All Forum Posts by: Mike Hill

Anthony, 

I don't think there is a standard "one size fits all" way to get started. Are you looking to wholesale full time and turn this into a business, or do you just want to do a few deals a year for supplemental income?

I agree with David that wholesaling is a full-time job... but, it's not meant to be that way forever. Ideally, you scale up and create a business and systems that gradually require less and less of your direct involvement. I learned this from Michael Gerber in the E-Myth and from Kent Clothier at one of my local REIA meetings years ago. Kent told me to "Fire yourself as often as possible" which always stuck with me. Anyway, I'm getting off topic....back to your questions.

What is your monthly marketing budget for wholesaling (that you can commit to every single month for the next 12 months)?

What is your availability (hours per day or hours per week) to put into your business (realistically and with consistency)?

I agree that you should start going to your local REIA meeting ASAP.

Also, get on all the wholesaler's buyers lists in your market. This will give you good insight into the demand, target markets, etc. You may be able to reach out and partner with some of them as well. Just be sure to provide value from the start and be persistent. I get emails everyday from people who ask me to mentor them and they will graciously split the first deal with me when we close. Partnering and mentoring is a huge commitment and I personally don't invest in someone who doesn't demonstrate some sort of serious ambition (with action behind it) or provide some form of value from the start. 

On that note, I don't think there is anything wrong with partnering with an investor or wholesaler. I had no money when I made my very first deal. In my case, I asked a well known wholesaler if I could advertise his property and found a buyer for him. 

There are arguments on both sides on whether you should find buyers or deals first, and there is validity to both. I think once I hear back from you, I can provide some better insight. 

Also, what is your target market?

Oh and no such thing as a rate to charge. In fact, don't think in terms of percentage at all - that's more like a commission. In wholesaling, you have equitable interest and you are either selling your rights to purchase the property or selling the property itself. 

The price you charge depends on the value of the property relative to your purchase price. Remember, your end buyer needs to be able to make a profit so you want to get them the deal at approximately 70% of retail value. 

For the sake of simplicity, let's say a house is worth $100k and needs no repairs, you would sell it to an end buyer at $70,000. 

So if your purchase price is $68,000 you can mark it up $2,000 to sell for 70k. So your profit is $2,000.

If you get it under contract at $60k, you can mark it up by $10,000. 

Heck, if you got it under contract at $10,000, you can mark it up and make $60,000. Hope that makes sense. 

Look forward to hearing from you.

Just to clarify, I agree completely with Matt when he says use an attorney to review a generic purchase and sales agreement found online. This is why I recommended you don't use these contracts at all :) 

Instead, I was recommending using the Board of Realtors State Approved Purchase and Sales agreement. I understand where Matt is coming from and at the end of the day, one must do what he/she feels comfortable with. 

Personally, I feel comfortable using these state approved contracts as a wholesaler and I don't think you NEED an attorney when doing a simple double close.

Can we merge threads on here? Someone just asked a similar question. My copied and pasted response:

"If you want a generic purchase/sales agreement, you can generally find those by doing a quick google search. These are the 2 page contracts touted by many gurus back in the day. Personally, I caution against these and never use them. I find that unless a seller is highly highly motivated, these aren't credible or they get rejected (especially if the seller is working with a real estate agent or attorney). It also goes without saying that this would never hold up when purchasing from a bank.

Instead, I recommend using your state's Realtor approved purchase and sales agreement. This way, you know the contract itself is legit and you just need to worry about filling in the proper terms (i.e. your earnest money deposit, specifying your escrow/closing agent, giving yourself a favorable inspection period, etc.).

I firmly believe in controlling the paperwork and filling these in yourself. As an unlicensed person, you can usually Google and find these contracts. Here in Florida, many unlicensed investors fill them out this way without repercussions. Of the thousands of offers I've made, I've only been questioned by a Realtor on this once - He said it was illegal for me to do this since I am not licensed. This is untrue. If you want to do this "by the book" (legally and without violating copyright law), you can lease the Realtor forms and use them as an unlicensed individual. This is my personal preference and I lease my docs from an online company called Altastar for about $129 a year.

Also I personally don't think an attorney is necessary for drafting a purchase agreement and most probably wont understand what you're trying to do anyway." 

Hey Justin,

If the house has been foreclosed on and bank owned (REO), you can absolutely wholesale. Simply present the offer to the listing agent who will give to the asset manager for approval. Once you have an executed contract you can look for a buyer to double close (banks wont allow assignments). Just make sure you read the addendum thoroughly to ensure there aren't any deed restrictions.

If the owner is in pre-foreclosure, you can still contract and wholesale before it goes to auction. If the homeowner doesn't have enough equity in the property (which is common - they owe the lender more than your offer price), you'll need to work out a short sale. You can still wholesale these deals, but again, just look out for those deed restrictions - they are more common with short sales and can even be more strict. 

In my opinion REO's are simpler, faster and easier to get done but the profits (especially in my market ) are typically smaller.

Short Sales are typically a pain - they take a lot of investment, time, patience, paperwork, creativity (i.e. to get around restrictions), but the payoff is generally greater. I have a short sale now that I've been working on since early October of 2015. We are closing on 3/18/16 :)

Good luck!

If you want a generic purchase/sales agreement, you can generally find those by doing a quick google search. These are the 2 page contracts touted by many gurus back in the day. Personally, I caution against these and never use them. I find that unless a seller is highly highly motivated, these aren't credible or they get rejected (especially if the seller is working with a real estate agent or attorney). It also goes without saying that this would never hold up when purchasing from a bank.

Instead, I recommend using your state's Realtor approved purchase and sales agreement. This way, you know the contract itself is legit and you just need to worry about filling in the proper terms (i.e. your earnest money deposit, specifying your escrow/closing agent, giving yourself a favorable inspection period, etc.). 

I firmly believe in controlling the paperwork and filling these in yourself. As an unlicensed person, you can usually Google and find these contracts. Here in Florida, many unlicensed investors fill them out this way without repercussions. Of the thousands of offers I've made, I've only been questioned by a Realtor on this once - He said it was illegal for me to do this since I am not licensed. This is untrue. If you want to do this "by the book" (legally and without violating copyright law), you can lease the Realtor forms and use them as an unlicensed individual. This is my personal preference and I lease my docs from an online company called Altastar for about $129 a year. 

Also I personally don't think an attorney is necessary for drafting a purchase agreement and most probably wont understand what you're trying to do anyway. 

Not sure if I understand either, but I think you don't want to have a buyer send in EMD on a property that is no longer available. If this is the case, the best thing to do is to first just keep in regular contact with the wholesaler. Then, when your buyer is ready to buy, ask the wholesaler for a contract. If the property is available and they send you a signed contract, they cannot sell the deal to anyone else. At that time you can have your buyer execute the contract and send the EMD.

I see this is an older post, how did this work out for you?

My thoughts:

• Did you ask to have escrow held with your title company? Some sellers and most seller agents will request you put up escrow with them, but this is real estate... so negotiate. Tell them you always put up escrow with your title company and will send them confirmation of deposit (in fact, you may be better off telling them rather than asking). This should work 90% of the time. If you must concede however, you can still do the deal. 
• If you need to put up escrow with the seller, your closing should still be through your trusted, investor-friendly title company who should not be disclosing the flip to anyone. You are an investor - whether you sell in 1 hour or you sell in 10 years, that's your right and nobody else's concern. If you can't do the entire transaction at your title company, do the A to B side at the sellers title company, and the B to C at your own.  You can also tell the seller's title co. that your title company will be doing a "courtesy close" and reviewing all the paperwork to ensure that your interests are protected - this shouldn't be a problem most of the time.
• There's no need for you to bring the agent in to represent you on the B to C transaction. In fact, they do not need to know it exists at all.
• Ideally, in a perfect world, your end buyer should not care how much money you make on an assignment so long as they are agreeable to their purchase price. But.... experience has taught me that in the REAL world, for any number of reasons, SOME buyers don't feel this way (as logical as it may be to the rest of us) and will balk at your profit or possibly kill your deal. My rule.... if you're making more than 10k, just double close. Why risk to save a few bucks on closing costs. 

Hey Kenneth, wish I caught you earlier, but glad you're going - this can be the hardest part for some people. Here are a few pieces of advice I'd suggest for the future (or for future readers):

1. Go early. Ideally you want to be the first person there. Not only will you get more face time with the head of the group, but as a newbie, the networking will be much easier. It may seem counter-intuitive, but think about it. If you are the first person there, when the second person arrives, you will naturally start speaking with them. The third arrival will naturally join in. Contrast this with showing up 20 min after networking begins. By this time, folks have naturally clustered up into groups of 2 to 5 people. It can be more difficult or awkward to infiltrate and you can often become "that guy" awkwardly standing on the outskirts, nodding in agreement (ask me how I know that :) ). Next, when you are first, you automatically assume the leadership role in your cluster, making it easy to introduce other folks and be a liaison between other clusters and or individuals. 

2. Be genuinely interested in other people. People like to talk about themselves and I genuinely enjoy listening and getting to know people. If applicable, introduce people who might benefit from each other. Many people approach networking seeking to gain, but think about giving value first. Always ask if there is any way you can help the folks you're speaking with (whether via referral or otherwise). It's a good thing to do just to do it, but I also believe very strongly in Karma. People take notice and these things come back to you.

3. Remember names. "I'm not good with names" is not an excuse. Get good, period! There are a lot of youtube videos and/or "brain hacks" to make you good

4. Introduce yourself to the host

5. While I agree with Brian that "who you know" is crucial to your success, I disagree with the notion of the mass business card swap. In my experience, many of your cards will end up in the trash. While I try to make my way around the room, I always think to myself that it's better to make a deep and meaningful connection with one or two people than to exchange pleasantries with as many people as possible. I suppose it's a balancing act, but just food for thought. Oh and I also rarely offer my card first. I always ask for a card and reciprocate when asked. 

6. Hold onto those business cards and follow up! A simple email saying - nice to meet you, mention something from your convo and say hope to see you again soon is a great way to go about it - doesn't need to be long.

7. For other first timers - especially if you're more introverted, I recommend making "The Golden Phone Call" - a call to a close family member or friend to chat with in order to get you in a talkative mood just before going into your event. Once your inside, talk to someone immediately. If you're naturally shy and stand to the side or sit down, you'll get inside your head, overthink, and miss out on some great people and connections.

8. Have fun and smile often. The hard part is over. Especially in the beginning, networking was like when I first started going to the gym. I never wanted to go and loathed the idea. But I'd force myself to go and by the time I'd worked out and left, I never regretted going. Now I look forward to my regular workouts. 

Hope some of that helps. Good Luck and tell us how it went!

Try meetup.com and search "REIA" near you (in most cases you are looking for the largest, most professional looking group). Contact the group admin (who is usually the head of the club) and ask them who they use. Most will be happy to share.

(Bonus: Then start going to their meetings :))

Hi Toya, 

Msg me with your email, I'll send you a copy.