All Forum Posts by: Ryan Webber

As Kevin shared, the "technical" part is really the easiest part of wholesaling.

The next step is to take your contracts to a title agent to get the title search and closing process moving forward. The title agent will hold your hand through everything else.

I would go back to the same title agent. That title agent is obviously comfortable with assignments or double closings and that isn't common. I doubt they will ask you for the deed, but your corporate papers will be required. You wouldn't need anything else other than the contracts to start the process.

I would not let your buyer pick the title agent, and I would recommend that you stay very active in the whole closing process. Its your money at the end of the road, and you need to be ready to do whatever you need to do to make this whole thing get there. Now you are a babysitter. A well paid one (hopefully) but a babysitter nonetheless.

"resident wholesaling optimist"? Hmmmm. Yes, I guess when you compare me to some of the pessimists that reside here.

"anyplace any time is great for wholesaling"? Well I'm going to have to be the resident pessimist on that one. Focusing on certain areas versus others is essential to long term success in wholesaling.

I set out some of the criteria a couple months ago in this post:

http://www.biggerpockets.com/forums/93/topics/55508--wholesaler-beware-

Many posters I'm sure will follow me and share with you that you should go and find some investors and then find out what areas they want to buy in and then go find houses in those areas.

Well that idea is flawed.

Areas that are MOST conducive to wholesaling are NOT the highest demand areas in your town where EVERY investor wants to buy. If you polled 100 investors in your town, the top 5 to 10 areas that most of them want houses in will NOT be areas that you want to focus on for wholesaling.

The whole idea of just asking investors where they buy and then going to those areas is flawed because it only factors in demand. Wholesaling as a profession is not just about demand. It's not even MOSTLY about demand. I know starting out the whole issue is finding investors to sell to that have cash, but its only a matter of time before you find more investors than you know what to do with.

The bigger issue in wholesaling is supply. To generate income on a regular basis from wholesaling, you have to focus on keeping a regular supply of houses.

And you will not find a regular supply of houses in the "most popular" areas for multiple reasons.

First and foremost is that unless an area is at least 30 years old, you won't find the equity to consistently buy deals in that area. The "most popular" investment areas are typically not 50 year old areas. Trying to find equity in an area that is 10 years old is a quest for the Holy Grail. Good luck. Obviously this does not factor in the whole short sale option, which can generate equity in these areas but is not the focus of this discussion.

The second factor to consider with the whole "most popular" area approach is that you will have the highest level of competition in finding deals in those areas. Even if the area has plenty of equity, if 75% of investors want houses in that area, it will be crawling with competition who are drooling to buy houses there for more than you, as a wholesaler, can pay for them. Yes, you can sell a house in that area in 3 days flat to 42 different investors with cash, but if you can only find one every 6 months to sell then you will be eating beans and cornbread nonetheless.

First and foremost, don't waste your time in areas that have no equity (less than 30 years old).

Second, don't focus on the areas that have ultra hot demand. Too much demand is just as bad as too little. It is more profitable to focus on areas that have moderate retail demand to minimize competition and ensure adequate supply.

I will make dramatically more money focusing on an area where I can find 10 really good deals but I only have 5 really strong investors to sell them to, versus being in an area where I can only find 1 really good deal but I have 100 really strong investors.

Wholesaling successfully is not about following the crowd. Its about purposefully focusing your efforts in areas that will maximize the effectiveness of your time and money.

Mostly newer folks, but every once in awhile I get an old timer asking me who I use for insurance or as a contractor.

And as Bill pointed out, only "refer" your buyers and sellers to other people. I would not ever require anyone to use anyone, well except my title agent. I always try to use mine.

My title agent is the best in town. A couple weeks ago, I sent in a contract at 11 am and the seller and I were closing with clear title at 3 pm that SAME day. Clear title and closing in 4 hours, that is awesome. Just got to give her a plug here. Kathryn Wilson with Lawyer's Title in Amarillo, Texas. She's the best I've ever worked with.

As for the SAFE Act, the national one (if your state doesn't have its own then you fall under the national one) does require a mortgage license to originate notes, BUT if your "note buyer" has their license you can set them up as the direct lender to your buyer so you are not originating the note. Most note buyers are not equipped and/or comfortable doing this, so finding one is not easy but they are out there. I knew a hard money lender that used to do exactly that, and he was a local lender that knew the market very well and was very comfortable loaning on houses in certain areas for certain prices.

With the SAFE Act and with any other legal maneuvering, you should always check with a qualified attorney in your state FIRST.

Remember as a beginning wholesaler, KISS it, Keep It Simple Stupid. As you gain experience you can tackle more creative ventures but there's no reason to complicate the model. It works. Just work it.

If you don't have commercial bankers, hard money lenders, conventional mortgage brokers, contractors, realtors, title agents, appraisers, attorneys, and insurance agents to refer your buyers to, I think you are missing the boat.

Adding value in these ways helps promote your buyers to buy. To me its a no brainer. My experience in real estate is that your net worth is directly proportional to your network. Though wholesaling is about income and not assets, the same idea holds true as a wholesaler. You need to have the best network in town.

So from what you're saying it seems the State of Indiana has determined that an "option" to buy does not constitute an interest in a property and selling that option can be construed as brokering. That's good information to have if you are wholesaling in Indiana. Again, always seek qualified legal counsel in your state.

I would argue, and have argued on this forum for many years, that Scott's idea technically IS wholesaling. Wholesaling is an exit strategy in which you are reselling houses to NON-end users (i.e. to other investors). If you are selling a house to an investor who is going to then resell or rent it out, then you are "wholesaling", whether you have closed on it yourself or not.

Now the two most popular transaction strategies utilized in wholesaling are assignments and double closings, but the "technical" definition encompasses transactions outside of just those two strategies. Wholesaling means that the buyer is not the end user. Wholesalers in the retail industry sell products to stores that then resell to the "public" end users.

I would actually argue that assigning a property to someone who is going to live in the property is NOT technically wholesaling. You are selling to the "public" at that point. You are a retailer, not a wholesaler, even though you are assigning the property.

As for wholesalers being everywhere, its been like that for years. This is actually a discussion we've been having on here for years too.

Its like when your wife is pregnant. All of a sudden it seems like everyone is pregnant. You start looking for it more and seeing it more. Are there cycles of massive percentages of people getting pregnant that perfectly coincide with your pregnancy? Probably not. You just don't notice it as much when it doesn't apply to you.

I remember when I first got in to the business, my business partner came to me and was sincerely concerned. It seemed to him that all of sudden everywhere he looked For Sale signs were going up on houses. He was sincerely concerned that the market was shifting and we weren't going to be able to sell our house because of a massive influx of supply. The house sold, and over the last 7 years I've bought and sold 300 more houses.

Be careful. Your perception has a sneaky way of getting in the way of reality.

Sorry after a month of no requests I threw it away. Contact the Attorney General of Indiana for a copy.

Most state's real estate licensing laws specify that it's illegal to buy or sell real estate without a license, and then down the page a little it specifies the exceptions to that rule. Owning the property is always one of the exceptions. The issue is whether having an interest in the property through a contract qualifies under whatever they term that ownership exception as.

I am NOT an attorney, but my understanding from different attorneys and from different cases that I've studied is that a valid contract does constitute an interest in a property, and that interest can be enforced in a court of law. That interest can also be assigned or sold. It is similar to having a lien on a property, and I can sell that lien or interest to someone if I want to and it does not fall under real estate licensing laws. That was my understanding and I was completely confident about it in all 50 states until I saw this case.

This is the very first case I've heard of where the point of prosecution was a wholesaler assigning contracts. The prosecution was asserting that he did not have an interest in the property, which to me, seems absurd. When I looked through the complaint it appeared to my untrained and non-attorney eyes that Jeff Raudabaugh did not seem to try and fight the prosecution in court. It appeared that he rolled over and just took whatever they wanted to stick him with, turning down an opportunity to even file a motion for a trial and instead immediately going to judgment. The outcome might have been different if he fought it harder. The whole ordeal came to light several years before and I would guess he was out of money and unable to afford adequate legal counsel.

Keep in mind that he had screwed a dozen investors out of almost a million dollars, too. That kind of thievery is going to strongly motivate the prosecution to find something to nail you to the wall with. I would guess that 100% of the prosecution's decision to try to nail him to the wall was because he was screwing people. They decided to try and nail him to the wall through this arguable semantic of contract law, and it worked.

I seriously doubt the Attorney General's office is going to start chasing down wholesalers in Indiana, BUT bottom line is that if you are wanting to wholesale in Indiana, you need to go talk to a qualified real estate attorney in Indiana about this specific case.

You believe this exactly why? Did you read the articles I posted? Jeff Radabaugh was using "Assigments of Contract" and he now owes almost $1 million in judgments. His buyers would have been signing an assignment which would have clearly informed the buyer of his fee. It would have also been on the HUD-1. This is NOT about disclosure.

The only people you will ever hear about making anything close to that kind of money in wholesaling are gurus, and gurus say they make that much so you'll buy their product. I've actually never even seen a guru claim that they've even made that much profit. And upscale homes in this market? That's the hardest hit market in the country. I think you should get your money back, Champak. Somebody sold you a bill of goods.

You haven't even done a wholesale deal and you are on here telling people what they should and shouldn't do and what they can and can't do? WHAT?!?! Really, Champak, you should try talking less and listening more.

Ahh, no. In the case of doing assignments in Indiana, check with a qualified real estate attorney. I would actually ask them specifically about this case, and see what they have to say about it. Asking a realtor about anything but comps is a mistake. They won't even know what an assignment or double closing is. And hard money lenders? I'm not sure why you would ask them about whether you should assign or double close.

In every state other than Indiana, I would recommend assigning unless you are going to show a large profit, and then I would recommend double closing. REO's and short sales you have to double close, so those are a different category.

The bottom line being that if you are wholesaling in Indiana, you need to seek competent legal advice about doing assignments solely because of this specific case.

Also I talked with the Indiana Attorney General's Office and they wouldn't give me any straight answers on the issue (which I kind of expected) but they did send me over the official complaint, judgment, and punishment. The woman I talked to said that she didn't know of any other cases since or pending that are relevant to assignments but she said that she is unable to verify completely that there aren't any others.

If anybody is interested, message me and I'll send you the file the Attorney General's office sent me.

Here's what I could dig up.

http://www.fortwayne.com/apps/pbcs.dll/article?AID=/JG/20070928/LOCAL/709280322

http://www.journalgazette.net/apps/pbcs.dll/article?AID=/20080314/LOCAL/803140324/0/LOCAL07

Pages 7-9 http://www.in.gov/dlgf/files/ALLEN_2009_NARRATIVE.pdf

There is definitely more to the story here. It would seem to me that the State of Indiana DID use the fact that he was using an option contract and then assigning the properties rather than being in the chain of title to prosecute him. Now the reason WHY they decided to prosecute was not because he was assigning properties but because his Ponzy scheme was collapsing. He made up to double the purchase price selling the properties on allegedly inflated appraisals (the appraisers had their licenses suspended) to investors that he would then buy the properties back from on land contracts and then rent them out at rents that would not cover the mortgage payments. He stopped paying the investors and they went to the attorney general.

The Indiana attorney general's office stated

I would schedule walk-thru's with realtors, homeowners, investors, and anybody else that will let me see the inside of their house whether they are selling or renting in those areas. You need to know what houses in that area look like inside and out. Do they have tile or vinyl, central hear and air or wall furnaces, garages or are most of them converted? You need to know what people in that area expect in a house.

List price obviously means little but normally its within 5% of sales price. Yes, realtors will give sold data information. More importantly, getting ALL the sold values from a realtor for the last year for that area is part of learning your farm area. Zillow or similar services are a joke. I wouldn't recommend using them to determine value. The MLS is what you need to use to determine value from comparable sales.

You answered your own question. If you can only do it once a month, then do it once a month EVERY month consistently and persistently. If you can do it once a week, then do it once a week EVERY week consistently and persistently.