All Forum Posts by: James Reynante

Hi Mohammad- I recall seeing one technique used by a real estate investor that allowed him to sell a property without charging interest for property he sold. I'll try to explain how it worked below.

He was selling a parcel of vacant land for $8,000 and offered two different purchase options:

Option 1. Seller Financing - He offer to carry the note for the buyer of his vacant land. It required a $2,000 down payment. The remaining $6,000 was to be paid in monthly installments of $200/mo until paid in full, plus $10/mo for property tax. This was presented as a no-interest arrangement.

Option 2. Cash Purchase. If a buyer could purchase the property with all cash, the seller was offered a discounted price of $5,000 upon closing.

 I hope this makes sense and helps you think of ways to stay involved with real estate investing.

Hi Kenneth- I don't think that there is a "standard practice" for estimating when you are wholesaling. Every investor has a different method for determining repair costs. A lot depends on the estimator's experience, the labor rates for a specific geographic area, variances in materials costs, etc.

For example: when I had plumbers submit bids for re-piping one of my rentals in So Calif, I received estimates that ranged from $10K all the way up to $22K.  I had something similar done in San Antonio and the estimates were a lot less.

I have heard/seen investors use the "square foot method" and they broke it down as follows:

Light rehab = $10 per sq ft

Medium rehab = $14 per sq ft

Heavy rehab = $21 per sq ft

Estimating repairs costs is more art than it is science... plus there is always the potential for finding really serious issues once the rehab has begun.

Hi David- When I first started to build my buyers list, one of the first things I did was attend the local county auction (for tax delinquent properties).  I started introducing myself and networking with other people that were there.  I met some folks like myself (newbies), but I also met a few serious cash buyers.  As I recall 3 or 4 of them gave me their contact info and buying criteria and I have been able to work a total of 7 deals with 2 of them. They are still on my buyers list today!

Hi Troy- Welcome to BP !  Take a look around and you'll find a wealth of helpful info!

After I perform my due diligence on a property, I have been able to use the services from DocuSign and CudaSign to get seller signatures on purchase agreements.

Hi Zac,

I am also located in the So Cal area where median property values for a basic, no-frills 3/2 SFR can be on the high side ($500K+). While it is possible to wholesale in these neighborhoods, I have found that the pool of sellers and buyers tends to be smaller which usually means that there are fewer deals to be had. That's why I turned to virtual wholesaling... so that I can target a market where the median sold price is anywhere from $120k up to $200K (depending on the zip code). I am having much more success with finding motivated sellers and keeping my deal flow going, and then also there seems to be more buyers that can afford $200K vs $500K.

As for the "virtual" aspect, since my target market is out-of-state I rely on working with wholesalers that are located in the target market to get deals finalized and sold. We joint venture where I bring the seller's property, and the local wholesaler can view the property and find an investor/buyer. I have co-wholesaled a few properties using this method. Yes I have to split the profits, but it allows me to make money where I might not have the opportunity otherwise.

When I started virtual wholesaling, I first researched markets that would lend themselves to doing deals.  Personally, I like the southwest states (CA, AZ, CO, NV), plus Texas and Florida. Next, I use "List Service" companies to search for the counties/cities have lots of recently closed sales (last 3-6 mos), and then sort the list by zip code. The zip codes at the top of the list (lots of recent sales) are an indication that buyers want properties in those areas.  

Now that I know where buyers are looking, I start my marketing campaign to find motivated sellers. My VA scrapes FSBO's in the local market Craigslist, plus we send direct mail to homeowners in the hot zip codes that have lots of equity (70% or more). We used to only target absentee owners, but now we target all owners that meet the criteria.

Marketing is crucial and it must be consistent and happen like clockwork.  That is the key to keeping the deal flow going. 

For me, the trick to virtual wholesaling is to market every day for sellers.  You need to get the deal flow consistently going so that your supply of seller's never stops.

When I first started I would look for sellers and then as soon as I had a property under contract, I would stop marketing and instead focus on trying to sell/assign my contract.  BIG MISTAKE! Because after I sold my contract, there were no more deals in my pipeline and I had to start marketing all over again. This made my business have lots of up and downs.

I eventually hired a VA to keep my marketing going on a regular basis.

I have been investing in raw land in AZ, CA, CO, and NV for a while. I have found that I could offer 15% of market value for a piece of land all day long, but there were very few sellers willing to accept. I send out 1000's of direct mail pieces (postcards & blind offers) every month, and my best responses come from offers that are more like 18%-25%. When I offered less than 18%, my ROI was very low... the number of actual deals I could get and then successfully wholesale didn't make a lot of sense for amount of time, energy, and money that I put into marketing, etc.

When investing out-of-area (500+ miles), I also factor in the travel cost that I incur so that I can more accurately calculate my ROI. For example, cost of airfare, hotel (overnight stay), rental car, meals, etc.

I didn't do this earlier in my career and had to learn it the hard way!