All Forum Posts by: Chris Piper

I am about to get back into wholesaling in Northern Indiana and was wondering if the Corona Virus is affecting the ability to wholesale houses, and if cash buyers are still buying or not?

@Marshall Hawley You can put in "escape" clauses such as "subject to partner's inspection" etc. to make sure you have an out, but you should never plan on using that out. You should only put properties under contract that you plan on closing on. If you do back out of a deal, you will lose your earnest money, but if you have an escape clause and use it, the contract is cancelled.

If you find after a week or two of having a property under contract, then start calling every "We Buy Houses" people in town and try to do a JV with them. That means they bring a cash buyer for your property, and you split the profit with them. Also, you can always utilize transactional funding to close on the property yourself and give you more time to get it sold. Typically you can get the transactional funding for up to 30 days past the scheduled closing date. It can be a little costly to use those funds, but it gives you more time to flip the deal to a cash buyer. Just figure in the additional cost of borrowing the money when you run your numbers. Transactional funding is not based on your credit or income, just on the property.

@Sierra Gordon I don't think you need a mentor to wholesale. It's a pretty simple process once you get it down. Here is the quick overview of the process:

1. Find a motivated seller

2. Do a walkthorugh of the property and see what repairs need to be done to get it into retail shape(move in ready)

3. Pull similar and accurate comps using a RE agent or Real Quest

4. Run your numbers: ARV(after repaired value)-30%-Repairs-Your Profit= MAO(maximum allowable offer). Never pay more than your MAO, and always offer a little less in your first offer than your MAO to leave you room to negotiate if needed.

5. Make an offer, and negotiate a purchase price with the seller.

6. Fill out and send the seller a purchase agreement. Make sure it ALWAYS says "this contract is assignable."

7. Go find cash buyers. Put out bandit signs, craigslist, advertise on here, etc. 

8. Collect a non-refundable deposit form the cash buyer at the time of signing the assignment agreement with them.

9. Close and get paid.

As a side note @Ethan Johnson, whenever you put out bandit signs, since most cities forbid them and will fine you, always use a burner number or a Google voice number to ring to your cell phone. That way, the city or whoever can't link the number to you and can't fine you.

If you are trying to build a cash buyer list before you have a property for sale, it can be a little tough. I understand that you want them first though so when you get a deal, you just contact them, and get it sold. You can use bandit signs to get cash buyers. The only thing is, you are offering a "generic" property that doesn't actually exist in order to get them to call. If you want to go that route, you can, you have to tell them that the property already sold when they call and collect their contact info for future deals.

It seems like everyone and their brother are lookng for good deals these days, so you may want to get a deal or two under contract first, then do the bandit signs advertising an actual property for sale. Should sell easily and quickly if it is actually a good deal for the cash buyer. If you get one under contract and can't find a buyer in the first week or two, start calling every "We Buy Houses" sign in town, and see if they want to JV with you and split the profit using one of their cash buyers.

Be honest with them, and make them an offer they can't refuse as long as the numbers make sense for you. Don't let them try to get you to pay more than you can afford to offer because that's what they "Think" it's worth. Run your numbers, repair costs, comps, and don't pay more than your MAO.

It will be a lot harder to wholesale if it needs to be torn down and try to convice an investor that it's a deal because he can build two buildings there. Your selling a teardown and land basically, not a SFH. Sounds like a headache, and something that is more commercial then residential.

@Sierra Gordon Only wholesale properties that are not listed in the MLS with an agent. A wholesaler's value is in being able to offer off market properties to cash buyers. Any investor can have an agent pull up deals in the MLS, they don't need you to find those deals.

You can wholesale REO's from the bank, but you will need to find out how much earnest money you will need to put down, which may be higher than a typical property from a motivated seller. In my area, it's $500 earnest for a property under $50,000, and $1,000 if the property is under $100,000. Also, in order to wholesale REO's, you CANNOT assign them to a cash buyer. You have to close on them yourself. You can still wholesale them similarly to a typical deal, only you have to close on them.

You would need to find transactional funding and do a double close. Google transactional funding, and you will find several options. They will fund anyone without a credit check or income requirements. It's all based on the property only. You have to have a purchase agreement between you and the seller, and also one between you and the cash buyer. You will need to get a POF(proof of funds) letter from the funding company to submit to the bank with your offer, along with the earnest money. Once they accept your offer, then you submit the complete details of the deal to the funding company, you close with the seller on the agreed upon date in the purchase agreement, then later the same day, you close with the cash buyer and get paid. Funding will cost you probably $3,000, maybe more, so factor that into your deal when you run your numbers.

You need to do walkthroughs on every property, get accurate repair costs on all of them, pull comps on all of them, and then figure out your MAO(Max Allowable Offer) for each property to see if any or all of them are a good deal. Also, keep in mind what the mortgages are on each. If your MAO is $30,000 and the mortgage is $32,000, then it's not going to work.

ARV

-30%

-Repairs

-Your Profit 

= Your MAO

You could check out "The Simple Man's Guide to Real Estate." It's like $100 one time with no up sells, and it covers every possible way to invest in real estate, and they offer free unlimited mentoring. Hard to beat that deal.

Go to tools>fileplace>contracts I uploaded a purchase agreement and an assignment contract there a month or two ago.