All Forum Posts by: William C.

I think a better title might have read “Why aren’t the few agents I know, investing”. Your title implies implies more than 1 don’t invest, and some would even read think and think all agents don’t invest.

Anyway the answer to your question is pretty simple, just ask them. I personally don’t know any agents that don’t invest, and according to study done last year 85% of agents own property, so those few that are not investing are in the small minority.

I’d look around for some new agents in your market to network with. The old cliche about the 5 people you spend the most time with etc etc....

I’m enjoying the thread though. Anecdotal evidence always finds a way to prove the fax.

 Closing costs seem a bit high for the buyer side on a cash deal.

 RE agents are not paid employees, they need to earn a commission to be paid.  There is the 1% of agents doing all the business in your town and they are not driving around your neighborhood, and they are being paid very well.

 Except your analogy fails to relate to wholesaling real estate.  Sure, the socks at target are produced in a warehouse, are sold to wholesalers, which then are sold to Target, which are THEN are marked up to fair market value, and purchased by a market that demands socks, at that price, but not more than that or they would buy socks at Walmart.  How does the sock market and consumer experience compare at all to the real estate market and how a home is conveyed.  Is the end buyer Target, or the sock buyer?  Is the seller the warehouse, or the socks?  Does the warehouse need my money Im paying for the socks, to make them?  I think I may have seen someone suggest using buyer funds to pay the seller, so if we are comparing appples to apples, that would be the case. The two transactions couldn't be any further from each other.  If we want to start talking about the Target Pharmacy, and how the people behind the desk handling the meds need a license, well now we might be able to compare the two.  

 I think what she means is in this current market the price she would have to pay for a property will push the expenses plus debt service over the market rents.  As compared to the good old days when properties cash flowed day 1, and the renovation process just made the margins bigger.  Correct me if I'm wrong @Dianna Vaderheide.

Also can you clarify how a surprisingly higher ARV would result in taking a smaller loan? Smaller in terms of LTV, sure. But if I'm doing a BRRR and have 80K cash invested into the property and now its worth 120k instead of the 100k I thought it would be, Id still pull the 80K and now have 40k in equity compared to 20k.

I kinda of got lost in your debate with @Stefan Tsvetkov, but I could at least see the point you are making with the example above. While I agree with you, and I think option A. is the easy choice (to you and I) in a vacuum, but real life doesn't exactly place these 2 options on our doorstep at birth and force you to choose one. We are all investors, trying to take what money we do have, and turn it into more. Using your same example, let's assume I have 80k cash, I buy for 60k, use 20k for renovations, and now its worth 100k. I refinance and pull my 80k back out, and do it again, until I get to 40 units. The question I have to ask, as it relates to the OP and these rest of this thread, is how does someone achieve option A through the BRRRR method? What makes the BRRRR method so appealing to everyone is the potential to reach option B, with only enough capital to complete the first deal. When someone gets to option B through the BRRR method, they have created the $1m in equity by buying right, renovating, and refinancing to do it again. It's simply impossible to use the same 80k to reach 10 properties free and clear in your example, or am I missing something?

I think @Stefan Tsvetkov was arguing option B might be more appealing if cash flows were greater, and although I made some major assumptions, in your example the cash flow of both these properties appear be equal. I came to about 5K cash flow on each, assuming 1000/month for rent, the 50% rule on all properties, and about 15k in debt service each month on the $3 million.

10x1000 -50% =5k

40x1000- 50% -15K ds= 5k

So that would only make my decision even easier to choose option A, but until I find a genie in a bottle offering up these 2 options to me, I'll continue working down the path of option B, in hopes of eventually selling off some properties to pay others down and reaching a happier medium as you were eluding to with option C.

@Pratik P. I quoted you, so you would know what I was referring to.   I was just backing your statement up with some facts.   Although implying you got your license on a whim one weekend and that 10k commission checks fall into agents laps kinda rubbed me the wrong way because of how far from the truth it is, but I digress, I don't want to hijack this thread. It's turning into a gem. 

 Contrary to the TV shows, 10k commissions don't fall from the sky.  I don't think you would find a single agent in the country that would argue the licensing process is too hard.  It takes something like 10x the hours to get a hairdressers license compared to a RE license.  So the fact that you got your license, and you know nothing about selling real estate, doesn't make all agents incompetent.  I could go on and on about how  90% of all agents fail and don't renew their license, and how 1% of all the agents do 95% of all the business, so your right, most of them don't know what they are doing.  But that still doesn't make this story true.

 I'm not sure how I missed this post, but lucky for you the seller is the one who gets to decide whether or not to accept an offer, not only are agents required to submit all offers, but why on earth would any agent refuse to submit an offer to a seller? Since you already talked to the seller, and she agreed, sounds like a done deal to me.  You mentioned you are not sure how to work with realtors in this capacity, its actually not as hard as you would think.   A phone call would be a good place to start.

I tend to try to stay out of wholesaling threads because I hate reading about sellers being ripped off and people practicing real estate without a license. Too many so called wholesalers paint a scary picture of listing contracts, home inspections, repairs, commissions, long closings, etc, etc, in a effort to make a "cash offer" their only only option. Cash buyers happen to shop on the MLS too. I just couldn't resist that title though. This whole thing smells pretty fishy. Have you attempted contacting the agent or the broker? Why doesn't your end buyer just go purchase the property themselves? Why don't you share the rock bottom price the seller is willing to accept with your buyers, and have them pay you a "finder fee". Probably illegal, since you would need a license and all, but so are most of the other options you have other than buying it yourself. You are not presenting this buyer with an opportunity that would not otherwise exist, it's plastered all over the internet, albeit overpriced. Nor are you bringing a buyer to the seller that couldn't be done by simply clicking a few buttons and lowering the price on the MLS. If they were a true "investor", this property has been sitting stale on the MLS for 3 months then they likely have seen the listing on Zillow 100 times already. I'd be willing to bet part of the reason the seller is willing to take such a low price is the fact that the home is listed with an agent, therefor she assumes buyers don't want to buy it, and needs to take any offer presented to her that will get he out of it. The statement "I have a handful of buyers that would buy it site unseen" is what gives wholesaling it bad name. If you personally have more than one buyer that would fight over buying it, without even seeing the thing, then the open market probably has hundreds who would do the same. Why not let the fair market dictate the price, and get this poor seller the max amount of money she can for the property? Someone needs to advise this seller to drop the price to what she is willing to accept and watch the cash offers roll in. I am a huge fan of legit wholesalers, who are able to bring buyers and sellers together for the benefit of everyone. This doesn't sound like one of those situations, and there is a reason what you are trying to do is illegal. Licensed agents have a fiduciary duty to home buyers and sellers. Where does your fiduciary duty lie? For example, if a great agent is able to negotiate a lower sales price for their buyer, the agents commission actually goes DOWN, but they did their job, and acted in the buyers best interest. Wholesalers on the other hand, are incentivized to get both parties as far apart as they can. It becomes a game of how bad can I rip this person off, and not "how can I help this seller out"? How low can I get the seller to go, how high can I get the buyer to go, great, that's my cut. I'm going to end my rant here, but I think the question you need to ask yourself is this:

How are you and your handful of "buyers" able to help this seller any more than reducing the price and making ALL of the cash buyers in the area aware of the sellers bottom line???

If you are any wholesaler for that matter can answer this question truthfully, I'm all ears.