All Forum Posts by: Meryl McElwain

@Josue Vargas what platform is this?

If you're in this business you have heard the line "I bought 5000 houses with other people's money" (exaggerated for dramatic effect). I'm aware that experienced folks can generally find investors that would like a consistent return to give them their cash. What I'm baffled by is the amount of people who say on Saturday they were managing a dry cleaners, on Sunday bought "The art of flipping by Joe," on Monday gave up their day job and by Friday used other people's money to buy 5 houses. Is there some kind of equity leverage scheme going on here that I dont understand? Are completely inexperienced people actually going out and getting investors to provide the down? What in the world does this actually mean in real life? Or are these people all just full of it. Can anyone provide a real life story of using other people's money when you have little to no experience?

@John Bauer

I'm not in Boston but I'm curious and would be happy to take a look.

I have a client who has substantial equity in building one. Building one has a 15 yr note at 3%. Next door to building one they would like to construct building two. They dont have the down stroke for building two. In ordinary circumstances I'd refi building one, pull the cash out, throw it down on building two. However in this instance I dont want to do that because you cant get 3% anywhere now.

What do I do here?

@Jeremy Woods

My first thought was that you need to map the steps in the process before doing a thing.

You're pissed because you think you look like a jag to the lender for pressuring her to move when she can't because she doesnt have the necessary information.

Before you even said a word to the lender I would have to the seller, "I'd be happy to give you a prequalification letter. In order to do that, I need the rent roll. After I receive that, I can provide you a PQL in 48 hours. (Assuming you know the lender can turn that fast) I don't like making promises on other peoples turnaround without talking to them first even if I have a history with them.

And then wait. Wait until you receive the required information before speaking to anyone on your side.

I used to deal with this all the time. People flipping out on me because I havent contacted the lender to start the process or I havent contacted the attorney on the buyers side. I'm generally always on sellers side. And I wont because it's a giant waste of everyone's time. To be frank, they're kind of jags for demanding a PQL without attaching the necessary underwriting documents to the listing, or at the very least sending them in the same email as the request for the PQL.

I generally send out a reminder email each day that says "I'm just following up on YOUR initial requirements. I'm waiting on the following from your party:

1. Rent roll

Please advise.

You cant control other peoples lack of preparation but you can refuse to waste your own teams time. I do it everyday. I could care less about the pressure to respond.

If what you want is the cheapest quote, expect to pay a hefty deposit. Credit lines cost money. They can't buy materials without your money.

@Brandon L. @Lydia T. @John Thedford

I'm not sure a simple website search was going to answer my question.

I feel like this is a hypercritical time for real estate investing and wholesaling has a lot to do with it. I'll get into that a little more in a moment.

As to my wholesaling question-Frankly, everyone gives the same vague generalizations when they answer who they're marketing to. All kinds of people would make a deal like this. People getting divorced, tired landlords, vacant properties etc. But no one ever gives the specifics. I'm an attorney, tell me the story. "Tired landlords" tells me nothing. It's a platitude.

But here I am at a VC fund and we hear this stuff all the time (wholesaling works) and they're in front of us asking for capital for an app or to expand because "this is the year real estate investing is going to go completely wild." Why? Because the stock market is like playing craps or roulette with a blindfold on right now.

Now there are you're average people. One or two person shops that go out make these deals maybe make a decent living on it. Then they're are your guys with a proven method making a business out if it. And then, we have some behemoths getting into the game.

Zillow Offers is essentially wholesaling on a massive scale right now. Wanna sell your home in seven days? We'll offer you cash to take a huge haircut and close faster? Not your thing, no problem, we'll list it. That's serious. Huge group, a lot of weight behind them, and they're getting into the wholesale game. I imagine they spent a lot of research and marketing dollars to make the call.

I get the argument that wholesalers aren't agents etc. But they way I see this and I'm being totally serious when I say, correct me if I'm wrong-these people are offering to buy properties that are not saleable on the general market for one reason or another. They may have logistical, cosmetic, legal or lien problems but they are not readily saleable in their current state. It will take work to get them there. That may be rehabbing them, taking care of past bills that the current occupant may not be able to pay or settling outstanding mortgage debt. Outstanding taxes may be due. Maybe the property hasn't been properly probated. In any of these scenarios it requires work to get it to market value.

The wholesaler looks at the issues, decides how long it's going to take and how much work it will take to get it to a certain price point and makes that seller an offer based on that. The spread is the wholesalers fee for resolving those issues.

The WH is going to have to do the work to resolve the issues and find a buyer. For that, I believe anyone has the right to be compensated. Its work like any other type of work. What value they attribute to that work is up to them but I imagine it's like anything else. What's an attorney going to cost? What my time worth? What are the rehab costs? Seller is free to go procure those services independently but many people dont know how or why or where to start so they just dont.

At any rate that is what I was looking for concrete examples of wholesale deals because I'm trying to understand the size and specifics of an overall market.

It sounds like wholesaling is just part of the overall transactional market, the niche is that the property isn't general market ready for a multitude of reasons.

I'm not encouraging it. I'm not sure I agree that its traditional sales work but I'm curious.

So if anyone else has some concrete examples, let's hear it.

'm thinking to

@Lydia T. This helps. Reading your answer as a lawyer-my immediate thought is that is complicated and like 3 headaches all at once. You'd have to negotiate the reverse down and settle the taxes. Those two alone are a minimum of 60 days (I would think). Do the kids come out with anything then? Or does it just pay off the reverse, clear the taxes, and leave you with a margin to resell? So basically it doesnt cost them anything and you dispose of their problem? They're not looking to make any money. I'm asking this because people tell me all the time there are situations much like you described above but they dont get specific. If the property is unhindered I cant wrap my head around someone giving it up when they could just list it. It sounds like they have multiple complex issues going on they cant solve to move it.

@Lydia T. It says you're a wholesaler on your profile. Can you give me a real example you experienced?

I recently heard a remarkable story of a wholesaler claiming they picked up a house for 32,000 and then turned around and flipped it to a contractor for 54,000 within a span of 10 days. The story is true; which leads me to my question-how exactly do you get someone to sell you their house for half of what its apparently worth? I've heard all the marketing strategies. I'm not looking for marketing advice. I want to know who the audience is. What type of person agrees to a deal like this? And why?!