.  

So, my suggestion would be that if you are looking to wholesale or rehab in Idaho Falls that you find your buyers first so you know that you have someone to sell these properties to once you put them under contract or rehab them.  As far as buy and hold I would just want to make sure that the vacancy rates were low and the rents are either stable or on the rise.  If there is a lot to choose from in terms of rentals why will tenants choose your place?  

Lastly, I would tell you that a savy investor can make money in any market.  That does not mean every strategy is a good one!  You need to know your market and what is working to make sure you are safe!  I certainly did not mean any offense by the prior remarks I made.  I can tell you I did about 20 or so properties in Pocatello over a 8 month period of time but I am not currently looking for properties there now.  The market is always changing.  You must adapt to the market or change markets to what works for you!

By the way, I have never been to Pocatello or Idaho Falls!

@Edward Payne When you are wholesaling a property you have agreed to a contract with the seller.  In that contract you have agreed to put up some earnest money.  That may range from as little as $10-$100 to $500-$1000 or more.  That is the money you are at risk of losing if you allow your due diliegence or contingencies in the contract to lapse and you do not perform on the contract.  When I am now getting a contract (Assignment or another purchase agreement depending on my exit strategy) from my new buyer I want them to put up a non-refunable earnest money deposit.  Now if they don't close on the contract I get their deposit.  So, it makes sense to collect considerably more than what I have at risk.  For example, if I put up a $1,000 em on a property I would collect $3-$5,000 non-refundable em from my buyer.  

One other note to be aware of:  The closing date for your buyer should be as soon as possible and have nothing to do with the closing date with your seller.  For example, if I offered the seller to close within 30 days or less from the signing of the contract and I found a buyer on day two I would immediately ask how fast could they close.  Typically, a week is plenty of time to close on a property that is around median price range of that area.  Bigger projects may take a a little longer.  However, I want my buyer to close as soon as possible.  If there is a problem with the closing I still have time to either get it worked out or find a new buyer for the property.  Never let the buyer close on the same time frame as you have with the seller.

@Edward Payne, Wow!  I am amazed at some advice that other investors give on this forum.  I firmly disagree with @Chris Grenier on his advice to you.  Here is what I actually do in two states:

First, find out what buyers are paying for rehabs. In utah and Idaho I find that rehabbers will pay about 80% of ARV minus repairs. The formula of ARV x .70 minus repairs = MAO (Maximum allowable offer) still applies but needs to be tweaked depending on the market. Most markets are hot right now and rehabbers will pay more. You also will be able to offer more to the sellers so you will have a better chance of getting more offers accepted.

Now that offer does not include your fee. So you should be offering less than the MAO. The minimum fee I try to get on every deal is $10K.

I am not a fan of writing your name or entity as the buyer and adding "and or assigns" to it.  I use a REPC that makes it clear that the contract is assignable.  I also create an addendum which includes again that the contract is assignable.  I have a few disclosures that I include in every agreement stating I am a "for profit" company and I will either buy and fix this property, buy and hold it or sell it quickly for a profit.  Not once have I ever been told "no" because I had an assignment of contract clause in my REPC.  

As far as earnest money goes, it is up to you and the seller to agree what that should be.  If you don't have the money for a significant earnest money deposit just put in the agreement that the deposit will be made with the Title Company within 7 business days.  If you find a buyer by then have them deposit the earnest money with the Title Company.  Always make sure to collect significantly more from your buyer than what you have agreed to give to the seller. 

Once I have a purchase agreement on the property I go and order a title check.  You can wait on this step until you find a buyer but I get it done right away.  That way I know if there are any issues on title I need to deal with.  

Once I find a buyer I send them an Assignment of Contract document.  It states what I am charging for this Assignment (if it is a fairly significant fee you may want to consider doing a double close).  They sign the Assignment and deposit a non-refundable earnest money deposit with the Title Company.  I send the buyer the original contract and set them up to work with the Title Company.  I send the Assignment and the original Purchase Agreement to Title with the names and phone numbers of both my Buyer and Seller.  

I let the Title Company know I want the closings to be separate and that I do not want the seller to see the Buyer's side of the HUD1.  I don't want the seller to know what I made on this deal.  Send your wiring instructions or set up a time to pick up your check after the deal has funded and recorded.  I suggest you don't even go to closing!  

Don't get me wrong, you have to manage this whole process.  You need to know the Title Company knows what they are doing.  You need to instruct the buyer and seller to do what they need to do or else nothing ever gets done.  

Hope that helps!

@Jonathan Larson, Absolutely!  This will be a great way to get started!

The UTREIA has asked me to speak about vacant houses and how I use them in my business.  I will show you how we find them, what we are looking for and how to track down the owner.  I am always eager to share my knowledge and experience and looking forward to meeting some new investors.  If you have never been to a UTREIA meeting before it is free!  Otherwise there is a fee or a membership is required.  Either way it will be worthwhile for you to attend.  Meeting starts at 6:30 at the Ran Life Real Estate building in Sandy.  Hope to see you all of you there!

Jeff Rappaport

@Quintin Mortensen I am not sure which one would be considered best! They all have thier own way of doing things. However, you have a ton of choices in the SLC area. You have SLREIA, UTREIA and Utah Valley REIA. They all have a fee to join It is nominal and the presentations are normally informative and a great place to network. Keep in mind many of the REIAs also offer free luncheons you can attend throughout the month.

There are also MEETUP groups that meet throughout the month.  I have organized a BP Meetup that meets the first Thursday of the month for the last 6 months.  Nothing planned just strictly networking with other investors.  

Bottom line is that you should be getting to a lot of these meetings and check them out.  You decide which best fits your needs.  I can guarantee you this - you will certainly be able to network by attending.  

If you have any other questions PM me and we can discuss.

@Jace Thornton I would be happy to help you with some direction. There are also a ton of REIA and Meetup groups you can attend that will help you with content and networking. PM me and we will set up a time to chat.

@Account Closed I know the big thing is to build your buyers list before you get a deal. However, you don't have any idea whether that buyer is for real! They are telling you what they want but may not have the money to do it. Maybe they are new investors telling you what you want to hear. You are certainly right! A good deal will get you paid! If it is truly a good deal investors will flock to you. Go to your local REIA meetings and Meetups. Call the We Buy Houses bandit signs and online ads. If the deal is a good one you will not only get the property sold but you will build that buyers list very quickly! Awesome job and good luck!

@Jason Rivera I am not sure your company would like it very much if you started negotiating with clients about their homes.  However, I am sure it would not be an issue if you told the seller that you may have a solution for them and referred them to another investor.  That way you could be paid some type of commission or finders fee and the investor could structure the deal and get it sold.  

You would also get some free training out of the scenario since you would be privy to how the deal is structured and eventually sold to another investor or owner occupant.  It actually is a great way to get going in real estate and learn the ropes of wholesaling.  

I tell new real estate investors all the time to focus on one particular area and become great at it!  If you can find good deals, buyers or money you can make a very good living in this industry.  I think too many new investors want to try and learn everything (there is a lot to learn) and put it all together.  If you become consistent at any one of those three things you will make money.  

Would be happy to talk to you more about it if you are interested.  Just pm me and we can talk in detail.  Good luck!

Are you having trouble negotiating with sellers? Having trouble getting an agreement signed? What are you saying to the seller when he/she says "I have to think about it" or "I am not going to give my house away?" Tonight you can learn from several successful investors on how they negotiate with sellers and answer their objections. Negotiating the right way can explode your business! Negotiate the wrong way and you will be wondering why you can't seem to get the deal! Join us tonight (Thursday, April 14th) for the Wholesale Meetup at 7:15 pm. The cost is free! Make sure you check out our new location - Thai Siam 12147 S. Factory Outlet Dr. in Draper. You will not want to miss out on this opportunity! Hope to see you there!