Newbie investor needing some advice!!

Bird Dogs, Wholesaling
1

Hello everyone!! This is officially my first post!!!

Okay. I am an aspiring real estate investor looking to begin wholesaling real estate in the DC/MD/VA region. My resources are limited and I havent had the opportunity to benefit from one of the costly courses or the mentoring offered in many places, so most of what I have learned has been through reading and research on my own. I am very eager to begin my investing career to better my quality of life and experience real freedom. I am currently taking the pre-licensing course to get my Realtor’s license, strictly to have a general understanding of Real Estate concepts and laws. I have a basic understanding of wholesaling but feel as though I am missing many details to get started. I know this so far:

  1. Must have a buyers list before looking for deals
  2. Find a deal and lock it up using a Purchase agreement and the clause “and/or assignees” next to my name to make the contract assignable.
  3. Find an end buyer and either reassign the contract using and Assignment of Contract, or find a titile company that does “double closing”, closing with the end buyer first and then the seller.

Now my questions are as follows:

  1. Is the repair costs determined after I tie up the property?
  2. Is it best to reassign the contract or use a title company that does double closings?
  3. Is it necessary for me to show proof of funds when I make an offer?
  4. Do things change if the property is listed with a Realtor?

I have found a deal in my area but kind of dont know what to do next. I have asked a realtor to provide me with the CMA, but I kind of dont know what I am looking for with the CMA. Is there any specific place that I can find contracts or is it best to consult a RE attorney to have it done?

Please Help :banghead

I am very motivated to start and would appreciate any help anyone can provide me…THANKS IN ADVANCE!!

2

see responses in bold

Hope that helps

3
1. Must have a buyers list before looking for deals
Not necessarily. If your strategy is assigning, you need other investors, if its hold and rent you need tenants. My particular investing method I contact a property management company and they find the tenants for me. It depends on your method. Plus, if you can tie up the property for 60 days or more then you have a lot of time to find buyers after you grab your deal

[Quote]2. Find a deal and lock it up using a Purchase agreement and the clause “and/or assignees” next to my name to make the contract assignable.
[/quote]
Yup, you can never go wrong with the and/or assigns option. Better to have the option and not need it than vice versa.

[Quote]3. Find an end buyer and either reassign the contract using and Assignment of Contract, or find a titile company that does “double closing”, closing with the end buyer first and then the seller.
[/quote]
Again this depends on how you want to employ your exit strategy or if you rather a long term hold.

[Quote]1. Is the repair costs determined after I tie up the property?
[/quote]
Pretty much yes. I always ask for pictures of the property to get an idea of the cosmetic damage, but the only way you can determine things like electrical, plumbing or foundational issues and so on is by having it professionally inspected.

[Quote]2. Is it best to reassign the contract or use a title company that does double closings?
[/quote]
It depends on what you want to do. Assignment is quick and hassle free but the potential for profit is much lower. Double closings can get technical but the payoff is usually way better.

[Quote]3. Is it necessary for me to show proof of funds when I make an offer?
[/quote]
Its possible to negotiate this off depending on what else you are offering and how motivated the seller is. Going through an agent, they usually demand proof, dealing directly with a fsbo you often have a lot more flexibility to negotiate.

[Quote]4. Do things change if the property is listed with a Realtor?
[/quote]
Like I said, negotiating is many times more difficult, depending on the situation. A realtor is not a motivated seller and wants to maximize the sale price rather than get out of the property quickly. With reos however, there is no home owner per se, but the listing agent might be willing to let you negotiate the price, depending on the commission structure and other factors. In any event, always attempt to negotiate, regarldess of who you’re dealing with.

[Quote]I have found a deal in my area but kind of dont know what to do next. I have asked a realtor to provide me with the CMA, but I kind of dont know what I am looking for with the CMA.
[/quote]
The cma (comps) helps you determine the market value of the property you are looking at. Its useful if you’re retailing to an end buyer or applying for financing, and gives you a good picture of your built in profit going into the deal. Its also cheaper (free) than an appraisal and more reliable for determining value.

[Quote]Is there any specific place that I can find contracts or is it best to consult a RE attorney to have it done?
[/quote]
The answer is yes :). Always get an attorney, regardless of if you’re using your own contracts, the state issued ones, the ones your agent prepares or the ones you download off the internet.

[Quote]I am very motivated to start and would appreciate any help anyone can provide me…THANKS IN ADVANCE!!
[/quote]
In my opinion this is a great place to ask the questions your asking, lots of good people here glad to help out.

4

Thanks for your help. When you tie up the property, would you wait until you have the buyer to order a title search and see if there are any other liens on the property, or is that done by the end-buyer? I am assuming that if there are any liens on the property it will affect the numbers and the profit potential. Is this right? I am VERY motivated to get off the ground for next year. Today is actually my 21st birthday and ready to get started NOW to begin experience what life truly has to offer. I will be looking to form an LLC by January, while networking and building my buyers list. My next step will be to begin getting all my marketing material together, flyers, bandit signs, vanity number, business cards, etc. 2009 will be a great year for me, I can see it now. “Anything the mind can conceive and believe, it can achieve” (I am a firm believer of this)

Any help is highly appreciated. :cool

5

I always do a generic search on the county clerks website before I make an offer. Imagine offering a Seller 50k only to find out he owes 50k and has 20k in liens. You have a buyer ready and all. Sometimes I have my Title do a quick search for me as well.

6

Hi everyone,

As I was perusing the topics here I noticed the remark regarding wholesaling and having a RE license. Can you tell me how structuring a wholesale deal would be different with a RE license than without. As a means to an end I got my RE license (to raise capital/find buyers) and now am marketing to sellers. I was told by my broker I didn’t need to disclose my realtor status, but my attorney said it’s a fiduciary duty…how is it fiduciary if I’m going in as a buyer, not a lister?

Thanks in advance!

7

Not sure exactly, but my guess is that since you can get a property for a certain price you should also pass on that price to your end buyer as an agent. I.E. you can get a place for 100k and you assign it for 120k…you should have told them it was available at 100k since you are supposed to act in their best interest? Maybe I’m wrong…just my 2 cents.

8

Alex you are right if a Realtor does do this and another Realtor calls the board they can and will get in trouble. That’s a big downfall to having a RE License you basically can;t double dip its called Conflict of Interest.