All Forum Posts by: Matt Huneycutt

@Ping Chen ,

There are literally hundreds of wholesalers in North Carolina, especially Charlotte, trying to off-load inventory.  My advice would be to set up key-word alerts here on BP, and check in regularly to the BP marketplace.  You will find member wholesalers.  Also, speak with some of the NC investors on the site.  They may have some good references for you as well.  O

If you can't turn up any Wholesalers through BP for Cary, NC you can simply petition one of the Big Three wholesalers, to start a campaign for you in your neighborhood.  Give them the low down on the neighborhoods to target, and let them do what they do.

If that doesn't work, then try reverse marketing.  Assume you are a distressed home owner.  What would you do?  Respond to a bandit sign?  Look it up on Craigslist, or the yellow pages?  Follow the ads to the "cash buyers", who we happen to know are simply wholesalers.  Once you have them on the line, ask what they have for you as a buyer.

How to discern a good deal from a wholesaler is the same as discerning a good deal from the MLS. The first step, is to know your market, criteria, and costs. You have to be able to dissect any project to know if you can make money on it. Wholesalers want to sell to the highest bidder in most cases. Who wouldn't? So be prepared to take a little hit in the beginning to make it to the top of their Rolodex. Once you make that relationship, then you can settle out on costs in exchange for continued business.

Good Luck

Let's crunch a few numbers.

- Loan balance + $7k in back payments = $107k.  This is what the seller hopes to net in order to walk away free and clear, no short sale, no problems.

- 5% sales commission of $107k = $5,350.  Add that to the $107k above and we have the sale price.  $107k + $5,350 = $112,350.

- Let's take the high side of $20k (because it is safer to assume) for repairs.  $112,350 + $20k = $132, 350.  

- The ARV is $123k. This makes a net deficit of $9350 to the buyer who would hope to restore the house. This is no good for a fix/flip, and a tough MLS sale for home owner.

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If the market rent is at $1500, and the economy supports the rental market let's analyze this.

- $1500 per month as a percentage of $132,350 is roughly 1.1%. Could this make a rental for an investor? Possibly. Let's explore. HOA? Maintenance costs (regular)? Utilities to the land lord? County, city taxes? cost of management and a rainy day fund? Lets say all this comes down to %20...just a round figure. a Gross Scheduled Income of $18000 per year, minus these expenses gives us an idea of the Net Operating Income (this doesn't include cost of lending). That equals $3600 in cost to operate per year, (about $300 per month). $14,400 per year is left over...NOI. At a buy in of $132,350 we have...

NOI / total cost = Capitalization Rate

14,400 / 132,350 = .108 or 10.8%

Could you sell that?  Possibly.  Some investors prefer to buy rentals that they can liquidate later on...appreciation, or buying at below market value.  Others care only about the cash flow and will forgive the negative equity.  Could go either way.  

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Let's envision taking over payments. It is possible that the owner fell behind and now is in a default APR.? It could happen. My first suspicion however, is that this is no 30 yr fixed. 2007 to 2014 = 7 years. She got in trouble in 2014, has a sky high interest rate and hasn't been able to catch up. This sounds a lot like a 5/1 ARM disaster (or something similar). If that is the case, no one will take over the loan, and the 9% interest isn't getting any better.

You have a lot of information left to gather to help this woman.  Get some of these answers and we will help you make sense of it the best we can. Good luck.

 Kyle,

Good question.  Let's see if Tony can answer that one for us.

Tony,

I am guessing she is a spanish speaking home owner?  You may learn more if you get a friend to tag along and translate.  Could you do that?

@Sal Villa 

Thanks for the definition...I was actually asking Tony what the ARV (in numbers) was. He gave us an appraisal (I am assuming in current condition), an estimate of repairs, est mortgage payment and rental rates, but we have no idea what the house may be worth north of the current appraisal when cleaned up. As an investor that is one of the first things I would address.

@Tony Johnson 

Have you run comps on this property for ARV yet?

@Tony Johnson 

If it were me, I would address the core concern first:  Why is she behind on the payments?

If the monthly payment is too high, then pursue a loan mod or refi.  At 9% interest, I have to believe she can get a better rate somewhere; that is borderline hard money.  If she is now unemployed, then selling her house will get her out of the mortgage, but she still has to qualify for rent somewhere.  

@Tony Johnson 

What is the ARV?

@David Roberts 

I am researching HELOCs as well.  In my research, I find that the line of credit (not debit) works similarly to any regular credit line.  You apply for a credit limit, and start with a zero balance.  What allows the creditor to open a line in the tens and hundreds of thousands is that the line is secured with your property (lower risk to the creditor).  This also allows for a lower interest rate than say a credit card.  

Take the line at 75k, and use as you need.  

 I think Brandon Turner said on one of the Podcasts...Start where you stand, in your own back yard.  Who do you know?  Do they have houses?  Do they have money?  Have you asked them?  Who do they know? You may surprise yourself with a millionaire next door.

I was looking for a duplex to buy so I could house hack for free living.  A fantastic tactic.  When I called my old agent to set up a viewing on a house I found, she told me she was now a mortgage broker and referred me to another agent.  I met with the agent, and after hearing me describe what I was looking for, he turned me down to be his client, and offered me a partnership hunting houses.

On a trip home to see my family, I came across some vacant houses next door to my Dad.  I asked my Dad what the deal was with them and he told me they were for sale.  He said that he could not get a partner or a bank to back him on buying them.  He didn't know the right words to say.  he didn't think of me as a partner either, in his pursuit.  When I asked the questions, we connected the dots.  I knew how to get the money, and he knows how to do the work.

When Josh and Brandon ask at the end of every episode..."what is the difference between people who are successful, and those who quit, fail or never get started?" the only answer is persistence.  turn over every stone you can find until a situation needs you, just exactly as you are.  That is where you start.  Nobody can answer that question for you.  It is your own unique story.  

Last part:  This industry is a service based industry.  We are all here to solve someone's problem.  I urge you to first consider what you have to offer, to solve someone's problem.  Is it money? talent? skills? inventory? energy?  When you figure that piece out, then go find the person who is looking for you.  Every time you find an opportunity, ask who-needs-what here? And then, provide it.  

as a side note...the slowest that things will ever be is when you are at the start of this thing.  Don't quit.

Cheers!

@Henrietta M. 

Wholesaling is what you might consider an apex skill in Real Estate.  Though some folks have been successful at it early on, It is typically something seasoned buyers ascend to when they hone their skills.  

To be successful takes not only a lot of research, but also up front money for marketing with no hope for return in the first year.  Wholesaling also pairs well with a certain personality type.  A large portion of the process is in closing the deal, not just finding it.  Folks from sales backgrounds are usually more comfortable with it, than those with a labor backgrounds.

The point is, its not as easy it may sound, and it's not for everybody.

Welcome BTW!

 Thanks K!  I owe you one.

Matt