All Forum Posts by: Kole Kingslien

Hello BP community,

I am posting this thread to gather information on Seller Financing transactions! I am looking to gain as much information and education now, so I can prepare for this possible scenario. I am looking to gain information about the following concerns:

• My first concern with setting up a Seller Financing deal, is the tax implications that this would trigger. I have never been on the selling end of a real estate transaction but I know that most of the time there is a hefty tax bill on the sellers behalf. In a Seller Financed transaction, what can the sellers expect to pay in taxes, and when will these be due? Will they be able to spread them out? I am really not familiar with this at all, so if you guys have as much detailed insight on the process, that would be great!

• Is there anything that changes here if they were asked to carry part of the note, furthermore, would a bank require a down payment on a partial note? How difficult is this to set up?

• What kinds of contracts will need to be written up, who will they be written up by, and how much will it likely cost? These will probably be residential properties from 1-4 units to start off with.

• Should the seller use a mortgage loan originator? I don't even really know what this means or what they do, I heard it discussed briefly on podcast 123 with Justin Escajeda. What are costs here?

If anyone has any insight to the details of this process, I would be very grateful, thanks all! 

Hello BP community!

I am post this thread in hopes to get some helpful insight on the Wholesaling details! My goal with Wholesaling is to raise capital, to fund my buy and hold purchases. I am familiar with the wholesaling concept, and generally how it works. I have already sent out a marketing campaign, and am ready to give it my best shot. I understand that Wholesaling is not easy, but I know it can produce some of the best leads. The following are some areas that I am a little confused about:

• Most of the incoming call scripts I have viewed, always include lines like " If I were to offer you cash, and I can close next Friday, what is the bottom offer you would accept?" or " We are a company that buys houses all around in your area for cash". I understand that these statements puts us in a position of power, building our credibility, and cash buying power, however my concern lies with the fact that I can do not have the power to purchase a property for all cash, as I am on a budget; I also do not buy houses all around the area yet. I have a small amount of money saved up for a reserve on my currant buy and hold (about $4,000), and I have a small amount in my savings that I plan on using towards Yellow Letter Marketing. Can I/Should I still make these statements that every script I come across is including? Is there anyone out there who can elaborate on these concerns a little bit?

• I am also curious about what contract I should use; Should I use a purchase with the option to assign? Are there any legal implications I should worry about?

• If/when it works out, and I get a Wholesaling check, how do I file taxes on this income, I am very confused about this, so feel free to spell it out!

• Should I expect to give sellers an earnest money deposit? If I do, where does this check go, and how do I proceed with the entire wholesaling process after I have an accepted contract?

• Phone calls: How do you guys screen for motivation (I don't want to look at 50 houses a month)? What are some common things you say, or some objections you have to face? I have watched a lot of YouTube videos, and read a lot of scripts, and most people are saying things like "Before seeing the property, we would have to be in the ballpark of X purchase price, if that's a number you could work with, I would be interested in scheduling a time to look at your property", they usually ask this after they've already asked the seller what they want to get for their home. How are they coming up with these numbers, especially if they are answering their calls live, and don't have ARV comps sitting in front of them?

I know a lot of people hate the script idea, but I think it really helps beginners to keep on track, and remember what information to ask, along with helping with confidence in the beginning. 

• I know the double closing idea is favored by a lot of people, because there is little legal controversy, since you are taking title on the property, however, in this case you would actually need the cash to close, correct?

• I want to make sure the seller is prepared for what to expect in this process, does anyone know what kind of closing costs, or anything else that both parties can expect, during a Wholesale transaction? 

Hey BP community, you guys have been extraordinarily helpful thus far, and I appreciate all of your help! Once I gain experience, I really look forward to giving back to this community and helping others out there!!!  

@Chris Heeren, 

I understand and agree with not wanting to be leveraged 100% of the ARV; I actually had a conversation with my wife after we got close to the closing date, realizing that we actually payed to much from an investment standpoint, not because of the numbers, but because we lost access to the capital that we put into the property. I really got caught up in the "net-net" cash flow, and the 30% return that I had calculated. I also really wanted to take the leap, and get into something, out of fear of not getting the guts to start! What I would like to now learn and pursue is, trying to buy houses that I can quickly add value to, and then refinance, and pull equity out, to use as another down payment.

What I don't really get is why it would be a bad idea to do more than one or two seller financing deals? If the numbers work well, and I don't need to bring money to the deal, what troubles could I run into? Is it the idea of being leveraged at 100% of the ARV still? If that the case, then I kind of could understand, however, I wouldn't have to be worried about pulling money out, since I could potentially have no money in. One idea I had with seller financing is buying rehabs, adding value, and then refinancing out of the seller financing. This way they could carry the note for a short time, and then get a balloon; In a sense, they would kind of be like a private lender, getting interest only payments, until the refinance occurs.

Also, i'm sure this has been said before, but it seems like it would be impossible to get the numbers needed to wholesale (especially in this market) ! Are yellow letters really that effective? Is it just a matter of being really good at negotiating and helping to fix peoples problems? 

Another thing I ran into is with my realtor. I had a conversation with him about wanting to be aggressive with submitting lower offers, and in doing so, buy more properties. I tried to explain to him that it is just a numbers game to me, and that I am not looking to be a "Shark"; He told me that some investors do it, and end up with bad reputations for doing so. I got the feeling that he was worried about his reputation. In regards to the mls, should I just look for another realtor, till I find one who is on the same page as me? I also do understand that it might be annoying for most realtors, and I am not trying to take advantage of them. I think a fairly easy and quick system could be developed to submit multiple offers, on multiple properties, without it taking up much time or work. Any thoughts? 

@Pete Sailhamer, Thanks for the input! That does make sense, and this is something I have put some thought into! 

@Chris Heeren, Thanks for the information! How do you know which house I bought? The one I bought is %100 move in ready, and it is meeting the 2%, plus I already have a qualified tenant set up, so I thought it would be a good home to jump in on, and get my feet wet. As far as wholesaling goes, that will just be another "tool" I hope to have in my box once I start direct mailing. However, I still am trying to learn the nitty gritty details of this stuff (obviously, since I am on here posting questions:)!). Are there any particular strategies you might suggest for someone in my position? I'm am willing to consider anything; I am at the point where I want to hustle and learn as much as I can! If you think my property is a bad deal, feel free to give some constructive criticism!  I really do appreciate all advice, and definitely have much to learn!

Hey guys,  

I'm a starting investor in southern Wisconsin,  and just closed on my first deal in Beloit Wisconsin. My first deal was fun, the numbers were great,  and I have an excellent tenant. Now that I have my first deal in the books, I am out of money, but I do not want to stop building my portfolio, so I have been looking into some of my options.  I have now decided that I want to do direct mail marketing in order to generate deals that I can buy and hold via seller finance,  or lease option,  or wholesale,  to raise capital for my buy and hold goals.  I have been talking to some people who brought up some concerns,  so I want to see if you guys have some insight.  My questions are:

Do I need any special licence to to wholesale,  or to submit a purchase contract(I heard that you needed a licens in order to submit an offer to purchase)?

Are there any details or legal problems I may not be aware of? 

As they say,  "you don't know what you don't know ", so I'm just looking for some insight from fellow Wisconsinites, who may have done the same type of thing. 

Thanks for the help! 

Would the basic version be fine to start with, or is there some benefit to the other versions?

Awesome Nicholas! Thanks for the help!

So when I create a DBA, I will do it as a sole proprietor? Will this still allow my wife to sign, write, and deposit checks, as well as withdraw funds and pay bills?

Thanks guys, 

This is some very helpful information! Would you guys recommend waiting to use QuickBooks, until I have a few more properties, and does quick books solve the problem of having multiple business accounts? I have heard a lot of mixed opinions about when to start an LLC, or if I even should. I have also heard of people having separate LLCs for each of their properties? This seems pretty complicated and "messy" to me. Wouldn't it be better for simplicity, if everything was operated under one business entity?

The information and you guys have shared is very helpful, Thanks!