All Forum Posts by: Brandon Ellis

I am a noob running into 2 major hurdles:

1. Local attorneys tell me wholesaling and land trusts are illegal or qeustionable, and that I shouldn't invest in my town because it is going no where.

2. Fear of the lack of ability to find reasonable financing after the sub prime fallout.

My local REIA members are nice, but I feel like their primary motivation is to try and sell me something (prepaid legal, no cash flow rentals etc.). I guess I could say my hurdle is more discouragement than anything else right now.

In this basic wholesale formula (ARV x .7) - repair cost - wholesale fee = MAO, the COV would be taken in to account at 70%, right?

Or written another way (BPO x %COV) - repair cost- wholesale fee = MAO

Ryan,

Wouldn't you CYA a little better if you said to the seller "to make this legal, we have to put down $1 earnest money." Would that give you more ground to stand on than just promise to buy?

Ryan,

Are double closings more difficult now because of their assocaiton with illegal flippers? Do you have to pay a transfer tax in your area when you do a DC? Do you negotiate lower closing costs in a DC?

Along the same lines... I do intend to create an LLC by the end of August, but didn't want to pass up a deal on a technicality. My plan, as of now, is to operate a wholesaling LLC as a seprate entity from my (soon to be) rental LLC for added legal protection. I do, however, wish to use the cash from the wholesaling business to pay down principle on the rentals (or whatever immediate needs I might not have the cash on hand to resolve). Is it difficult to pass revenue from one to the other? Should I consider combining the two?

What is Cost on Value? Never heard of it. Googled it... still nothing.

I bought mine on eBay for $300 (basic and advanced) and there's currently a "buy it now" that has both for $100. Don't buy one without the other, eventhough the advanced course is lacking a bit.

I am sure there are many reading this blog who could give more info that I can (and from experience), but it will be good experience for me to take a stab at answering your question.

Basically, wholesaling is a good way generate immediate cash that can be hard to come by through other means of investing. It is a good compliment to a rental or flip business. For example, if you need to put a new roof on your rental and don't have the cash on hand, wholesale a deal (and save some for the IRS). If you are going over budget on your flip, there you go... Don't get me wrong, she does run the wholesaling business to stand alone, but states that it should not be the only trick up your sleeve.

In fact, the advances course discusses the use of financed flips, where you negociate owner financing for your end buyer. This opens your buyers list to investors who may not be able to purchase the property as a cash only deal. Those buyers will be willing to pay slightly more for the property which translates to money in your pocket.

She uses different formulas for different situations. Aside from the basic 70% arv - repair - your fee = MAO, she has formulas for homes that are <70K>$140K or need more than $50K in repairs, etc. For the sake of not having her people hunt me down, I will hold off on posting those.

One thing I dislike about her philosiphy.... She does not tell the seller what her role in the transaction is. She doesn't lie, and to her, that is good enough. She says "my partner" or "my money guy" and never clarifies that she is merely the 'middle man' who plans to assign the contract to an end buyer for a fee. Granted, the seller has agreed to sell for X amount, and it shouldn't matter how the profit is divided in the end, but I don't want to practice deceit or do anything I will not be proud of.

Lots more, this is getting too long though.

Thanks gfwproperties.

I don't have an LLC or any type of business license yet, but I am ready to start wholesaling. Can I legally do a deal and make a profit without one?

I have been studying Vena Jones-Cox's wholesale course (which I would highly recommend) and she does not try to adjust for closing costs. According to her, the cost range is too wide and the buyers are happy to take care of it as long as their profit is still there.