All Forum Posts by: Randy Thomason

Yes  Arkreia.com is our group but we use meetup for marketing. Tonight we have a zoom meeting if you wish to signup for the online meeting. Starts at 6:30 with our speakers starting at 7.

Hi Rob.

Lots of missing info in your post.  What is your interest rate you have?  What is the value of the house?  Does it need repairs?  Is your market where the house is hot or soft now?

Other than VA loans I'm not sure you will find any other loans that are assignable these days. Even then the VA has to approve the new buyers just like a new loan application.

So a couple of options for you. You could possibly wrap it if the numbers work out. Or the other option is to sell on a contract for deed. Got to check the state laws, as every state is different. I am pretty sure Georgia is a CFD state though. Get a good down payment of around 10% of the sales price, mark the sales price to market or slightly higher since you are financing, interest rate should be higher as you are looking for non qualifying people and make some good money. Remember, you have dodd frank to deal with so make sure you do things right. If you do it right you will have money down, money cash flowing each month, and your amortization spread gets bigger every month giving you a big payday somewhere down the line.

Good luck!

Randy Thomason 

Hi @Tarik Sapp,

My suggestion to increase your odds of getting a deal is just to go in and see what the NEEDS are of the homeowner. If you go in pitching a sub2 or any other thing off the bat, you are likely to turn them off. You must find the problem and find a solution. If you can do that then the odds of you being able to finalize a deal goes up dramatically. Sometimes it has to be cash, sometimes a Sub2, sometimes something else.

Be careful and know your state's laws though. Not sure about Ohio but some states have a law against contacting or doing deals with someone already in the foreclosure process.  The fines can be stiff if you get caught.  

Good luck!  

Interesting, but unless you have a license here that would not work.  No referral fees of any type without a license.  Quack, walk and feathers.  The commission would say it is a duck, just disguised to look like anything but a duck.

@Kyle J. is on the right path with his comments of taking a 30 year and making extra payments to make it a 15 year, IF YOU CAN.  The option of having lower payments of a 30 year but being able to shorten it with the 15 year is tremendous when you are starting out.  You will make mistakes.  You will have something happen that will be earth shattering probably.  Divorce, medical, etc.  Having flexibility in your early years of investing is a high priority, IMO.

Secondly, I did not see anybody saying this and it needs to be factored.  If you do take a 30 year and pay additional CF towards the principal, that is possibly profit that you will be taxed on and if you throw it towards the principal you then negative cash flow when you factor in the taxes.  You will pay taxes on that extra CF even though you put it towards the paydown.  A lot depends on your tax brackets and deductions/depreciation.  

I do a lot of these in my Roth 401k so I don't have to worry about the taxes though. It is all tax free.  However, all my properties are some sort of creative deals, sub 2's, LO, OF.  

Your best friend is a good Amortization program where you can play "what if" games to look at extra payments and such.  My Excel spreadsheet Am Chart makes me more money than anything other than my lips working.  If you aren't talking to (motivated) sellers you aren't buying properties. 

Also realize this.  Newer people haven't seen anything higher than a 4-5% interest rate loans.  They will go up.  They will at some point be back over 10%.  Any loans you can get these days, 2-5% is  a blessing you may not see again in your lifetime.  If you get a 3% loan now for 30 years where else can you borrow money for long term at that rate. But I bet everything you invest in gets you a much much higher return than 3%.  Borrow long at low rates, invest at high rates. That is how you make money! Anything else is gambling. For you younger people, that is the opposite of what savings and Loans did in the 70's and 80's. They borrowed short term at low rates (paying CD rates for 1-3 years) but then made loans for 30 years also at slightly higher rates to arbitrage the money.  Unfortunately for them the rates rose on interest rates to as high as 18%. They were then borrowing on CD's at high rates like 15% but still had money invested at 5% (30 year mtg's), thus losing 10% interest daily on every loan they had made earlier.  Therefore, no more Savings and loans.

I pool money from CF and then analyze which higher interest property the extra CF should go to to pay down the principal enough to get it to the point where the loan flips to more principal and less interest. At that point, rerun your EFFECTIVE interest rate on the balance of your loans. When you do this you can often turn a 6 or 7% int rate loan into a 2 or 3% loan out of your pocket on the remaining balance. But again, I am using this where I have taken a loan over Sub2 and the loan was already 8 to 15 years into the mortgage. When looking at the AM charts the amount of interest is front loaded and usually 70% of the interest has been paid already (by the previous owner- gotta love them!) for the whole 30 year term.

Bonus info:

For you out there that are nearing 59 and half and already have your Roths done for the 5 year min term, this is what I am getting ready to do since I am shortly hitting that age.

Instead of taking my income from my company and paying all the taxes on that income- SS, FICA, Medicare,etc, I can now run ALL the income thru my Roth accounts and take a defacto salary from it in distribution form and pay NO taxes then. My income can stay the same as it was and I still grow the Roth by 30% each year from the no tax portion. 

My point here being is if you haven't started your Roth IRA or Roth 401k, then get to it. By itself, these are the most crucial tools (together with your brain and work ethic) you can have to building your retirement and lifestyle in the future. But it starts now, not in 10 or 20 years.

Just an opinion of an oldtimer who made tons of mistakes in my early years and would love it if others didn't make some of the same mistakes.  Always be making course corrections. 

No, @Barbee T., I am not upset or peeved about legal wholesalers.  Unfortunately most do not do it legally though.  I do some myself.  I sell my contracts occasionally.  I double close more often when I wholesale though.  I do probably 85 -90 buy and hold, so as my state Commission said I am an investor who occasionally assigns a contract.  They said they have no problem at all with what I do bc I am truly an investor who puts my money and company at risk. 

A couple of the red flags they have are:

1- is your inspection period the length of the contract period or do you have a time frame to waive your contingency?  This is probably the biggest thing that gets under their collar.

2- Can you unilaterally extend the contract and if so is it done without a fee extension?  They hate this.

3-EM Deposits or lack there of.  This is a funny one that I think I pissed them off when I interviewed them.  They commented that no EM on contracts shows lack of commitment and no consideration which is required for a valid contract,  But Our Realtors contract that is copywrited and required to be used by our realtors in this state, and was written the Realtors Assn here and approved by the Commission, now has no EM written as standard language into their contract..  I asked the Commission, therefore, how could any contract written by any realtor be a valid contract to a seller since they have no EM. Crickets!!!!!!  Next question.  lol

Hi Cory,

First I am not a lawyer so I am not giving legal advice, only my educated opinions based on years of being in this business and lots of experience and dealing with lawyers and Commissions.

So, your questions was a little confusing to me.  You state " if someone found a property and gave the info to a buyer with funds. The buyer showed the finder(Bird dog) how to close,paperwork and everything.  Is your question that the finder closed the deal and and then sold it?  Or is the buyer giving the finder all the paperwork to put it under contract and then the finder assigns the contract to the buyer for the assignment fee?  Or is the buyer closing the deal and paying the finder a fee and showing the finder how to do it the next time?  

So as one of my attorney's says, "if it quack and looks like a duck, the commission will call it a duck."

In the scenario I think you might be saying - the finder finds the property, then finds a buyer, then the buyer shows the finder how to put under contract to assign or to JV, then the finder gets paid. In essence it appears the scenario would be a version of "Reverse Wholesaling. Finding a buyer before you put the property under contract so you know how much you can sell it for before you contract the buy side. If so, that would be considered brokering without a license in this state. IMO.

Does this happen?  Absolutely. Sometimes innocently too. Such as - you have a deal you are negotiating for. Your are pretty sure you are getting it and you tell a couple of people you think you have a deal coming in. One of the people tells you if you get it they would be a strong buyer in xx range.  Call them first.  It happens all the time when you get good relationships with buyers or investors.   

Is any of the scenarios above I mentioned easy to prove you are doing something wrong? Not easy by any standards.  

In Arkansas the RE Commission only has 3 investigators for the whole state. They police about 15,000 licensed realtors plus the public for any wrong doing.  Hard for them to chase people on their own.  How people get caught is:

1- a realtor turning you in when the see you do something that takes money out of their pocket

2- a seller who thinks they have their house sold and at the last minute the wholesaler cancels the deal. This puts the seller in a bad situation often. Then have already moved and now have two mtg's  the new place and now this empty place.  

3- a competitor who does things right and see the bad actors out there and turns them in

By law the Commission MUST investigate EVERY complaint filed. and they do.

I will tell you that almost on a daily basis I get people calling me with deals and are doing things illegally. I try and teach them what they are doing wrong and why, how to change their methods. Some listen, some don't because their GURU in another state has told them everything is legal in all 50 states. LOL

I have no problem turning someone in that repeatedly continues to do things illegally after being told otherwise. They give us all a bad name and that is why states are cracking down and writing legislation to tighten the screws on wholesalers.  I think NC just passed a new, very tight law that pretty much prevents wholesaling by assignments. Haven't read it yet but that is the jist of what i have seen.

Hope this helps. Feel free to give me a call if you want. or PM me. I run the REIA in Arkansas, coach, mentor and do JV deals. Maybe we strike up a relationship and make money together somehow in the future?

@Jay Hinrichs is right and has many years experience so taking advice from him is a great decision for your business.  And yes, every state is different, but not by much. The Regulators hate "Wholesalers" because the majority of them do it illegally. So the few that do it right do not get noticed.  

I know that this topic is the biggest topic of discussion at the semiannual ORRELO meetings with all the state RE commissioners, investigators, and attorney generals.  They are comparing notes and strategizing how to stop of prosecute violators.

That was not the topic of the message. The topic was bird dogging.  Paying mailmen, or UPS drivers, or anybody to tell you about houses they see and then paying them if you get a deal.  

You are talking about assigning contracts.  That can be legal, but also may be illegal, depending on what and how you are doing it.  If your business is to always assign contracts, never to close, then you are circumventing licensing laws, which is a Felony in this state, and realistically violates the law in almost every state.  I personally interviewed the full RE Commission and an Assistant Attorney General here about it.  Their view and what they prosecute people for is that you cannot be in the business of assigning contracts without a license.  Yes, You can assign contacts. They agree that is legal.  But not as your business model.  You are relying on the "Equitable Interest" you think you have by signing a contract. 

But to have Equitable Interest you to have a "Valid" contract and to have a valid contract you have to "Capacity and Intent" to close.  

Capacity meaning, that you have the money available- a bank loan, a private lender, your money, or a true JV partner. If you don't, then you do not have a valid contract, therefore, you do not have equitable interest.

Intent to close, meaning your true plan when you sign the contract to buy, is to pay for and close title into your name or in an entity you own.  If your plan is to assign it, then you have no intent to close, and again you do not have a valid contract.

Now, I realize that nobody can read your mind as to your intent on every deal.  And we change our minds often of how to dispose of a property. So how could they make this argument?  It's easy most of the time because a "Wholesaler" usually only assigns contracts.  Therefore, their intention is shown never to buy and close.

The Commission here would not state what percentage of deals should be closed vs. assigned, but they did state that your business model needs to be an investor model, that sometimes assigns some deals but closes the majority of the deals.  If you assign the majority of the deals they will view you as acting as a realtor, and thus you will get a Cease and Desist order and the fines are up to $5,000 per occurrence.  The statute also has a penalty of up to 1 year in jail, but I have never seen that happen. If you were a repeat offender who ignores the law, I could see that happening to make an example of someone.   

Again,Bird dogging and wholesaling are two different topics even though they interrelated. 

Just a PSA opinion to people on here that may be newer or just getting started in Arkansas.  I am constantly hearing from people after they have gone to one of these weekend seminars from the Drive Thur Guru's who pitch how to quit your job in 60 days by learning to wholesale.  They tell you to go out and get bird dogs to help you find vacant houses and deals and then you pay them a finder fee for $250 or $500 if you get the deal.  In Arkansas, and most states I imagine, it is illegal.  It is a class D Felony.  In February, I interviewed the Real Estate Commission here about this topic and many others centered around wholesaling.  The bottom line is that you cannot pay anybody a contingency fees, meaning if you pay based upon getting a deal then you are acting as a realtor because only realtors can pay or get paid on transactions based on the deal closing.  

When these seminars come thru town and get you hyped up that you can make tens of thousand of dollars and they "help" you swipe your credit cards for 5, 10 or $30,000 to learn how to do it- RUN!  (Some of them)-They often tell you to do things illegally.  If you get caught it is you who pays the price. Not them.  They have disclaimers about information only and it is on you to know the laws of your state. They are not doing the actual illegal things.

Don't fall for the lines that it is a marketing fee and not a commission. The RE Commission has made it very clear.  You can pay a marketing fee for marketing services If the fee is paid on "every lead." It is not a fee if it is based on "if you get the deal (a contingency)."  And if you pay more than $600 you better be doing a w-9/ 1099 at tax time. 

It seems that some of these traveling money vacuum companies from the Utah areas are the one's pushing the Bird dog teaching the most.  My words of warning to you is, If they tell you one thing that is illegal, what else might they be teaching you that is wrong or could get you into trouble?   

Just my opinions from a person who is a full time investor, runs the largest REIA in the state, former President of the State Landlord's Association, Worked with the Legislature on crafting Bills, formerly a licensed RE agent. But what do I know?