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Author Topic: Understanding my wholesaling contract...  (Read 15020 times)

Offline Redstar1324

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Understanding my wholesaling contract...
« on: April 25, 2016, 11:08:45 pm »
Rando, can you help me on this one?

I am ready to make an offer for $13,000 on a house.

What do I put for Earnest Money, Down Payment, Sum of all financing, and Total Purchase Price?

My guesses are $13,000, $13,000, $0, and $13,000, respectively.


Closing will take place...... Is this information that I get from my title company?
« Last Edit: April 25, 2016, 11:14:25 pm by Redstar1324 »

Offline Randoskie

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Re: Understanding my wholesaling contract...
« Reply #1 on: April 25, 2016, 11:28:34 pm »
Haha, the contract scared me at first, now I can fill it out in seconds, I made a blank copy on my desk top, now for each house I just type in a name and a address and a few numbers and its wham bam. I don't even bother to print them, I email them to the seller. If the seller don't have a scanner, I just have them print & sign it and take a photo of each page and send it that way. A few of my sellers wud take it to Kinkos and they wud email it to me.
But down payment is 0 Zero, Earnest deposit is 0 Zero, I used to give 5 or 10 buks but I don't even do that anymore.
 Sum of financing is Cash, Total purchase price is $13,000
Email me I'll send you some samples of completed deals.
Simple stuff.


Offline Redstar1324

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Re: Understanding my wholesaling contract...
« Reply #2 on: April 25, 2016, 11:33:04 pm »
What about this problem?

I am finding lots of deals that are too far for me to drive, unless I am willing to spend my life driving around every single day, which I'm not.

I live in Orlando, FL.... I am finding deals in Tampa, FL.

I don't know how to estimate repair costs to know how much would the maximum I can offer if I don't see the house personally.

Do I just ask them questions about it's condition and ask for pictures?

That might work.

And what about the "Closing will take place on or before ___________ at _____________________ whose address is ________________ phone _____________________"

Is this the address of a lawyer or a title company (if so, which?).... I have never closed on any real estate before so I have no idea about the closing process.

Actually, I once sold a 1.25 acre piece of land but I wrote the Warranty Deed myself and didn't use a title company. The only closing costs were the recording fees from the courthouse which were in proportion to the sales price. I don't think many sellers will be willing to forego the use of a title company.

I also am still worried about liens against the property. Having never done this before... what if their are back taxes owed. I could check on the county tax collector, but do I have to do that for every one? What about any other type of lien? I suppose this doesn't matter too much since I have that escape clause.... but I would just like to as thorough as possible.
« Last Edit: April 25, 2016, 11:39:10 pm by Redstar1324 »

Offline Gold River

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Re: Understanding my wholesaling contract...
« Reply #3 on: April 25, 2016, 11:34:51 pm »
Hi,

    I am Rando's personal assistant, let me try to answer your questions as Rando is predisposed spending all his easily made wholesaling money!

1. Earnest money could be anything but probable $100 dollars earnest money would be fine for a $13,000 contract. (Earnest money is the amount put towards the contract to open escrow in good faith!)

2. Since this is a wholesale property and you don't yet know your buyer unless your asking for and have discussed owner financing you will need to pay all cash as conventional / FHA / VA lenders will not finance property for less than $50k and most hard money / private money lenders will not loan less than $25k. So down payment is (0) zero!

3. Since there is no financing the answer is (0) zero to sum of all financing!

4. Total purchase price $13,000.00  (Thirteen Thousand & 0 / 100 dollars)

So Rando's answer is $100, 0, 0, $13,000

Closing will take place in 45 days or sooner! (Put in contract)

Subject to property inspection and inspection by buyer within 21 days of contract. (This is your contingency to get out)


              GR as Rando's helper!

Offline Gold River

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Re: Understanding my wholesaling contract...
« Reply #4 on: April 25, 2016, 11:37:12 pm »
Hi,

     Rando do they let you open escrow with zero dollars earnest money in Florida?


           GR

Offline Randoskie

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Re: Understanding my wholesaling contract...
« Reply #5 on: April 26, 2016, 02:31:21 pm »
Haha, I'm too busy counting my money to answer your questions.
I've never done any deals in Florida, but I get a few bird dogs sending me some and they look like great deals, I shud see if I can flip some, I just have this pre conceived idea that 80% of the Investors in America are concentrated in Florida. And the competition is fierce.
In California, I can start escrow with a simple email and attaching my contracts. With no earnest deposit and I've cancelled escrow recently and ther were no charges for all the work they did, and they sent me the preliminary report.
I never leave the house except to pick up the check, and I cud wait a few days to get it in the mail.
And I don't do any earnest deposits anymore, the last 20 deals there was no need, of course if the homeowner was eating dog food and pinto beans I wud def hand him over a few hundred buks, but most are absentee owners and the houses are vacant.

I found me a hungry Realtor, and we are making some offers  on junk MLS properties, he's the sleazy guy that just made me $8,000 in Cash.
Let's make some Money.....
Rando

Offline Gold River

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Re: Understanding my wholesaling contract...
« Reply #6 on: April 26, 2016, 11:53:21 pm »
 :beer

Offline Redstar1324

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Re: Understanding my wholesaling contract...
« Reply #7 on: April 27, 2016, 09:46:28 pm »
$100,000/year wholesaling?

$400,000/year wholesaling?

Is this reality?

I just had interviews with 12 different bird dogs today... So I guess we'll find out.

I think that my home inspection skills will have to improve exponentially very quickly...

I don't think "Zestimate," is very official...

Let's see what happens.

AND MAKE SOME MONEY!!!!

Offline Gold River

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Re: Understanding my wholesaling contract...
« Reply #8 on: April 29, 2016, 03:14:09 am »
Hi,

     You need to build a buyers list before you recruit bird dogs! The only reason to expand into bird dogs is that you have more active buyers than properties to offer. A one hundred thousand dollar income is the equivalent of purchasing 14 single family homes a year for $100k each and making $7k per sale. This means basically selling a wholesale home every 25 days.

A four hundred thousand dollar income means you need to turn four (4) homes every 25 days for $100k each that make you a $7k per home income. This means the retail FMV of each home is probable $150k to $200k per home. Figure your buying in the 50 to 70 percent range of FMV.

I turned a little over 1000 wholesale homes in three and a half years in the 1990's, it's not only possible but some wholesalers today can turn a thousand houses a year. By the time you get this size you will end up with a full time staff of professionals supporting your volume!

Start with the basics of what improvements cost like paint, carpet, vinyl, hardwood and tile. Get an idea of what a 1000 sq. ft. home costs to paint inside and out then when you see a 1200 sq. ft. home you can scale accordingly. Then learn the basic numbers of what a full bath remodel requires to do, this will give you something to work from; and the same with kitchens as there has to be a average cost of a kitchen remodel in your area!

Zestimate is not very official, however the "Sold" properties pop up as yellow icons, they are received from sold data and are exact as closed. Look at the sold properties within a quarter mile, half mile or mile and within 3 months, 6 months or one year of todays date! Rule of thumb is an appraiser is looking first for quarter mile and 3 months, but if there are no comparable sales in that range the appraiser will go out to 6 months and a half mile, or three months and one mile, or six months and one quarter mile!

You are only going to have a matter of 10 days to 21 days depending on your contract to get an assignment done so you should have at least two potential active buyers looking for 3 bed / 2 bath homes in your prospect area, if you don't have buyers looking for homes now you will never sell a home in 10, 15 or 21 days!

Finally your going to make some money, "Thank you Lord"!


             GR

 

Offline Redstar1324

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Re: Understanding my wholesaling contract...
« Reply #9 on: April 29, 2016, 06:43:23 am »
Hi,

     You need to build a buyers list before you recruit bird dogs! The only reason to expand into bird dogs is that you have more active buyers than properties to offer. A one hundred thousand dollar income is the equivalent of purchasing 14 single family homes a year for $100k each and making $7k per sale. This means basically selling a wholesale home every 25 days.

A four hundred thousand dollar income means you need to turn four (4) homes every 25 days for $100k each that make you a $7k per home income. This means the retail FMV of each home is probable $150k to $200k per home. Figure your buying in the 50 to 70 percent range of FMV.

I turned a little over 1000 wholesale homes in three and a half years in the 1990's, it's not only possible but some wholesalers today can turn a thousand houses a year. By the time you get this size you will end up with a full time staff of professionals supporting your volume!

Start with the basics of what improvements cost like paint, carpet, vinyl, hardwood and tile. Get an idea of what a 1000 sq. ft. home costs to paint inside and out then when you see a 1200 sq. ft. home you can scale accordingly. Then learn the basic numbers of what a full bath remodel requires to do, this will give you something to work from; and the same with kitchens as there has to be a average cost of a kitchen remodel in your area!

Zestimate is not very official, however the "Sold" properties pop up as yellow icons, they are received from sold data and are exact as closed. Look at the sold properties within a quarter mile, half mile or mile and within 3 months, 6 months or one year of todays date! Rule of thumb is an appraiser is looking first for quarter mile and 3 months, but if there are no comparable sales in that range the appraiser will go out to 6 months and a half mile, or three months and one mile, or six months and one quarter mile!

You are only going to have a matter of 10 days to 21 days depending on your contract to get an assignment done so you should have at least two potential active buyers looking for 3 bed / 2 bath homes in your prospect area, if you don't have buyers looking for homes now you will never sell a home in 10, 15 or 21 days!

Finally your going to make some money, "Thank you Lord"!


             GR

 

I have a buyers list of about 15.

I recruit bird dogs because I don't want to spend my life driving around looking for houses. In any event, it would increase the amount of houses I would find. Same reason for using bandit signs.

Offline Gold River

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Re: Understanding my wholesaling contract...
« Reply #10 on: April 29, 2016, 02:37:16 pm »
Hi,

    You need to advertise "I buy homes any condition call 1-800-redstar" and you need to plaster the net on every platform available to advertise. You should also be putting up little cards on bulletin boards and any place with a community wall like grocery stores, etc. You need to put out flyers to various area's, parking lots under windshield wipers, on doors in poor neighborhoods, etc.

Bird dogs cost you money for a profit share, doing advertising costs you nothing in profit share! I got my best deals because the principle (Owner) called me directly. I was also talking to motivated sellers when they call me!

Have you created a buyer check list questionnaire so you know exactly what each buyer is looking for and in what area? My buyers list was hundreds and hundreds of buyers but I knew Bob wanted 3 bedroom / 1 bath or larger properties in Redwood and Bill wanted 4 or 5 bedroom / 2.5 bath or bigger homes in Starwood, and Angela wanted 3 or 4 bedroom / 1.5 bath or larger for fix and flips with her boyfriend Ron in Redstarville!

This is the type of information you need to be successful, I did not buy property in any area where my buyers did not want homes, I did not want to spin my wheels and waste time trying to buy something my investor / owner occupied buyers did not want. If I can't find a buyer and assign the property I did not want it! In some cases when I found a property I did not have a buyer for I turned it over for a partnership with another wholesaler!

When a bird dog finds a run down property that owner may not be motivated, however when the homeowner calls your number, you know that person is motivated and wants to sell, you don't waste your time!

I am not sure what you gain recruiting bird dogs this early in the game, you just kicked off your campaign and your special teams are not even off the field yet, wait to bring bird dogs into the game in the next quarter or after half time! Work to advertise and prompt motivated sellers to call you first and gain some control and experience in your prospect area before you expand into bird dogs.

Could you handle 15 contracts from bird dog deals in a day or two if deals start flying fast? If you can't handle deals your bird dogs will run away and find a new home with better food and treats! You don't have enough buyers to handle 20, 30 or 50 properties a month and that's exactly what you could end up with when you have 15 bird dogs!

You don't have enough time or experience to handle 15, 20, 30 or 50 homes in a month!


                        GR
« Last Edit: April 29, 2016, 02:40:45 pm by Gold River »

Offline Redstar1324

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Re: Understanding my wholesaling contract...
« Reply #11 on: April 29, 2016, 04:34:22 pm »
Hi,

    You need to advertise "I buy homes any condition call 1-800-redstar" and you need to plaster the net on every platform available to advertise. You should also be putting up little cards on bulletin boards and any place with a community wall like grocery stores, etc. You need to put out flyers to various area's, parking lots under windshield wipers, on doors in poor neighborhoods, etc.

Bird dogs cost you money for a profit share, doing advertising costs you nothing in profit share! I got my best deals because the principle (Owner) called me directly. I was also talking to motivated sellers when they call me!

Have you created a buyer check list questionnaire so you know exactly what each buyer is looking for and in what area? My buyers list was hundreds and hundreds of buyers but I knew Bob wanted 3 bedroom / 1 bath or larger properties in Redwood and Bill wanted 4 or 5 bedroom / 2.5 bath or bigger homes in Starwood, and Angela wanted 3 or 4 bedroom / 1.5 bath or larger for fix and flips with her boyfriend Ron in Redstarville!

This is the type of information you need to be successful, I did not buy property in any area where my buyers did not want homes, I did not want to spin my wheels and waste time trying to buy something my investor / owner occupied buyers did not want. If I can't find a buyer and assign the property I did not want it! In some cases when I found a property I did not have a buyer for I turned it over for a partnership with another wholesaler!

When a bird dog finds a run down property that owner may not be motivated, however when the homeowner calls your number, you know that person is motivated and wants to sell, you don't waste your time!

I am not sure what you gain recruiting bird dogs this early in the game, you just kicked off your campaign and your special teams are not even off the field yet, wait to bring bird dogs into the game in the next quarter or after half time! Work to advertise and prompt motivated sellers to call you first and gain some control and experience in your prospect area before you expand into bird dogs.

Could you handle 15 contracts from bird dog deals in a day or two if deals start flying fast? If you can't handle deals your bird dogs will run away and find a new home with better food and treats! You don't have enough buyers to handle 20, 30 or 50 properties a month and that's exactly what you could end up with when you have 15 bird dogs!

You don't have enough time or experience to handle 15, 20, 30 or 50 homes in a month!


                        GR

Most of my buyers say they are looking for "anything.'

I ordered bandit signs, but they haven't arrived yet.

Should I put my full first and last name on the flyers or just a business name?

If I had that many bird dogs calling me, I would find out whether I could handle it or not. I think I could.

How many potential deals should a bird dog be getting me per day so I know they are working?
« Last Edit: April 29, 2016, 04:45:13 pm by Redstar1324 »

Offline Redstar1324

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Re: Understanding my wholesaling contract...
« Reply #12 on: April 29, 2016, 06:11:04 pm »
Gold River,

 When you wholesaled, what was the most common way that sellers found you?

 Was it through bird dogging or bandit signs?

I put an advertisement on Craigslist and haven't found anything.

If someone wanted to sell their house, why wouldn't they call a realtor?

Could it be that Florida is just too tough of a market to do this in?
« Last Edit: April 29, 2016, 07:03:58 pm by Redstar1324 »

Offline Randoskie

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Re: Understanding my wholesaling contract...
« Reply #13 on: April 29, 2016, 11:23:31 pm »
Haha, when I first started I ran an ad on Craig's List that I buy Houses cash, I waited, then I waited some more. I was desperate, so I made up numerous emails and started putting in a lot of ads, even in other states, I wud have 50 ads going. I dint have any marketing money back then.  After awhile I didn't have to place ads just simply hitting a button to renew. Then I started getting the calls and did some local deals, I even did a deal in Montgomery and one in Vegas and almost did a few others out of state. But still, it was slow going, luckily had enuf brains to also recruit bird dogs, then eventually do direct mail and the bandit signs.

But even so, I got to say, placing ads on Craig's List that I buy houses is how I got the least amount of deals.

But yea, if your going to place 1 or 2 or a few ads on Craig's List your gonna be waiting for the second coming.

Did I rain on your parade, Did I give you any ideas?

Rando

Offline Gold River

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Re: Understanding my wholesaling contract...
« Reply #14 on: April 30, 2016, 02:19:29 am »
Hi,

     I think Rando would agree that Craigslist can be better or worse depending on the market area, I am sure even today we could find very poor response area's of our country and very good response area's. When I was wholesaling in the 1990's I was acquiring properties in Kansas City, Detroit, Kentucky, West Virginia, Georgia, St. Louis, Ohio, etc.

The average home was between $20k and $50k and I averaged about $5k per sale assignment. I got way more deals from direct calls on my ads, whether they were bandit signs, advertising, radio, door hangers, cards on windshields, etc. to buy homes. Just because a bird dog see's a home with issues does not guarantee the owner even wishes to sell.

I was putting 3 or 4 or 5 ads a day on craigslist, backpage, running thrifty nickel ads, placing news paper ads, putting inserts into local advertising by zip code and trying to piggy back on special events, etc. If you place an ad at 7:00 AM in a big market area it is buried by 12:00 noon, so placing multiple ads under multiple email addresses is important.

I also did not use my personal cell phone number, at the time I had a Nextel phone with two lines, one personal and one business. Today you can get a phone number on the web and direct it to your cell phone. You also want to word your ads to target a larger audience: "Having financial problems? Have a home needing TLC you can't afford? Have medical issues and need cash? Had a death in the family and need to sell fast? I buy homes in any condition! Call 1-800-Redstar  Right Now!  Look for the big red star on the side of my car! Get the best deal under the stars!

By the way my examples above are for multiple ads, not intended to group all of them together in one ad!

If a house will not pass a home inspection, termite report, has a lot of deferred maintenance, has a lot of trash and litter, shows poorly, is not in good condition and the owners can't afford to repair / update they will sell you there house without a realtor as a realtor won't take the listing!

I get emails daily from wholesalers in Florida with new inventory every few days, there are lots of opportunities in Florida!

I agree with Rando in the sense that you don't put all your eggs in one basket, but trying to rely on a bunch of bird dogs only is a huge mistake as I don't know what your offering bird dogs but just because you interview them does not guarantee results. I would never tell you to rely solely on Craigslist but if your marketing and advertising through 15 or 20 different platforms or types of marketing you will find good results.

I used bird dogs, bandit signs, ads on 5 or 6 different web platforms, I put up flyers, placed door hangers, put cards under windshield wipers, piggy back advertised with the county fair, I ran a radio ad a few times a month, placed news paper ads, sent flyers to bankruptcy attorney's, sent flyers to divorce attorney's, sent flyers to accountants, sent flyers to realtors who might find a property they can't list because of condition, I sent flyers to court trustee's, I made sure that I put cards on cars at the unemployment office, I put flyers / cards at the funeral homes, I put cards / flyers in the hands of pools maintenance companies and lawn care companies to alert me if there servicing empty property.

I sent flyers to mortgage lenders who might refer someone who can't qualify to refinance, I piggy backed as a sponsor of the grammar school fair, I sent flyers to the death, divorce and bankruptcy records in my area's. Etc, etc, etc, etc, etc.

Now I just took Rando's rain and grew deep green hundred dollar bill flowers!

Now go make some money!


                          GR
                       



 






 




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