All Forum Posts by: Michael R.

It's on my list to attend next time around as I, too, couldn't swing it given the timing.  It's interesting to hear the feedback regarding the venue and format.  

Aside from the priceless networking that took place, was there anything impactful or novel that you took away from the event or conversations?  Maybe some nuggets about the direction of the industry or unique/alternative investment strategies?  I know much of this will be dependent on your level of experience.

Just remember that your reputation is going to be incredibly important in this business (gained in drops, lost in buckets).  What I mean by that is, you don't want to go out there and act like you have a experience in an effort to lure potential investors into putting up their hard-earned dollars while you're initially figuring this business out (I'm not assuming you'll do this, just mentioning it).  In your shoes, I would take a deep look at what funds I have available to invest, plan on using those funds as my down payment, search for a deal (direct to seller would be best) and work with that person to seller-finance the property with a small down payment.  I would document the deal start to finish so that when I speak with potential investors in the future, I will have a reference that can speak to my earnestness to pay on time and have some experience finding a managing a good deal.  That's just how I got started (not necessarily the only way to go about it).  The first investor we worked with, on our third deal, has gone in on a number of deals since and is still a happy investor to this day.  I know for sure he never would've gotten on board for my first deal.

This isn't to say that you can't run it by immediate family members to help you out with the down payment early on as they know you well.  I just wouldn't want to risk anyone else's money and my fragile reputation that early in the game.

My post doesn't speak directly to your question regarding social media but hopefully gives you another data point while you make your decision. 

When it came time to list the last two wholetail deals and one flip we sold this year, we used a flat-fee listing service.  The cost was $99, we chose a 2.5% buyers agent commission, uploaded 6 pictures and handled the showings ourselves via the Showing Assist app.  The process was incredibly easy and all of them had a similar time-on-market and percent of list price to the sales in those areas represented by an agent.  @Account Closed I'm fully aware that you aren't an attorney but do you see any issues with this approach from a liability perspective?

My partner and I find that this, along with having an investor-friendly agent for the buy side, is a great way to save some cash without obtaining/maintaining a license.  

I'm curious to know if anyone has had luck with virtually staging their properties.  The thought is that the potential buyer can walk through the property with the listing pulled up on their phone and have an example photo of how furniture could be laid out rather than having to actually see it in the property.  

I'd love to hear some opinions, especially from realtors who walk staged and unstaged houses with clients regularly or flippers/sellers who have tried this method.

Update:  We received conditional loan approval on the 9th along with a request for insurance and updated proof of funds.  Those documents were submitted shortly after and we received a clear to close today with the closing scheduled for Thursday the 16th.

As a result of the last minute efforts to drum up private money we actually found a family member who welcomed the opportunity to earn some interest and we'll no longer need the HML. This will save a significant amount of money in points and fees, so definitely a win-win.

Lesson:  Make sure you've exhausted all efforts to find private money before you go the hard money route.  You will save yourself a lot of money and aggravation in lost time from potentially missed closing dates, sending a million documents to the lender, dealing with draw fees for the rehab and lead time for inspections before each draw, yadda yadda.  

I would also set a deadline to raise that private money to at least 2.5 weeks out from closing as there are many steps in the loan approval process which require time, should you need to go that route.

I can share my experience with GroundFloor on a loan that is currently in underwriting.  

I reached out to someone on their team on 7/23 to inquire about their ability to appraise, underwrite and approve a loan for 8/7.  I was assured at that time that the loan would close on time so long as I began the process by the 27th.  We made a decision to move forward on the 26th, paid the application fee and sent over all of the documents requested by end of the day on the 27th with an appraisal scheduled for that Saturday the 28th.  I received a call of panic that Sunday from the account manager letting me know that the new appraisal company they're working with has been taking about TWO WEEKS to turn around an appraisal.  He assured me he wasn't pulling a fast one on our original call and not to set off any alarms with the seller by communicating that we may need to extend the closing.  The appraisal came back in the morning of the 6th and I receive a notification that the file was submitted to underwriting with a 24-48 hr turnaround time.

Meanwhile, the seller flew in from Florida on the 6th only to receive an email that we need an extension to the 16th.  To say he was upset would be a huge understatement.  He agreed to the extension with an additional $20,000 earnest money which we put up.  Today is the 9th and I'm getting complete radio silence from the processor and I have nothing to communicate.  Since we didn't want to keep the seller in limbo he flew back home yesterday and we'll be flying him back in on our dime once the closing is scheduled.  With no reassurance, I'm beating the streets to find a private lender so we don't risk a total of $30,000 earnest money on this deal.

I will say that we had a tight timeline, extensions in RE transactions are a common thing and the sellers travel gripes are a wildcard nobody expected.  Much of this is not out of the ordinary given the circumstances but figured I'd share a data point.

I'll continue to update the community on the status of this.  @Brian Dally maybe you could help me out and look into this?

I think you're mixing up wholesaling with wholetailing.  Wholesaling is where you market your option to purchase a property, that you have under contract, to an end buyer.  Wholetailing is where you purchase a property at a percentage of as-is value and sell it near as-is value. 

We offer our wholesale opportunities to a list of cash-buyers via email. We list all of our wholetail properties on the MLS via a flat fee listing service. Very cost-effective option and shows up on all of the major websites (Redfin, Zillow, etc.).

Begin with the end in mind

Number of units isn't a metric of success when pursuing financial freedom, net cash flow is

Invest in the path of progress

Definitely second the "Vacuum the truck" quote (see podcast 276)

@Michael Wentzel I know it's been a while but how did you end up structuring this deal?  I'm working through almost the exact same thing at the moment.

@Matt Faircloth thanks for sharing some of your experience and knowledge.  This podcast really spoke to me as my partner and I are in the midst of a big fundraising effort.  A quote that didn't make sense to me when I first started investing is now reeling in my head, "you'll know you're serious about real estate investing when you're frequently trying to raise private money".  I feel like we're consistently counterbalancing that with marketing for deals.  

I especially loved the part where you talked about leading with the track-record, integrity and trust discussion before going into the percentages.  The person knows the returns are great compared to many alternatives, what they don't know is what happens when things go south. One of the objections we've run into is "Sure you're giving me a note and mortgage, but what happens if you guys stop paying and now I own the house with two or three people I don't even know?"  It's frustrating that there's really no way of reassuring the person that even if I have to work nights a McDonalds, they're getting paid.  

Maybe you could shed some light on how to structure the deal to put their mind at ease and take even more risk out of it for them.  The first thought is a clause that states that after payment is 15 days late the home must be listed for sale as-is within X days.  Then again, maybe I haven't done a good enough job speaking to the integrity piece and objection-handling up front, therefore, this is a concern that comes up as a result.