All Forum Posts by: Ryan Webber

My first wholesale deal was actually a package deal of five crappy houses in the hood from another wholesaler. The wholesaler had no idea what they were worth or how much in rehab they needed, but she had negotiated the seller down to a very nice price. She assigned them to me for something like $10,000 and that's when I really figured out I was in over my head.

I had rehabbed a handful of houses, and these were all at good numbers, but one or maybe two rehab projects is one thing, FIVE at once? :wowie:

It was a 45 day closing so I put my butt in gear. By the time closing rolled around, I had two of the houses set up to double close, and I had two more sold within a month of closing. The last one I ended up rehabbing myself and finally sold it 4 or 5 months later. I think I ended up clearing about $25,000 on the whole deal when it was all said and done.

Over the next year or two, I ended up buying about 20 more properties from that wholesaler. Funny thing is that most of them I would just wholesale to other buyers.

So, Will, you haven't been able to find a title agent who is willing to file two deeds on the same property on the same day? That doesn't make logical sense to me. Why can't they send the same runner to file both deeds. Then they can be absolutely sure that the deeds are filed properly, and that nothing was filed in between them. That would eliminate all risk for them. That just doesn't make any sense, the title company doesn't have any additional protection by waiting a day and even rechecking the title the next day versus filing both the deeds at the same time.

Thinking about it, most title agents file multiple deeds on the same property on the same day on a regular basis. In heirship situations, this is actually a very common procedure. When Billy is trying to sell his house to me, he will often times get his long lost cousin Elmer, who is also on title, to sign a deed to him. Billy then would take that deed to the title agent, and the title agent would file that deed along with the one to me. They file Elmer's deed first and then Billy's to me, but they still do it at the same time on the same run on the same day. The first deed ends up being County Clerk's number 100000001 and the second deed ends up being County Clerk's number 100000002. Its not rocket science and its extremely common. There is no reason apparent to me why waiting a day to file a deed would give any value to a title company.

And even thinking about the whole 4 day process you described, Will, you could just tell your seller it is going to be 2 days from closing for them to get a check. Then the buyers funds would not be "at risk" at all. The title company could have the verified funds from the buyer on the first day, so there isn't really any risk for them either. Yes, your buyer's money would be out an extra day or two before he or she had official title, but I don't see a buyer making that a deal killer. The title company would already have both deeds signed completing the transactions on both ends and would have the buyers money sitting in escrow to fund the transaction. They have everything they need to complete the transaction.

I don't see any way that a title company would be at any risk with either one of the scenarios I described.

Please somebody enlighten me.

Again, all I see is people not willing to get out of their box. It has nothing to do with laws or even risk, just title agents or title companies who have always done it a certain way and they don't have a desire to change.

I'm sorry, Will, I think I misunderstood you.

So your title company funds initially and then files? Why does that prevent a double closing? The funds would be dispersed the first day and then all the documents are filed the next. I don't see the problem. What prevents them from funding the first transaction on the first day with the second buyers funds and then filing everything in proper order on the second day?

:wowie:

I posted my personal experience above.

I completely understand corporate preferences preventing a certain title company from doing a double closing. Obviously finding the right title agent/company is essential to the whole process.

You overposted my last post, but what Bryan pointed out about Illinois was wrong. I talked to a title company just outside of Chicago, Illinois that is knowledgeable and willing to do them. In reference to your point, Will, why not just wait to fund it until the next day? I have done that on multiple occasions. Its actually very common to wait to fund. That doesn't seem to make simultaneous closings out of the question.

Hmm, that's funny, Bryan. A search on BP brought up this thread for Illinois. In it Jackie Patterson actually referenced that she had used this specific title company for double closings. Just got off the phone with a title agent there and she said double closings were no problem as long as everything was disclosed to all parties.

http://www.biggerpockets.com/forums/49/topics/53177-double-closing-in-illinois

Bryan, the logic of why you stated that you can't in Illinois seems to have some flaws in it anyway. Every state I've ever researched is a "record" state. Filing the deed is the determinant for ownership, but its the same title agent filing both deeds. They simply have to file them in proper order and it wouldn't matter to them.

Look at it this way, you are saying you have to file the deed to be a legal transfer. If that's the case then you aren't technically selling it UNTIL you file the second deed to your buyer. FILING is the determinant of ownership on the first transaction but EXECUTION of the deed is the determinant on the second transaction. Its either one way or the other, but not both.

Why wouldn't execution of the deed be sufficient for the title agent on the first transaction if its sufficient for the second transaction? Or vice versa, if filing is the determinant, then it wouldn't matter when you actually executed them as long as filing order was done properly.

Transfer of title of real estate in every state I've ever researched is by filing of the deed and NOT execution of it (except for some owner occupant/homestead situations where an unfiled deed can still be considered legal transfer). Not to say that there might not be states out there that are different, but I haven't seen one yet.

My market (Amarillo, Texas) and my own portfolio is filled with 15-25K houses that rent for $400-800 per month. They always need varying amounts of work, but my maximum exposure on 95% of my rentals is a monthly GRM of 50 (50 X monthly rent equals my total exposure).

They are all lower end (its hard to find a $20K house in an upper end area in any market), but only one of them is what I would consider a war zone. That one cost me $2,000 and no fix up to get $225 a month out of it.

Chris' insight is indicative of what I've seen in these areas in my market. During the run up, they appreciated even more so than many nicer areas of my market, but they have taken bigger hits with the slow down.

Steve referenced maintenance being similarly priced as upper end houses, but that is not the case in my experience. You don't have to make these houses as nice to rent them, and in a market with these types of houses the standard of living is lower so rehab costs are much lower too.

The ROI on these lower end properties is significantly higher than upper end or even middle class properties. BUT there is absolutely a higher management requirement. At this point for me, it doesn't really matter because I have a property manager take care of mine. If you are going to be doing your own management long term then this is definitely an issue to consider.

Understand, though, that I've had headache tenants who bounced a check and moved out in the middle of the night after letting their dogs piss on the carpet for a year in $250,000 houses just like I have in $10,000 houses. The only difference is that its a whole lot cheaper and easier to get the $10,000 house ready to rent again.

I make most of my living from wholesaling, though I do a handful of rehab to retails each year, too. I do 2-5 deals a month (30-50 a year) and I average about $4,000-5,000 gross profit per wholesale deal. I've been investing for 8 years and actively wholesaling for about 6 of them.

Matt, I think you are confusing "down payment" with "earnest money deposit". Some FSBO's may be selling "Owner Will Carry" in which they themselves are financing the property for the buyer. They will advertise "$1,000 down". A down payment is an initial payment made in order to obtain financing, but an earnest money deposit is a deposit made in order to secure a contract. They are two different things.

You won't be putting a "down payment" on a property that you are wholesaling, but you might put "earnest money" on a property. You should do a forum search for "earnest money". We have had dozens of in-depth conversations about why and how to give or not to give earnest money when wholesaling.

Cash Flow is what initially got me interested in investing in real estate. I also used the minimum ROI that I had developed in playing the game to crunch numbers in buying rentals in the real world (40% minimum).

The game is a tremendous tool to introduce people to investing and the basics of an income expense statement and balance sheet. I would highly recommend playing it on a regular basis to anyone getting started in investing.

I host a monthly Cash Flow Club. Its great for new investors to learn about investing and for experienced investors to network.