All Forum Posts by: Dan Miller

Thanks for the response. From what I've learned so far, a wholesaler is often putting a lot of offers out there on a regular basis. Given that, how does one estimate the repair values? I'd imagine that in those cases where you're putting together 15-20 offers per week or more to assess the motivation level of the seller, wholesalers are not even looking at most of those properties until they get either an approved offer or a counteroffer from a seller. Is that how it generally works? At what point does one actually figure out the repair costs if all this is true? If it's after getting interest from the seller, how much do you know how to offer in the first place?

Don't the closing costs you have to pay in a double closing basically kill most of the wholesaler's profits? Transfer taxes in many states are pretty steep (e.g. 1.5%). Paying that twice (when you buy initially and then when you sell to the investor) would eat away at all your profits, wouldn't it?

What am I missing here?

Thanks,
Dan

How would I estimate repair costs as a beginning wholesaler? If the answer is to use a contactor, then I have another question. Why would a contractor want to work with a wholesaler (providing estimates) when the wholesaler won't ever be giving that contractor business (since the wholesaler is not doing the rehab work)?

In assessing my maximium allowable offer price, I imagine I wouldn't want to wait to get a contractor into each property to estimate repair costs, so how do you normally calculate your maximum offer price without this information? (or what assumptions do you make on repairs in this case)?

Thanks,
Dan

I have been to the one in Bowie, MD about 4 times now since aug 07. I like it a lot. It has a bit of a sales pitch at the beginning and sometimes at the end, but overall, I don't find it too "salesy," and I'm generally pretty easily annoyed by sales pitches, so I think my viewpoint is reasonable.

I have not been to the one in VA yet, but would like to do so. I feel that the Bowie club is heavily skewed towards Baltimore investors, and I live in DC, so I'd like to learn more about investor areas and investors that are closer to where I live (DC or Northern Virginia are all a bit more convenient). If anyone has attended the VA REIA meeting, let me know what you think of it.

I would also love to find out what the hot zip codes are in NOVA, DC, and Prince Georges Counties for investors these days. I'm about to start up my wholesaling business.

Thanks,
Dan

I am about to form my first LLC for the wholesaling business I am about to start. I live in Washington, DC, and I'm sure I will be doing business in both Maryland and Virginia as a result, and maybe DC too, but certainly don't know yet. I have a few questions:

1) Are there general tax implications of forming an LLC in one state (or DC) vs. another for a small business like this? Should it matter at this stage?

2) How easy/difficult is it to do business in MD or VA my LLC is formed in DC?

3) I am married. Should my wife be a part of my LLC or is it better just to have a single member LLC? Does it matter?

4) Would you suggest that I be my own registered agent? I've heard about privacy issues since it's in the public record, and as a result you should seek out a relative or friend.

5) What if I choose an available name in DC that is not available in MD (or VA) and I want to do business in one of those states later on?

I think forming an LLC should be very simple, but I guess it's a bit tricky in this area just b/c 3 states (incl. DC) are so close to each other. Any suggestions would be helpful.

Thanks,
Dan

So I did sign up for the $495 3-day Rich Dad Education seminar in the DC area back in August. It was probably the most expensive impulse buy of my life, but I wanted to start taking action as a newbie in RE investing.

I did learn some good things at the 3-day course, and I still refer to the notes I took as I look to begin wholesaling. That being said, I was very disappointed with how "salesy" the seminar was. It felt like everything (and I mean everything) was geared towards the upsell at the end--the advanced training. As a result, I began to question and distrust the instructor and her helpers. While I'm sure some of their intent is genuine, it just became too blurred with their own sales agenda to differentiate what was legit educational advice and what was merely part of the sales pitch.

Things they did that I didn't like:
1) establish a rule of no networking until the end of the last day (this rules makes no sense, so my guess was that it was either an attempt to avoid naysayers persuading others on the fence of the advanced training not to do it; or an attempt to avoid forming partnerships to split the advanced training fees.

2) ask questions to which you can only answer yes (this is a classic sales technique). "Don't you want to be a right-sided thinker?" referring to Kiyosaki's cash flow quadrant. "Who wouldn't like that type of deal?" after showing some of her successful deals.

3) say upfront that anyone who is against their teachings/sales pitches is a cynic and doesn't really want to get out of the rat race. Basically shooting down any differential opinions before they even come up.

4) they flew through the slides, almost in a way that was so fast, you can hardly write down the lesson.

5) had us write in the prices to the advanced training courses, and of course those prices "were only good until the end of the seminar." Writing in prices is another technique to overcome psychological barriers of the big prices.

6) request credit line increases on day 1 to boost our seed capital (which later felt like it was merely a way of enabling the students to buy the courses if they didn't have the money.

7) One of the aides told me that he was learning to be the course facilitator, but wasn't ready yet until he had it just right. That tells me that the course is designed precisely, minute by minute, to maximize the # of advanced training sales. Otherwise, why would you need to "have it just right."

8) Lastly and most importantly, the teacher took NO questions. She had us write questions down and later ask the helpers in the back of the room, who were no help at all. What kind of teacher discourages questions?

Overall, while I got some value from this (and I'd say it was worth my $495 given the basic knowledge), I did leave very frustrated with the approach and seriously question the ethics of the company and its instructors. I am extremely distrustful of the company's motives and would not do further business with them as a result.

Feel free to email me if you want more info. [email protected]

Thanks, Oaks. Two follow-ups:

1) What is an option?

2) How come my agent doesn't get paid his/her 3% commission by the seller at closing like in a normal home sale (sellers agent gets 3%, buyers agent get 3%). Do I have to work out a special deal in advance with my agent?

I interpreted the question a bit different, and it's similar to a question I have (also a newbie). The question I inferred from the post and my same question is how does a real estate agent get his/her commission in a wholesale deal? Say I get the property under contract and found it via help of an agent. I then assign the contract to an investor. When /how does the agent get a commission (since I'm no longer the buyer in the transaction)? Who pays that commission? In a normal sale, the seller would pay the agent of the buyer. How about in a wholesale deal?

Thanks!

In a wholesale deal where I assign the contract to a buyer, how does my real estate agent, who may have helped me identify the property in the first place, get paid? Do I pay him/her directly? Does the seller still pay the commission even though I'm no longer directly invovled in the sale? How does this work for a straight assignment? What about for a double closing?

Thanks!

Dan

I am new to RE Investing and do not own any current rental properties, but it's an area of interest. I'd like to build up passive income. A few questions I have in evaluating the profitability of rental property:

1) When we're talking about single family homes, how much should I generally assume for maintenance and operating expense? 10% of rental income? A fixed monthly amount? I have no idea what to assume here. What about for condos where you already pay a condo fee?

2) How much do property management firms generally cost? I've heard anywhere from 5-10% of the rent. Does that include collecting rents, screening tenants, marketing for new tenants, and making any types of repairs or regular maintenance? Would any expenses they incur from maintenance be passed on to me? Do they set the rent or do I set the rent? Do they advise on the market rental rates in the area to help me decide?

3) Any other expenses I need to consider outside of debt servicing, vacancy rates, property mgmt, taxes, and maintenance when determining if a potential investment property would be cashflow positive?

Thanks,
Dan