All Forum Posts by: Ryan Webber

Multidwellings are the best I have found for ROI for rentals. Now of course, there is a trade off. Multidwellings are more commonly going to have transient tenants and therefore more vacancy issues. You also have to deal with inter-complex tenant conflicts. But if you can deal with the headaches you will make a better return than on single family houses.

Finding deals is a business in itself. I would recommend getting involved with your REI club and networking with some wholesalers. If all you are looking for is ready to go rental property (no rehabs) then different types of marketing may not give you the return you are looking for. If you are willing to do some work to get a cheap price then I would recommend to start building a marketing campaign for finding properties.

Because rents have not caught up with many market's appreciation rates, residential rental property might not be a good investment strategy in some areas. If that is the case and you are still wanting rentals, I would expand my search to outlining areas. Obviously the closer you are to the property the better you can manage it, but you may have to sacrifice some of your income for a property manager in a distant market.

Rental returns are always highest on lower end property. Buying in middle or higher income areas in any market will always bring lower returns on rentals. Its a trade off. You can get better tenants and less headaches with higher end properties, but you will be sacrificing ROI. If you are looking for the most return, then look at areas that average 30-50% of the average priced house in your market.

Understand also that it takes a thorough and diligent effort to find the better deals in any area, but they are out there.

I'm sorry, Caesar. I missed your post or I would have answered sooner.

In the situation you described where you would wholesale a property from a wholesaler, the procedure would depend on if it was before closing or not.

If it was before closing and I was double closing, the person I was double closing to could use an assignment of contract to assign the property to someone else (the original contract is not altered).

If it was before closing and I was assigning the contract, the person I assigned it to could double close the property to someone else.

Now I am avoiding the idea of a double assignment (the person I assigned it to assigns it to someone else) only because I have never done one and have never consulted an attorney or title company to find out if that's possible. I have done one deal similar to that and for some reason the person that was doing the second assignment was paid as a consulting fee on the HUD 1. I plead ignorance, though. I don't know what the laws are around a double assignment, but it would seem to me to be doable.

If it is after I have closed on the property then someone purchasing it from me could assign or double close it to someone else as normally done.

Now let me say this, I do not allow an assignment on a property I am selling unless the assignor fully understands that they are still completely liable for the contract (in my eyes atleast) and that I have their $1000 minimum earnest money. I also do not allow any contingencies on my contracts.

On an assignment, the HUD1 will document your fee on the buyers side as an assignment fee. On a double closing you take home the difference between what you owe on the buying HUD1 and what you made on the selling HUD 1. In both instances you are paid by the title company.

Having earnest money with a contract is always the wisest financial decision for a seller. When I am a buyer I want the lowest price for the least amount of money out of my pocket ($0), when I am a seller I want the highest price with the most out of the buyer's pocket ($1,000 minimum). It's just good business.

Power is a huge negotiating factor. I know when I am buying I have the control of the situation. I am most likely dealing with a motivated seller who really wants to sell to me. I deal in situations where the seller has a huge problem that they are hoping and possibly praying for a solution to. I provide that solution, but I provide under my terms. It's my money and I have that choice, so I create the terms favorable to myself.

When I am selling, I have control of the situation. I don't have to sell to anyone. I have developed my business to a point that I know I can wholesale a property to someone else or rehab it myself if I have to. I don't have to sell, so I create the terms favorable to myself.

Now let me balance this whole discussion with the idea of ethics. I do most of my business with people in desparate situations, so I balance that in my own conscience. If I can help someone and hit my numbers, I do it. There have been times when I know I could get the property for less but the situation led me to offer more than I knew I could get it for.

A good example of this is a house I bought this month from a recent widow. She was an elderly lady and her sister had driven from 6 hours away to help her deal with it all and to help her move back with her. The widow needed to sell her house very quickly and told me within 5 minutes of me walking into the house that she would take whatever I offered. She was crying talking about her husband, and she just wanted to move back with her sister. She was leaving the next day to go back with her sister. The house was all this old lady had and I knew she would be living off of the sales proceeds. It was paid off and I knew that I could sell it easily for $20,000. I also knew that she would probably take $5,000, maybe even $3,000 if I worked it. I decided to give her $15,000 for it. We closed quickly, and less than a week after buying it I sold it for $20,000 to another investor. I helped the widow out by taking it off of her hands quickly and giving her the money she needed to live on, and I still hit my numbers.

I still didn't give her any earnest money, though. lol

If you don't have a purchase contract yourself, the investor you are buying it from may have one. If the investor is a wholesaler then they will most likely have their own contract they want to use.

If you are starting with that kind of capital, I think I might do a deal or two to get some experience and then go the bank for a commercial line of credit. Use your money as collateral. You can probably escape any major points or downpayment and you will be paying prime or prime plus 1 or 2.

Welcome Ophri. I seem to remember seeing several members from the Atlanta area, so you will most likely have many local networking opportunities.

Being successful in any business will require years of diligent effort and commitment. Successful realtors can make a very good income ($100K+ and some much more than that), but the average realtor, like the average investor, doesn't make much money at all. I think I read a statistic that the average realtor makes $20K per year. I would attribute that to a lack of years of diligent effort and commitment.

Whatever you decide to do, understand that to be successful you will have to give years of your life in diligently pursuing your goals with commitment and effort.

Always make sure to consult with a competent attorney before doing some of these creative investment startegies.

In Texas, laws around lease options and contract for deeds (land contracts) have changed drastically in the last couple years. A seller becomes extremely liable (upto $250 per day from the day of closing) if stringent rules are not followed precisely. There is case law in Texas of seller's losing their entire equity on a house that was paid off.

Thanks Wes for your comments, and I would be glad to share some wholesaling principles for selling a house.

The number one key to SELLING wholesale property is networking. A wholesaler's success relies completely on two things, finding deals and your investor buyer network.

See if I am a rehabber I can find 5 or 6 houses every year and not have a good network. If I do rentals or owner carries or lease options, I can build a very substantial portfolio with just networking with a couple people. But if I am a wholesaler then my success will be completely dependent on my network. I will succed or fail completely depending on how strong my network is.

I sell 90% of my property now with my network. I usually can make a handful of phone calls and sell most houses I have. For the last year, I have been incorporating my wholesale properties into my website. It took me about a year to train my buyers to look on my website, but I still don't rely on it. The phone call to the investor that I know is looking in that area for that kind of house with that kind of work for that price is my number one selling method.

When I am looking at a house to buy, one of the first things I think about is who can I sell this house to and for much can I sell it to them for? Now over the last couple years, I have developed a database of over 300 investors in my city of 200K, but there are about 30 in that database that are serious buyers. I know I can call 2 or 3 of them and tell them about the house, and I have a very good chance of getting a contract to sell it within a day of putting it under contract (sometimes in a matter of hours). Most of these investors can close in less than a week, two weeks at most. I have investors now that call ME and tell me their looking for this type of house in this area for this much. I love it.

When I first started building my network, I did everything I could to search out and network with every investor I could find. I started out searching them out on the tax rolls and at the county courthouse records. When I saw someone working on a property, I would stop and talk with them. Whenever I would get a property I would put an ad in the paper, and normally I never sold it with the ad, but I was building my database for my future deals. I would search out people who bought HUD repos or REO's and network with them. When I came across my local REI club I thought it was a dream come true. Here's a gathering of people with the sole purpose of networking. On a slightly different note, I remember when I was getting started I had a house that I had actually rehabbed, and I called 6 different realtors to come over to talk about listing it. I was interested in listing it, but I was more interested in networking with them. I ended up selling it FSBO. lol. Two of the realtors, though, I still do business with today.

A wholesaler's success depends on two things. Finding deals and their network.