All Forum Posts by: Mo Sylla

Honestly,i value your contribution to my modest post.

I just feel you have carefully avoided the gist of my intervention. Let me repeat myself again:

is a business blueprint based on the wholesaling model sustainable? You have not touched upon that.

I never said America has suddenly turned into North Korea where the "state" runs everything and the people are enslaved nor do i claim to be an indentured servant. You are displacing the equation without solving it.

Yes,methinks lease option,creative exit strategies,equity exchange or 1031 are way better models than pure wholesaling.

Honestly,i am sick and tired of wholesaling. I don't think it is a creative strategy at all. So called investors go sell their souls hard-to the hard money lender-who slaps them with usurious type rate and ridiculous "points." So those investors are already neck deep in debt by the time they walk out of the infernal office. How do they emerge from this abyss?? By turning their guise on a bunch of unlucky people who are stranded in a thousand and one problems. Given that those unfortunate cannot "fight back" due to their circumstances,they have to accept the investor's demands of cutting their own throats to bleed profits. The Great Investor,after acquiring the property below market price,fixes it up,turns around and sells it at market price. 

Is this really a sustainable strategy?? Isn't there a better and smarter way to do real estate??

I want a dispassionate debate about this.

Your words indicate that you cannot do it,or you would strongly advise against it. Am i getting this correct here?

I hear a lot of conflicting opinions about being both an agent and a wholesaler.

What is the legislation? Where is the truth? No latter than today a fellow real estate agent was telling me that i could risk my license if i decide to do wholesaling. He did not provide any evidence to back his opinion,so i am taking his words with a grain of salt. Where can you find the legislation claiming that is it somehow illegal for an agent to do wholesaling? Anyone knows. You are appreciated.

How do you buy pre-foreclosures?

What are the logical steps?

Imagine you speak to a homeowner in pre-foreclosure. You reassure him or her and she is open to selling you the property. What comes next?

How do you determine the offer price?

1. do you buy out the equity on the house if the house has a positive equity? I elaborate.

The loan was 100k. The ARV of the property is now 150k. The buyer has already paid back 50k.

Do you hand the buyer 50k so you now have the 100k equity for yourself?(i.e. the loan was already paid at 50%. So it now stands at 50k of the original loan. The ARV 150k-50k balance=100k equity)

2. How do you go about to calculate your offer?

I am educating myself on pre-foreclosure,so all your contributions will be catalysts to speed up my learning process,which in turn i will use to solve ownership probems.

Happy new year to all.

All great answers.

If you don't mind mr. Gollatz,i would like to connect and ask more detailed questions regarding this topic.

With numbers.

@Adam Gollatz,

I am still running after my first deal. I can feel though that i am getting closer by the day.

Could you please elaborate on some of the specifics in your calculator that allows you to flip deals above the 70% bench-mark?

Admirably

@ Mr. Villeneuve,

i certainly appreciate your contribution. My only worry though is that it may have added more fog to an already foggy situation.

What's the link with that equation where y has a circumflex? I hardly see the rapport,unless you clarify the context for us.

You also say :"If you work your analysis in reverse, starting with what you need (exit strategy) to end up with in the end (minimum profit/cash flow in DOLLARS...not %), you may find that there are many markets out there where you don't need to discount to make money on.."

Suppose my end goal is to wholesale a property i laid my hand on,how does your formula operate from that end goal?

I appreciate your solicitude.

In his book " How to Be a Quick Turn Real Estate Entrepreneur in Any Economy" Real Estate guru Ron Legrand claims that your MAO(Most Allowable Offer)shouldn't go above 70% of the ARV(After Repair Value)of a property. Another famous Real Estate Investor,Armando Montelongo in his "Flip and Grow Rich" book also teaches the same precept. At the exception that he goes even further below,asking the new investor to bargain for as low as possible(he shoots for 65%.)

I have since included those stratagems in my overall strategy of putting properties under contract. I start at 65% then work my way up to the 70% bench-march. The fact that most sellers balk at selling their properties at 65 cents or 70 cents on the dollar pushed me to question the logic beyond these bench-marks.

The answer came in the form of a phone call from a Vice President of a Bank specialized in commercial lending. 

He posted his home for sale as a fsbo on Craiglist. The home looked nice,based on the pictures and didn't need any major repairs i concluded. Again,i picked my calculator,came up with a MAO,the Montelongo or Legrand's style and sent him an email with my phone number. He called me back.

He asked to know how i came up with my offer price? As i explained vaguely how,that's when he proceeded to tell me some of the  the reasons buyers require those thresholds.Simply put,the buyer's hands are tied up from the get-go. 

He continued to explain that these buyers go to hard money lenders and ask for loans. Their hard money lenders charge them "points"(a point is 1% of the amount of a loan.)In addition to all other closing costs,plus the down payment. Needless to say that the buyer leaves all his  or her feathers with the hard money lenders. 

The way for those buyers to recoup their investments is to ask for deeply discounted deals with the proverbial "motivated" sellers,which,as you know,can't be found on every street corner.

This is my version of what could be interpreted as either a myth or a reality,depending on whether applying the MAO rules has brought you success or the lack of it.

What do you know about the 70% rule?

How has it worked for you?

Where it was not applicable,what did you do to still get a deal?

Great and valuable insight.👌

Thank you sir.

I value your solicitude.

I will reset the compass.