All Forum Posts by: Ryan Webber

I always rent multi's when I'm trying to sell them. It maximizes your profit with the rental income coming in. Multi's will naturally take longer to sell because there is a smaller buyer's base. Why not maximize your cash flow in the meantime.

As for the appeal to an owner occupant if one side is vacant, you are dealing with an even smaller buyer's base in that situation. An extremely small percentage of buyers will be looking to do that. So small of a percentage that you should not cater around it. The vast majority of the buyers for a duplex are non-owner occupant investors that are buying it for cash flow.

In my extensive experience selling smaller multi's to investors, a leased property appeals to a larger investor group than one that still needs to be rented. Its a turn key income producing asset. That absolutely adds value.

I also disagree with Jake that most duplex landlords don't like inheriting tenants. If you've done basic screening on them, a paying tenant is a paying tenant. My cash flow investor buyers love stuff that is already rehabbed and rented. All they need to do to start cash flowing is go introduce themselves.

Now make sure you are using strong leases (you should normally be using an Apartment Association lease) and that you are asking market rent. Putting tenants in there with below market rents and crappy leases is not added value.

As for showing the property, I make sure that only serious buyers get inside to bother my tenants. And I've had very few problems showing rented properties.

Will, that seems a little extreme. I've rehabbed a lot of houses (even as a kid) and I've never heard of anyone dying from basic remodeling.

I was helping remodel our house at 11. I was wiring houses when I was 15 with my step dad and older brother. A strong childhood work ethic is the most common trait among wealthy adults. I agree with Quarles, we need more child labor. There's liability with any employee, adult or child. Take basic precautions but put him to work.

As for claiming it, I would document it as an expense against the property just like any other you have.

I bought an HOA once at foreclosure for 8K. I was the only bidder on it. I had to dig pretty deep, but I had researched it and found out that there was only 7K left on the first mortgage (in Texas they are NOT inherently superior liens). I paid off the first, and sold it for 35K a couple weeks later for a nice $20,000 profit.

Superiority of tax liens, HOA's, city assessments, etc are all state specific.

Auctions and newbies mixed together is crazy to watch. The stupidest things I've ever seen an investor do were at auctions.

As long as your contract is legal then no particular wording is necessary. If the seller falls of the planet and stops taking your calls, its probably because they found somebody who will pay more. The best thing to do at that point is file a lis pendens. It cost me somewhere in the neighborhood of $300 to have an attorney file it.

I have no issue making a seller follow through on their side of the contract just as I would have no issue with them making me follow through on my side. That's what a contract is for. Each side is making a commitment to do what is outlined in the contract, and I don't see anything wrong with using the law to enforce those commitments if necessary.

I've done the memorandum and some other jicky filing stuff and if the seller talks to an attorney, they will tear right through that stuff. On the other hand, a lis pendens with a legally binding contract and their attorney will tell them they need to sell it to you. You probably won't end up in court, it usually gets hashed out before that.

Now out of the 10 or so times I've had a seller get cold feet (every time its been because of someone else offering more money) when I lean on them that they signed a legally binding contract and that they are legally bound to sell it to me just as I am legally bound to buy it from them, only 3 didn't just move forward with the transaction with me. On the first two I filed something similar to a memorandum. One came around and the other got an attorney and shredded it. The 3rd time I used an attorney to file a lis pendens and the seller quickly changed his mind and sold it to me.

Sorry Namon, I don't know any title companies in Houston, but you can get in contact with some investors from your REI club and I'm sure you will find an investor friendly one.

QCD's don't work in Texas because title agents or rather title attorneys don't like them. Let's hit this point one more time. All that matters is what your title agent wants. If your title agent says that they need a sock from the great grandmother then we get a sock from the the great grandmother.

Now keep in mind that different title companies will sometimes require different things. Some companies will take some risks that others will not. There is normally not a lot of latitude with different title companies but there is some.

As for the particulars of why no QCD's in Texas, my title agent told me that there's some case law about heirs being able to come back to make claims on the title even though it was quit claimed. I'm not sure about the exact particulars on it, but title companies in Texas won't touch them.

Wholesaling is work, just like any other strategy. And most people don't like work, so most people who wholesale suck at it.

But the same is true for most people who do rentals, notes, rehabs, land contracts, lease options, owner finance, sub 2's, and really any business strategy in any industry I can think of. Success comes from working and most people suck at working, so most people suck at success.

I have to admit that wholesaling is definitely losing its sex appeal. It used to be real sexy 5 years ago, but now its starting to get old and wrinkled looking. It still makes money, though, which is really what matters.

I've wholesaled for 7 years and I just did 2 last week. I also do rehabs, rentals, and notes. All of which are still viable strategies for income for me in my area and when worked at properly, are probably still viable sources of income in at least 95% of the United States.

I got a call from a newbie wholesaler last week who is branching out virtually across Texas because, according to him, his home city is too saturated and you can't make any money in it. He had to get off the phone to talk to his coach before I could tell him that I was regularly doing deals in his home market and I thought it still had a tremendous amount of opportunity.

The man who says you can't do something should get out of the way of the man who is actually doing it.

As for buying a rental to start, the issue to consider is the next step. What is your next step? How are you going to get your next deal?

Generally speaking, growing a portfolio of long term holds requires capital. So unless you are starting with a large pool of cash, you need to focus on a strategy that will make you more money. Lots of money. Large chunks of money. Either your job/business or your real estate business needs to provide this source of capital. A single rental property just isn't going to produce enough, fast enough to grow a portfolio from.

Let's say it takes $10,000 to purchase, finance, and rehab a rental property that you will net cash flow $300 per month on. Well that's a pretty strong return of 36% Return On Investment on your $10,000, but its still going to take you 3 years to save up your cash flow for the next one. Now as you buy the next one and the next one, your profits will compound and you will be able to buy properties faster and faster but your growth rate is pretty slow. It'll take over 5 years to get 4 properties. So the trick to doing it faster is to build a business that generates more capital in the meantime (like wholesales, rehab to retails, etc.). Strategies that you can make chunks of cash to reinvest into your long term holds portfolio.

Lol, Don.

VA=Virtual Assistant - someone somewhere who works for you via the internet and/or phone

?!? Namon is asking about mechanics of putting a deal together. He's not trying to sell a deal. Not sure where you're coming from on that one Jake.

And really this isn't even a "Wholesaling" question. Its a general investing question. In ANY exit strategy, if you are buying directly from homeowners you will deal with "HELL NO" responses and title issues. These are both extremely common occurrences and are are not specific to Wholesaling.

Namon Thorn You've already gotten good advice.

"HELL NO" is the most common response you will hear to your stupidly low offers. Get used to it. Its a numbers game.

As for the title issues. ASK YOUR TITLE AGENT. All that matters is what your title agent needs for clear title. Only do what your title agent requires. A Quit Claim will not work in Texas. If his nephew has title then he can just deed it to the uncle and then to you or directly to you from the nephew. You will need an attorney to write up the deed, but really what you need to focus on is your title agent. What is the title agent wanting? That's all that matters. Also, different title companies will sometimes want different things done.

Its not illegal in Texas to assign or double close a contract, and most title companies are just fine with assignments. Assignments between entities (not the wholesaling type but contract assignments nonetheless) are common in commercial real estate, and are pretty straight forward for most title companies. Double closings are something that many title agents/companies are uncomfortable with, and the majority of them won't do them.

Just call 5 title companies, ask for an agent who deals with investors a lot, and ask the agent if they do assignments. I'm sure you will find several that have no problem with them. You can also track down some other wholesalers (try I BUY HOUSES ads and signs) and ask them who they use.

Ok so I've been out in the wilderness for 4 days with no phone service, so I'm just now getting back for Round 8 here with the wholesale haters.

:) jk

First off, I fully respect Will's opinion on just about everything he posts. I don't necessarily agree with everything he posts and I have no issues sharing that adamantly when the time arises (as is obvious). But either way I always respect him when we're done. I can't honestly say that with other posters that I debate with.

My passionate defense of wholesaling was generally motivated by the wealth of negativity expressed in this thread but very deeply motivated at your statement,Will Barnard, about wholesalers being the cause of current market conditions and the reason banks list REO's for such high prices. I believe those particular comments were inflammatory, exaggerated, inaccurate, and mostly rooted in your frustration with idiot wholesalers and not in the reality of the impact they truly have. I consider you to be a respected and influential contributor here, one of the BIG BOYS, so to say, and I become exponentially more motivated to put on my boxing gloves when I see someone of your caliber making asinine statements like that.

Either way, I personally believe and have built my wholesaling business on the idea of having financing lined up for any deal that I can't resell before closing. I also have a lot of experience with rehab to retails and rental properties, which I believe a thorough knowledge of both of those are tremendous assets in my wholesaling business. I believe that in the long term, following through on ALL of your contracts is the best strategy for a viable wholesaling operation. I have yet to see a long term successful wholesaling business built on backing out of contracts. Out of the 400 properties I've bought over the last almost 9 years, I've had ANY type of contingency (other than clear title) written into MAYBE 10 of them. Contingencies are not a part of my normal business model.

And yet, even with this being my own model for wholesaling, I strongly advocate that a NEW wholesaler should have a contingency in their first handful of contracts. To maximize your odds of success and really more to minimize your odds of failure as a new wholesaler, I believe it is paramount to put a contingency in your first contacts. Let's say the first 3 or so. I also believe that to greatly diminish the chances of your failure in this business, you SHOULD back out of those first contracts if you can't get them sold. I do NOT believe this is a sustainable model for success in wholesaling, but I also believe that the percentages of actually achieving success with your first wholesaling deals is so low that it is paramount to protect yourself strongly in the beginning. Newbie wholesalers are just as uneducated and vulnerable as most homeowners, so the whole argument of one taking advantage of the other seems pretty weak to me. You have the blind leading the blind here, and playing the ethics card on that seems pretty weak to me, too.

I balance this argument with the idea of fairness to the homeowner. I believe having a clear understanding with the seller that there is a contingency period and to be respectful of not dragging them out. A 2 or 3 week contingency period is perfectly ethical in my opinion, and I have absolutely no issues with any wholesaler who puts that in their contracts. Having long dragged out contingency periods is, in my opinion, rude and unethical. I've seen wholesalers who put 60 or 90 day contingencies or even recurring, never ending contingencies. I disagree with this approach. I also think extra care needs to be applied when you are dealing with a time sensitive homeowner (pending foreclosure). Even a 2 week contingency in this situation can pose severe risks to the homeowner and I think the responsible choice would be to pass or to be ABUNDANTLY clear to the homeowner about your lack of ability to insure a quick closing or a closing at all.

I personally do not feel responsible to share with the homeowner my intention of wholesaling their property. In my own business model, I'm going to close on it either way, so it doesn't make a difference in my perspective.

In a contingent model I would be okay with being very clear to the homeowner that the contract is contingent for a certain time period and leaving it at that in most scenarios. I don't feel responsible to share the inner workings of my business model with a seller. I never have. I don't tell sellers, "Hey I intend on buying this house from you, fixing it up and making $20,000 on all the equity your father worked for 30 years ago." With full disclosure in mind I guess I should tell the seller to call my competition because they will pay more than I will. Or I guess really before we sign the contract, I should disclose the names and phone numbers of my top buyers so that the seller understands exactly how much money they are losing by selling to me.

Its called a free market economy, and as long as I am performing in the context of my agreement with the seller, I am okay with the "ethics" of it. I do feel that the agreement should be fair and understood fully by all parties.

As for the legality of substance over form, I've seen several instances of case law supportive of wholesaling not being unlicensed brokerage. Unlicensed brokerage is always the angle I have seen taken by plaintiffs, and the only one I have seen prevail was the Indiana case I referenced before. Which that particular case involved options, and was about a whole lot more than wholesaling. Either way I'm not an attorney and neither is the other poster in the this particular debated issue, so I would recommend discussing it with someone who is. I've personally never had an attorney tell me that wholesaling is illegal.