All Forum Posts by: John Hixon

@Emmanual Freeman @Gurdeep Walia Wholesaling or assigning is not difficult.  I started 5 months ago in Dallas and have closed 3 deals with a 4th on the way.  Here is how I do it.

The below numbers are just an example:

1. Find a property with an ARV of $250,000 that needs $35,000 in repairs. $250,000 X .7 = $175,000 - $35,000 = $140,000.

2. Find a buyer who is willing to pay you more then $140,000 say $150,000.

3. Assign the contract to the buyer for $150,000

4. Send contract and assignment to title company

5. At closing buyer brings  $150,000.  Seller get $140,000 you the wholesaler get $10,000 buyer gets the house.

Now, that is a very basic summary of how it works but it is not much more complicated in reality.   Now, here are some more tips:

1. You do need to put down earnest money like $3,000-$5,000 not $20 like some gurus preach.  

2. You need to be able to actually close on the deal if your buyer backs out.  If you do not have the funds to close then you do not need to be in the deal.

3. Do not use any weasel clauses like need "pending partners approval" or "pending financing approval"

These things just give real wholesalers bad raps and is the primary reason some states are cracking down on it.

Before you start marketing for properties I recommend you find a serious cash buyer.  I have one buyer who buys everything I get.  The great thing about having a serious buyer is you can ask him before you make the offer what they need the property at.  I send my buyer the address and estimated repairs.  He then tells me I need that property for $150,000.  So that tells me before making the offer how aggressive I can be.  Sometimes you just know that the owner will not accept less then $145,000 no matter what and if you were to offer less they would walk and never talk to you again.  So I can safely offer $145,000 and make a fast $5,000. Seller is happy, I'm happy and my buyer is happy.

The problem a lot of wholesaler run into is they find a property put it under contract for what they think is a good price and then they can't find a single buyer because the price is not good at all.  They then back out of the contract and leave the seller screwed.  That is why I would recommend finding a good buyer first.  

It is easy to find a buyer, just look in the MLS and a couple of neighborhoods where investors are buying properties and see who is buying up the properties. Give them a call and that is it.

Well, best of luck.

@Brad Moody Well I am not a lawyer so I cannot speak as to the legal lines.  All I do is write up a contract with the seller, I put down $3K-$5K earnest money and send it off to the title company I then call up my buyer he drops by looks at the house and we sign an assignment agreement and then I send that to the title company and that is it.  A couple week later everyone closes and I get a check.  If you have real concerns regarding this it would probably be best to speak with a real estate lawyer who is familiar with investing.  

I do not freely market the property because I really just have one serious buyer.  I always let the seller know that I might be assigning the deal.  I have an addendum that says I have the right to assign this contract, the seller signs it and I put it with the contract.   That way there are no surprises and they know exactly what I am doing.  I would always be upfront with both parties, no reason to not be.  In my experience people do not car as long as they are getting the price they agreed to in the contract.   So, as long as you are upfront and honest from the start then I do not fore see any issues.  It is when you try and hide things and then the seller finds out that it could cause an issue.  

If I know from the start that a property is not going to work for me to buy and either turn into a rental or flip I tell the seller this.  I say, "look, in order for me to buy this property I would need to get it for X amount due to the high cost of money and time. But, I work with a large investment group that has access to money and people I do not.  I think the best option would be for me to work with them on this deal and I could offer to X amount"   That way I am being 100% honest in that for me to buy the house I really would have to offer much lower then my buyer can buy the house at .  So, the seller gets more money, I make some on an assignment and my buyer gets a house to flip or rent.  

@Brad Moody Welcome to BP.

I am a wholesaler is Dallas and as you said there are not  a lot of great wholesalers around.  Most try to make a killing on one deal and never end up finding a buyer and then dump the contract at the last second due to a weasel clause they have in it and the homeowner is screwed.  If you cannot afford the house you are writing a contract on then you do not need to be writing that contract.  Also, put down real earnest money $3,000 +.  I see this crap all the time were some wholesaler puts on $20 as earnest money on a $250,000 home.  If your intent is to wholesale or assign the property then be upfront with the seller.  Trust me, they don't care.  I even have all of my sellers sign an addendum that I attach to the contract that states I will be assigning this deal.  

Try and find a serious cash buyer, it makes like so much easier.  I have one buyer and he has bought all of my deals and will buy any and every deal I get.  

Unfortunately most so called "serious cash buyers" are worthless I tried dealing with a couple of them before I found my buyer and have from time to time called some since and they always want the property I have under contract for $10K-$20K less then what I have it under contract for.  

Sorry for my rant, to get back to your question.  Just do not do something dumb, be honest with the sellers and get your contract and assignment form to the title company ASAP.  Stay in contact with the sellers and let them know what is going on.  Use the standard TREC contract and forms not some contract you found online.   

Well I guess that is it. Feel free to ask any questions you have. Best of luck.

@Andrew Khiev Welcome to BP.  I would stay away from any programs.  Wholesaling or assigning really is not difficult.  Find a property for $50,000 that once it is fixed up is worth $100,000 sell it to an investor for $60,000.  The investor gets the house you get $10,000. That is a basic summary but pretty much how it works.  

Just read on BP about it and you will learn plenty. But do not be like so many wholesalers out there.  If you cannot actually close on the property then you do not need to be in this business.  Hate to bust your bubble but there are too many wanna be wholesalers out there with no money just screwing over home owners.  They think their house is sold then come to find out the wholesaler cannot afford it and walks and they are left sitting there.  

Every house I put a contract on I put $3,000 earnest money and I have the ability to close on it if my buyer walks.  People think that this is somehow different from all other types of business, that you do not need money to do this.  Well, you could not be more mistaken.  This business requires a lot of money.   I spend about $1,600 a month on marketing and that number is getting ready to go way up. 

Probably not the answer you wanted but I just see so many people get on here and think that wholesaling is their ticket to fame and fortune.  I also deal with those same fools in real life when I have to fix the issues they caused because they wasted a sellers time with thinking their house was sold then 20 or 30 days later the wholesaler backs out and the seller is screwed.

@Jay London I do not disclose to the seller what I am assigning the contract for to the buyer.  If they are paying attention when they sign the closing docs it will say what I am making but I seriously doubt very many people actually pay that close attention to what they are signing.  In the end it really does not matter so long as they are happy with what they are getting.  The buyer knows what I am getting but that is only after we have agreed to what they are buying it for.  I send them the assignment form along with the contract.  I use Alamo Title in Ft. Worth.  I am getting ready to expand to Tulsa so hopefully I will not find to many issues with finding an investor friendly title company there.  I lived in Tulsa for 33 years so I do not think it will be hard.  

I would just start calling all of the title companies there are in OKC I am sure there are investor friendly ones there. 

So, for those of you who missed my first post about my direct mail campaign here is a recap.  I am working with @Jerry Puckett on a direct mail campaign.  I am sending out about 1,800 letters a month to 3 areas around Dallas, Texas.  I am currently in the 5th month of my campaign and have closed 3 solid deals and have a 4th on its way, which if all goes as planned will be my biggest yet.  I know there are a ton of people on BP that are wanting to get into real estate and are stuck in the analysis paralysis phase.  So hopefully this post can help you overcome that and make the decision to jump in.

If I had to start from the very beginning and do this all over again what would I have changed or done differently?  Well, I would have started off with more letters and a call center.  What I didn't mention before was this is actually my second campaign, the first one I did was kind of a half-hearted effort you could say. I jumped in but only barely with 500 letters per month in one of the hottest and most competitive markets in the country.  I was also working a full time job and trying to take all of my own calls, so I was doing what 99% of all investors do is letting the sellers leave a message and then I would call them back.  That just was not working, most callers would not leave a message and the ones that did where either angry that I sent them a letter or angry that they were needing to leave a message.  So, this time around I did things completely different.  I increased my mailings from 500 to 1,800 per month and hooked up with @Ryan Dossey to set up my call center.  

To all newbies out there I can tell you this.  If doing this is truly what you want to do, then fully commit to it and make a real investment to start off with.  Sure you could throw a little money at it here and there and hope to get lucky but chances are you will only be throwing that money away.  And, this business is not like what all of those gurus say it is, it would be extremely difficult to become successful with just driving for dollars and mailing out 50 letters a month.  It always amazes me that people think real estate investing is somehow unlike all other business out there.  If you want to start a business and make that business a success you need capital.  And, you need to invest that capital into your business.  

If you are thinking about starting a direct mail campaign here is a key piece of advice. Find some buyers and learn what they are looking for and how much they are willing to pay for it. A lot of people will tell you just get a deal and if it is a good deal you will not have trouble finding buyers. Well, that is partially true, if the deal is a great deal then yes you will find a buyer but not all deals are great some just barely make the numbers. So, I would recommend finding some quality cash buyers in your area and talking to them about what they want and more importantly what they are will to pay. So, I know in advance that buyer X is willing to pay 78% of ARV for this property I am going to see. That is a huge advantage when speaking with a seller if you know that you have a buyer willing to pay X amount for this house you are looking at. I would have lost a couple of deals if I would not have known that my buyer (who has bought all 3 of my deals by the way) was not willing to pay X amount. For those of you who don't know, when you are speaking to a seller you can get a feel for how desperate they are or how much they are willing to sell for. Thanks to my call center I know before hand what they are looking to get and I have an idea of what the ARV is. So, if I know the seller will not except less then $130,000 under no circumstances and the ARV is $220,000 and it needs $25,000 in repairs but my buyer has already told me that if I can get that property for $135,000 he will take it then I am not going to risk insulting the seller or ruining this deal by offering some super low amount just because that is what the "flipping formula" tells me to offer. $5,000 assignment fee is not a home run but its $5,000 more then I had when I woke up that day. Here's another thing, get away from the rules of thumb, that is all the are, basic guidelines. Some wholesalers are so stuck on the 70% rule that they just throw away deals where they could have made four or five thousand real fast by just listening to what the seller is telling them.

Here is a tip on finding buyers for your properties. If you are meeting with a seller, jump on the MLS or find someone that has MLS access and look at all of the sales in that area for the last 6-9 months and see who is buying the properties in that area. More then likely you will have 1 or 2 LLC's buying up properties. Find them online and call them and let them know you have a property you might be putting under contract, I guarantee they will buy it from you. Especially if the listing shows less then 10 days on market, that means they are serious and have cash to move fast. If the house you are looking at is very similar in size and condition to the house they bought for $140,000 just 1 month ago then that tells you right there that if you can get it for under $140,000 you have a buyer. That is exactly what I did on my first deal and now the buyer I found on the MLS just so happens to be my buyer for all 3 of my properties and will take every single deal I get no questions asked. In fact, I just put a house under contract on Monday and it was sold to my buyer on Tuesday. It's just that simple and fast when you find a serious buyer who has cash to move.

So to conclude, for all of the newbies on BP that are just reading forums and listening to podcasts sooner or later you are going to have to make a decision to either fully commit or not.  You will never make your dreams come true by just reading the forums.  I have learned more in the last 5 months then the past 2 or 3 years on BP.  Jump in and you will either sink or swim but neither will happen if you don't jump.  It will be up to you what happens after that. 

@Will Skillman I have used Fiver for a lot of stuff and always had a great experience.  Just make sure you read the reviews and send questions to the seller before placing your order.  I think by logo cost $10.  I got a website for $60 and Microsoft templates for $20.  

@Eric M. Congrats on getting a call.  Ya, that happens sometimes people call about different properties.  First off you want to determine what the value of the property really is.  They may be asking $280K but what is it really worth in its present condition and how much work will it take to get it in the type of condition you want.   Then just set up a meeting with the seller and discuss the situation with them.  See what their motivation is for selling and try and judge how much they really want to sell.  Then just make them an offer based on what you feel the property is really worth given how much repairs are required.  People may want $280K but they will probably settle for less.   I just bought a house the lady wanted $100K, I offered her $72K and she took it without hesitation.

@Kyle Lopez Just out of curiosity what formula do you use to calculate your offers?  How are you finding your leads? 

As far as lack of buyers if you get a real deal that is truly good you will have no issue finding a buyer. But you should talk to them and see what percentage of ARV they are buying at. That will give you an idea of how high you can go.

I have a property that I am putting a contract on and I am evaluating what to do with it.  This deal could go two ways, 

1. I flip it and could make around $100,000 in a matter of just a few months. 

2. I fix it up and have a rental that cash flows around $1,000 a month.  It is also in an amazing area that is going to get great appreciation, so I have that to consider to.

And, if you read Brandons new article I could hold that for the next 12 or 13 years and pay for my daughters college.  

The current ARV of the house is $250,000. I am looking to get it for around $60,000. The house needs about $35,000 in repairs due to vandalism. Rents in the area are around $2,200 a month.

So, what would you do, go for the fast big paycheck or long term rental with great cash flow?