All Forum Posts by: Daniel Francis

As the owner of brokerage, with agents in Austin (that's where I am), San Antonio, Houston and Dallas, I'm going to answer that with a firm "depends".

First, I'm assuming you are talking residential (1-4 family)...

All listings commissions in Texas are negotiable (not set by statue or board rules like in some states).  6% is standard.

But for 6%, on a multi-million dollar home, I would expect some marketing $$$ spent by the agent.... luxury magazines, staging, etc.  After the split with the buyer's agent, that's potentially a $150-$300k commission. 

If, however, YOU are doing any marketing and you are expecting someone to just get it in the MLS, 4% would be reasonable... Still 3% is going to that buyer's agent.

If this is residential and you need someone to list, give me a call @ 512-731-4541, I can track down a luxury home specialist in Dallas for you.

@Roland Paicely couldn't have said it better.  I think beginners spend way too much time figuring out what they are going to do when they get deals and not nearly enough time actually getting deals.  Once people get deals going, they then create the opposite problem... they never work on their business or any kind of system building.

Try instilling good habits from the get-go.  Spend one hour each morning with your phone and email off.... work on system-building for your business.  But not longer than an hour.  Then the entire rest of the day spend on creating and managing leads and working deals.

That way you'll always spend enough time on your business, but not too much time.  

LLC is generally the way most people start out (cheaper, less complexities, etc. and until you have a huge business, you don't need anything more).

I've always used a self-directed IRA. I love it, because you can withdraw $100 for an earnest money check, assign the contract, and put $10k back in! Now that's a return on investment!

I'm not sure if they operate outside of Texas (you'd have to check into that), but Quest IRA is good here

HI Chris.... You'd have to find out exactly what "rights of redemption" mean in your state... In Texas we used to be able to do that on taxes owed, but not on mortgages. 

Regardless, I think the numbers are a little skinny and too bad the loan is so new.  Still more attractive to a buy/hold guy if you can keep that loan in place, but it didn't help the low equity position the new landlord would be in.

Buy hey, you don't know if you can wholesale it unless you try!

Ronnie, don't run from the deal! J Scott's answer was spot-on. Just use a JV agreement to both give yourself an equitable interest (to make it legal) AND protect your payment interest in the deal.

You could probably search around or ask your local investing club for someone with a JV template.... they are usually pretty simple.

There is nothing "unsound" about the logic.  Putting it under contract and wholesaling it certainly is something you can try.  Without all the details (like what is market rent for the area),  I can tell you that MOST investors are going to find that deal way too skinny.  So you might struggle finding an end-buyer for the property outside of the traditional route of listing the property.  Investors have different criteria, but a good rule of thumb is that its safest to take a buy/hold property at 80% and a flip at 70% of value (minus the repairs).  I'm no saying that's the only price people will pay, just that its a good rule of thumb.  I make exceptions all the time :)

Where that might be MORE attractive to an investor is if the home owner is willing to keep the current financing in place and an investor can come in with a little cash just to take over the note.  Their cash outlay, then, would be limited to reinstatement+closing+your fee+repairs.

This is even more attractive to a buy/hold investor if the note has some seasoning.  In other words, if they bought this house and originated the loan 13 years ago, that become a very attractive deal as over 50% of the interest on the loan will have already been paid and principal buy-down is going to accelerate.

If its a pretty new note or they won't let you take over payments, then probably you best bet to make money is to list the property.  Or you can try wholesale for a couple of weeks, then move to a listing.  If you're not an agent, maybe you should consider that?  Sucks to not have a license and leave money on the table.

Good luck with it!  Post more information and I'll see if we can't do a little more evaluation.  Like Market rent, age of loan, will they keep it in place? etc.

Hi Wade... Austin here as well with 10 years REI experience. Look me up when get back stateside... there's great ways here to accomplish your goals.

Of course it always depends on what your long-term goals are... and if this is a full-time gig or part-time.  

The only answer any of us can give is what would WE do.

Personally, I would set aside a big chunk of that cash and spend it on marketing (think 20k+).... I would market for leads like crazy (the difference between a deal you get from marketing and a deal you get REO will often exceed the 20k you just spent on marketing), then take each lead individually and get what I can and be open to ALL exit strategies.

That way I could take my rentals Sub2, flip the ones that have the biggest margins, and wholesale the rest.

Hi Lurline...

The bottom line is, you can educate yourself forever, but there is no substitute for working leads.  You will learn fast when you are working with homeowners.

That being said, you cannot do enough marketing.  Take all the money you could spend on a bootcamp and send out 1,000 letters instead.  Then next week, send out 1,000 more.

There are plenty of list vendors you an google that will sell lists of 60-90 late on mortgages, divorce lists, probate lists, absentee landlord lists, etc.  Any of those will get you at least some return.

The key is to mail volume and mail consistently.

Once you have motivated sellers calling you, you will be able to make a good deal... and good deals are easy to wholesale... and wholesaling brings cash... to do more marketing... THEN to do the bigger deals.

Market

You can't do it enough

Do it now

Hi Juan,

I am the investor half of an investor/broker marriage.  I think one license is enough, but without a doubt its a HUGE benefit.  I actually have a bunch of videos where I give great examples of why that is so useful on our website.

I can't really think of any drawbacks... I know that seems to be the CW, that being licensed makes investing harder, but I believe that nothing could be further than the truth.  

If you market for motivated sellers, it will give you a competitive edge to not have to screen them on the phone, but just make an appointment and go!  Since you can list the property, you have everything to offer the seller... the creative AND the traditional.  

If you go without a license, it is my opinion that you are leaving significant money on the table.

Good luck and happy investing!