All Forum Posts by: John Hamilton

I agree that a potential investor/borrower with "no skin in the game" has virtually no risk, and can walk away if anything seems like a losing situation. But, in essence, this is not a sustainable model for the investor/borrower. Try getting another loan or even purchase a property with that on your record. You'd have to wait 7-10 years to then MAYBE do another deal with an HML. And even then, you're name and reputation will be Mudd.

What I don't get is these HML who demand 10-30% down, up to 19% rate, add 2-5 points for a 6-12 month loan. Some even require a certain FICO score and even a 65% LTC for a 65% ARV. Are you serious? That's just downright highway robbery. That to me is not a sustainable model, unless you get a bunch of fools, because they're so desperate to be an investor, they grab at anything. I think most HML's I've experienced are worse than any wholesaler (believe me, I'm not trying to highjack this thread). There are some good ones, but not nearly enough to offset.

Back to the point of this thread. I, for one, if I was a lender, would feel more comfortable with the borrower having some skin in the game. Potential appreciation or profit is not enough of a cushion, even at 30% ARV. A whole lot of factors come into play. If I did 100% lending, I would be doing my own due diligence on the house to ensure it's a good deal, ensure the rehab is done on-time and in budget, have a buyer lined up, and require 80-85% of the profit. No points and no interest. If the borrower did the rehab, or project managed the rehab, and brought in a buyer, I would renegotiate the profit split. However, what experience do they have in rehabbing? What resources do they have to rehab? What kind of channels do they have for resale?

See where I'm going? I would have to put work into the project to make my money work for me even before the first $ is exchanged and the first nail is hammered. For some lenders, just getting a deal is not enough to secure they will make a profit, but not have to deal with a non-performing property if the borrower defaults.

If you've found a lender that works with you and provides 100% financing, keep them happy as that is your golden egg.

 I disagree with your assessment Bill. There is a 3rd party you forgot to mention, "The actual wholesalers that do perform ethically and do their best to bring an actual deal to the investors". Not everyone is a scammer or unaware. It sounds like you have a vendetta against ALL wholesalers, no matter who they are. Did you get burned?

I did vote for your post because I liked the "It's almost a sport" comment. After reading your post, I wish I could not only take my vote back, but devote beyond that.

I think you may need to get some counseling...seriously. I think wholesalers, bad or good, are here for the duration. Sure, the real bad ones need to be stopped. Would you like to line them up against the wall? Maybe you'd like to add them all to the firing line?

@David Oldenburg Excuse if I go off on a tangent, but want to add some color to the conversation and add my own experience as a wholesaler.

I am from Sacramento ('89-'09) and just started learning about real estate investing Jan of 2010. It seemed everyone and their brother, mother, sister, and uncle were starting wholesaling. 

I learned through one of the gurus in the business (D.G.) and sadly, but not surprisingly, they are all the same. They entice these suckers to invest tens of thousands in their program, give you enough information to be dangerous, and let their students loose on society. Unfortunately, most do not have any clue about real estate, have no money, credit, and may barely have a job. I know some that were even in foreclosure. So it's no surprise that these desperate people are doing what they've been taught as a way to invest in real estate with no money and no credit. It's easy to fall prey for the weary.

I AGREE WHOLEHEARTEDLY that most wholesalers are newbs, some are sharks looking to make an easy buck, and the remainder are quickly sifted out of business before they even get started. That's if they even had a business. Most still live the pipe dream.

In 2015, I started my own real estate investment business (LLC), paid for DM campaigns and other startup business costs and systems, networked with buyers and other wholesalers, and generally looking for any partnership where I'm a vital partner that I could start generating income to build capital to become and investor myself. I do this while working a full-time career. My hope is that I can make enough income to start working for myself.

My reputation is all I have. To me, it's all about building relationships. That's my legacy. It's nice to be successful, make a great income, and continue to work in a business you have a passion for. I've only really started due to having a career and as a contractor (IT PM) moved from State to State since 2010. I decided to plant my feet in Jacksonville, FL, start a business and do something...anything...in real estate. I wanted to start doing fix and flips, but without experience and ten of thousands of $$ available, I couldn't get the funding. I tried for years with family and friends, but to no avail. 

I started looking around the current wholesale deals being presented and constantly SMH at the "offerings", if you could call them that. I thought, how hard can it be to actually find a deal? It's hard, but I am starting to like the challenge. I find a deal, or get one through a wholesale partner, negotiate with the seller at a price that works, then notify all buyers where it fits their criteria. My goal is simple. 70% ARV minus rehab = MAO. Of course, there are other costs (closing, holding, selling) and impacts (rents, comps, taxes) that could affect a sale. Not to mention location, location, location.

Then, there is knowing your market. This, above all else, a wholesaler SHOULD know. Absolutely! What is trending? What is going to attract buyers to buy YOUR deals? Do you have a vast list of buyers to sell full rehabs to turn key? 

I think it's easy to spot a newbie by talking to them on the phone. Even before you look at any offers, especially if they're new to you. Once you have some warm and fuzzies, look at their deal. DO YOUR OWN DUE DILIGENCE! This is key for any buyer or investor. Never take anything at face value. Always do your own homework. Even as a wholesaler, I cannot just take the word of a seller that the rehab is only cosmetic, or the title is clear, or there is no mortgage or liens. I have to do that work myself before I even attempt to pass it along. Not to mention if it's truly off-market if getting it from another wholesaler.

I hope this helped the understanding of where these wholesalers are coming from and what their motivation and mindset is. It's not pretty and it's no always smooth sailing, but there are those that take it very serious. Like someone mentioned earlier, having these people on your team are priceless. Here is to all you investors who still have faith to find the diamond in the rough.

This is in Jacksonville, FL and is off-market.

Hi @Bruce CoullietteI'd be glad to meet up with you and see how I can help with your investing goals in Jacksonville. I'm a wholesaler and in a fix and flip partnership.

I'm available after work (5 pm) andy day of the week and anytime during the Holidays.

@Nat C. I would make sure your friend is absolutely on-board with him BUYING the property AS-IS AND whatever decision you make for closing (double clutch, buy and resell). You can add a little extra on top to get something out of it for your trouble. Be up front and tell your friend this. You are taking risks buying something you don't want to buy.

Also, he would need to make up for what you spent on closing, so add that to the asking price. You don't have to inform your friend, unless he asks, or unless you want to.

 Hi Hannah,

Welcome to the world of wholesaling and/or being a Realtor. The two don't really mix well, unless you are a principal and acting as an investor, not a realtor in wholesale deals.

Check your laws and statutes on doing deals "on behalf of others or sellers". Some States are cracking down on wholesaling real estate, though there are legal and ethical ways around it. Just perform ethically and legally and you will be OK. For the most part, you can't advertise a property, but can advertise an assignable contract to your buyers. If you have no buyers and you market publicly, you may get a Cease and Desist order from the State. You could also be fined and or imprisoned, though, highly unlikely if you are acting up-front and within the legal parameters for your State. I would consult and pay for a RE lawyer to get your contracts in order. You want to be able to stand up in court, if being sued, and able to defend your position.

Most Realtors don't understand investors, especially wholesalers. Most don't like them only because of the nature of the deals they're trying to get...pennies on the dollar or low ball offers. You're best bet is FSBOs, marketing direct mail, or driving looking for the worst house on the street (called driving for dollars). Foreclosures and REOs, and most on the MLS, you should stay away from, until you're more experienced.

If you have any questions, let me know in PM.

@Athol Dickson that's my last comment

@athol dickson 

I'm a Jacksonville local and involved in Real estate partnerships with a fix and flip and some wholesale deals. I'd like to provide a competitive lender resource to my buyers, if needed.

I also am seeking funding for any upcoming fix and flips that I don my own or with other partners. I would love to get your lending details once you've set up shop.

My contact info is in my signature and profile page. Feel free to PM anytime.