All Forum Posts by: Jonathan Marcus

I disagree with @John Larson about using the MLS to locate deals. He is right, in the sense that you don't find good deals because good or great deals are created not found. But, the MLS is a great platform you can use to identify properties and create good deals for yourself.

Before I had my RE license, I had my realtor pulled for me Vacant, Expired listings. These listings are usually overpriced which is why they did not sell. I then approached the owners directly via my direct mail (post card or letter) marketing campaign. I like direct mail because I only speak to sellers who are ready to deal instead of me making cold calls. Very few investors use this tactic and I don't know why. I have gotten deals using this strategy.       

When you wholesale (the right way) you're putting the property under contract then reselling that contract to another investor. You are correct that you have to disclose to the sellers that you hold a real estate license and indicate that in the contract. When you sell the contract, you don't get a commission but rather your profit (you can further check with your accountant or attorney) therefore your Broker has no right to get a cut of it. 

Now if the property you're wholesaling is listed and you're trying to wear both the Realtor hat and wholesaler/investor hat, there will be commission paid out when it ultimately closes. If you're the buyer's realtor (buyer is your entity) any commission you make your Broker gets a cut.

I personally avoid wearing both investor & realtor hat if there is a property I like for myself whether to wholesale or buy/fix/sell when buying. Especially if it's listed, I get the cooperation of the listing agent because they know they get to keep the entire commission.        

The best thing to do in this case is to find a private lender who can give you the rehab funds you need. You can secure the lender with a lien on the property (1st or 2nd). If it's a 2nd lien position you would have to pay a higher interest on the note compared if it's in 1st position; for example 10% interest if its on 1st and 15% if its on 2nd. You negotiate this with the private lender. The key to making your investment attractive to any lender is keeping the CLTV (Combined Loan to Value ratio) low, say no more than 70% (if house is worth $100k, all loans totals no more than $70k).

Good luck.    

I first heard the 70% rule (really more of a guide) from Ron LeGrand back in the late 90's when I started investing. The reason you do it is because that 30% buffer covers most of your costs such as Purchase Costs (3% budget to cover initial acquisition cost, brokerage fees & closing cost), Holding Costs (3% budget to cover monthly property expenditures while you're doing rehab), Sales Costs (6% commission when selling) , Miscellaneous Cost (3% unanticipated expenses) and of course, your Profit (15% or more if you have any left over from your cost budget. 

Now, if you do it in reverse, on your $100k example don't look at it as a $6k differential but rather 6% based on the ARV. When you start rehabbing higher priced properties, like where I am in Northern NJ/NYC, that 6% could be very significant.

I only use this napkin calculation in the very beginning on my first conversation over the phone with the seller to determine if it's worth my time and go see the property (first filter so to speak). If and when I do visit the property then I break down all my cost. 

Hope this sheds some light on your question. Good luck.    

I've done something similar. What I did is sent an invoice to the Title company handling the closing. The invoice is a payoff statement much like a mortgage payoff on the property. The Buyer's lender is really only concerned about the buyer's side, as long as, the buyer's purchase price, down payment, appraisal doesn't change the buyer's lender doesn't really care how the funds are split up on seller side. Speak to the Title company handling the closing and they should be able to guide you through it.     

Congratulations, you got to the next step. My suggestion when you meet with him is to hear him out. Find out exactly what the problem is and the outcome he desires. In this business, you get paid to solve people's real estate problems. Don't go into the meeting with a predetermined acquisition strategy. You won't know what strategy to use until you know all the facts about the property.  

@Jarvis Frazier you can wholesale/assign properties on the MLS (active listing) but I wouldn't suggest it for someone starting out. What I will suggest is have your Realtor pull expired MLS listings that are vacant and need work. You can then approach these sellers and see if you can strike a deal, since most investors stay away from these sellers because their property was on the MLS; competition should be light.

There are a number great multifamily expert contributors here like @Michael Blank & @Joe Fairless. Working for M&M is good but at the end of the day they're Brokers not investors. Build your network using M&M but I would suggest begin acquiring properties. 

Maybe try to eliminate Hard money from the scenario. If you can control the property with an Option agreement with the right to renovate the property, even use the cost to renovate as your consideration. Then to fund the renovation use a private lender (tricky part is how to secure the private lender). Once the property is renovated then you exercise your option to buy and now the house can qualify even for FHA financing.

First, run some projections on the income potential of a brand new 8 unit building. Then, 
speak with an architect, commercial lender and a General contractor because you need to get an idea of the cost to build the new structure (price per Sq/ft) and determine your soft costs and hard cost. Once you have the info only then should you decide if you want to move forward with it or not.