All Forum Posts by: Maurice Smith

@David M. My understanding is, its capital gains because the wholesaler is buying and then selling the asset in less than one year. I have been told the same thing.

@Chris Tarashuk Essentially, there are two schools of thought on this, neither is right or wrong. Some say get good deals and the money and buyers will follow. Other say network and build a buyers list and leverage their buy-box to guide you. In my opinion, the latter is more effective and the best way is at your local REIA, platforms like this, and/or using data to identify frequent and recurring buyers. Let me support my perspective. You often here qualify your cash buyers. Well, we pull cash buyer data and analyze the frequency, consistency, and if available the type of money buyers are using and build profiles. After outreach we have a solid idea of which deals will be appealing and work best for various types of buyers. I say all that to say, you can be successful with both approaches. It all depends on your comfort level.

@Jermaine Johnson I agree with @Chris Seveney. Your local REIA is a great place to connect with Cash Buyers, also you can use the filters in Propstream to identify cash buyers in very close proximity to your subject property or in key zip codes. We tend to filter for Corporate owners, then go to the State Secretary's website to get available information and reach out. You can also JV with established wholesalers in the area and sometimes the closing attorney will also know many cash buyers and can facilitate a connection.

@Michael Magee have you ever looked at Subject-To? You could control the asset under the existing finance, take advantage of appreciation, rent for over the mortgage payment, and at an appropriate time, refinance it and take title under your LLC, Trust or other entity of your choosing. Maybe that could work for you.

Hey @Abraham Muniz. Your question is very broad but here are the basics. First, know the laws in your specific market. That's key, because you don't want to skirt that. After you have firm grip on your local laws, you want to find "off-market" deals that you can either assign to an end-buyer or double-close on ultimately selling it to your end-buyer. 

Now you will find differences of opinion on this one, but I'll speak from my own experience. You need a solid cash-buyers list and I recommend you find some before you lock up any deals (preferably). One place you can find them is at your local REIA, the REIA is your friend. Network and find out who is buying and what they are looking for, the greatest benefit is that you start to learn how to look at deals with an investor's eye.

If you want to be successful, get deep discounts, don't inflate ARV, and have a decent understanding of rehab costs. If at all possible get a contractor to walk a property with and give you a good estimate. This will help you structure a good deal with room for your end-buyer to turn a profit.

Another critical part, if not the most for your business, marketing. You need a strong marketing strategy but you will have to build it over time, because marketing at scale takes significant cash. Here's some ideas, word-of-mouth (powerful, costs nothing), social media (mostly free, spend a few dollars on a logo/branding), door-knocking (free, careful where you do this), cold-calling (little-no cost, we scrub against the DNC, respect the law), hand-written notes (cost of paper and ink, place them on doors), direct mail marketing can be very expensive, but we very strategically send letters to certain property owners, which costs us postage and printing supplies. There are other marketing methods that have varying degrees of risk and are ethically questionable, so I won't mention them. If you have some funds I'd invest in a website with some SEO capabilities.

Other important things; have a good understanding of the closing process, find a good closing attorney or title company, highly recommend organizing an LLC as soon as you can, understand your contracts, get them reviewed and make sure you have the appropriate language in them.

As far as software; Propstream all day. We use it in our business day. It's very powerful if you know how to use it. No software is perfect though, but it's really good. You can get a free trial to try it out.

I think that's good for starters. Ask questions and I'll follow up.

@Alfredo Cervantes First recommendation or point of feedback, for wholesale you really want to start with off-market properties (if not strictly). There are a whole host of issues that can stem from attempting to wholesale on-market properties. You could build up your cash basis wholesaling off-market and then take down on-market properties when you can through some cash around.

Nevertheless, you asked for help to ground-truth your numbers. You can PM me, I'm always willing to help those starting out. There are some factors you will need to consider that are specific to your market, such as do you use 80%, 75%, 70%, etc. Things like that are market-driven, but I can shed light on the basics of structuring your deal.

Again, I'd look off-market...if you so choose.

@John Evangelist It sounds like you got it. Just stay in touch with everyone until the documents are signed and it's closed. Congrats! Make sure you get a HUD-1 for your records. A recommendation, put some away for tax purposes, invest some in your marketing and overhead, and work the next deal.

@Evan Fletcher Below I've listed some recommendations for finding cash buyers.

Finding Cash Buyers:

• If you get a subscription to Propstream, you can type in any City and State, or Zipcode and click the cash buyers filter. It will pull back properties purchased using cash. I like to filter the owner type by “corporate.” Most cash buyers that regularly purchase, flip, or buy-and-hold will normally have an entity or entities that they use to conduct business. From there, grab the entity name, do a search of the Secretary of State’s corporation site, retrieve the filing documents; some will have a phone number listed, others just an address. Use this info to reach out and add them to your buyers' list. If you can’t find “members” or owners of the entity, try contacting the Registered Agent, they may potentially be able to assist (not in all cases).
• As mentioned above, the REIAs are a good resource. 
• Network with wholesaler-friendly agents. There are many out there, but not so much on the internet, I’ve met plenty at the REIAs and in other investor circles.
• Visit the next real estate tax auction at the county courthouse. The folks bidding on properties, more often than not are cash buyers or their surrogates. Introduce yourself, get a business card if they have one. See how you can contact them if and when you have a deal.
• Partner with an established wholesaler, JV a deal and learn who is who (cash buyers) in the area.
• If you see an active flip going on at a property, stop by, introduce yourself to the GC or other contractors. See if they can share with you who is flipping the house. Network, network, network.

@Heather Thuli You will need to become familiar with the laws in the markets you operate within. If IA state law requires the use of an Real Estate Attorney to close transactions a.k.a an "Attorney State," then you will need an attorney. If IA is optional or does not specify, then you could use a title company. In some instances, RE attorneys will also own a title company or use the services of a title company to handle the title-work, which is an important part of the process, but not the only part. I recommend becoming familiar with the steps involved with a closing in your state, that will help you feel more comfortable with what to do and what services to engage. Oh and every Real Estate Attorney I have used has a trust account that may be used for Escrow, and they will disburse funds at closing to satisfy any mortgages, liens, etc., and to the parties in the deal in accordance with the terms of the purchase and sale agreement. Just confirm with your RE attorney about placing EMD in escrow with his/her office.

@Blake Ramsey

We favor having buyers identified before we go under contract. That is just our business preference. One can do it either way. During the disposition phase of our first deal, we had already identified potential buyers based on cash purchase patterns in the area and networking, but our ultimate end buyer was someone from our local REIA that was not on our list.

If you have a service like Propstream, you can easily pull a list of cash buyers around your subject property over the last 90-180 days. Look for the properties that have been flipped/upgraded and match up your subject property with similar inventory. When you search a subject property, one can view the linked properties, look at how long the properties have been owned. If you see a buyer that has recent purchases or consistent buys over the years that info can help locate a suitable end-buyer to close.