what terms should the P&S contract to take care of a situation like this -
If I’m looking to wholesale a house and I end up not finding a buyer and I want to end the contract.
Thanks
sounds like you’re looking for weasle clause. read some of bronchiks articles. i think there’s one in there on this.
i personally, wouldn’t get involved in that side of the business unless i knew alot of investors and had definitive options like, if i don’t find an assignee - then i have the means to purchase, not weasle out of it. that’s just me though.
Thanks for your reply. So if I’m a newbie , what kind of investments should I start with, if not wholesaling?
well if you’re a newb, i need to ask - are you a newb to business as a whole? what’s your experience in investing overall?
the term “newb” or “noob” is a very broad term. i think people with strong business/banking/investment backgrounds have an advantage over the average schlub who decides to just start investing in real estate.
so how much of a “newb” are you?
i’ll assume you’re new to it all - business, financing, investment -
wholesaling, to me, takes expertise. you have to know your sh*t, cold.
however, that question is really a great question. it’s got me thinking…lol
i’ll say this, for any business owner, if you’re going to do something, you must prepare. preparation requires a target market - identify customers (buyers/tenants), product/services, customer demands, competition, cash, financing, advantages, disadvantages, break even, marketing strategy, and vision.
leave the legal to the lawyer and the taxes to the CPA - if you can do a little of each of these - then go for it.
each of the catagories above - take ALOT of preparation. i don’t care what any tape or CD tells you - i love how the carleton sheets tapes have people on there saying “in 30 days, i owned my first property. i bought 5 others in the next month…”
to me, that’s insane. possible, but insane.
TIME is on your side. devise goals, create a one page business plan - simple - with some goals - long term and short term. start doing - then change and expand the business plan. take notes, talk to investors/business owners, insurance carriers, subcontractors, realtors.
when you’re READY - YOU WILL KNOW “what kind of investments” you should start with.
clearly, you’re not there yet. don’t jump out of the plane, without a parachute and a lesson or two or three or four to pull the chute.
Thank you. I appreciate your thoughts on this issue.
TMCG…you must not live in the same area of the country as Carlton Sheets interviewees do.
In this area of the country, using “new math,” one can consistently find lots of properties that cash flow with no money down. Its no problem to buy 5 maybe 10 properties your first month and still make your rent payments to your relatives your living with after you lost everything.
Maybe your just not looking hard enough?
Mark
too funny.
i’m concerned about a friend of mine. he went off the deep end and paid for the coaching - 5 grand.
he’s going to buy a 93,000 two family in upstate new york. he’s putting money down…i forgot to ask him about this - cuz the sheets program is a no money down program…hhmmm
anyhoot - he’s doing this in his own name, then he’s going to quit claim the deed to an S-Corp, he’s set up and have the rent payments forwarded to a maintenance company that he is also starting up, that will manage all of his rental income.
he’s never owned a business, started or ran a corporation or closed on any home other than his own, which re refinanced to get his operating funds for this and other transactions…
i mean, he lives on long island and is buying 8 hours away, upstate and is renting this unit…
It sounds to me like TMCG has some experience under his or her belt and I believe the comments left in this thread are pretty much on point.
Although it IS possible to find deals in most markets that can be bought with no money down, the investors I’ve met who jumped in buying fast without a clear understanding of the basics of investing and business ended up investors for the short term, not the long term. And many ended up financially damaged as well as emotionally scarred to an extent.
Anyone is welcome to argue with me on this but I’ve been at it since the age of 12 having been lucky enough to have a dad who did it right in investing who took me under his wing and taught his hungry little entrepreneur back in the late 70’s. I live and breath real estate and have seen so many fall by the wayside that it literally breaks my heart.
Like any organization promoting its wares, the success stories are the ones highlighted. After all no one wants to hear about those who didn’t make it. And indeed any training organization or person cannot control the students’ innate ability to be successful, as this entails much much more than just technical know how. So, of course you’re going to hear about those few who jumped out of the plane without a parachute and by a miracle stroke of luck ran into a fully functioning parachute which happened to be floating by and which attached itself to their back 2/3 of the way down to the ground. Doesn’t mean everyone jumping out of the plane in such a risky manner is going to have the same fate.
It is also true however that if someone told would be investors that they had to do five thousand things to truly give themselves the greatest shot of success none would take the first step and so would never see success.
Having tried to help beginners get started I try to give some motivation, some basic pointers to help them have the greatest chance of success, but I also temper it with reality so that new investors go in with their eyes wide open. At least then they’re a little more prepared to deal with challenges if such challenges present themselves along the way, which is in my experience usually the case.
Now to the original question which started this thread. Please see the other posts I made earlier in this forum. They may help you a bit. Click on my name – RonDPate – and at the bottom of the Profile section select to “Show the last ___ posts of this person.” It’ll display a number of posts which should provide you with some insights. Best of luck with your new investing endeavors.
so in reading a couple of responses to the other bwb it is not advisable to start in real estae as the basic “schlub” unless you have a background in marketing or business - well doesn’t that exclude all of us “schlubs” who are looking to get into real estate. I have read that wholesaling is actually one of the best ways to get into real estate if one is working with preforeclosures and/or tax and other govt liens… I also find it a little harsh that an “out clause” is being called a weasel clause…
i don’t think it says you have to have marketing and business to get into rei, but any advantage helps.
also, in my opinion, i don’t really think it matters what it’s called - an out clause or weasle clauses are very important to the re investor - just as long as they’re not so abusive and border on taking advantage of the other party…too much.
in negotiating, your goal is to promote a win-win by knowing the other party(s) interests, advantages and disadvantages, among other things. if you can put some “subject to’s” in your contracts that help you and don’t hurt the other party, then indeed, they are very advantageous/helpful. they can just be utilized to STRONGLY benefit one party, so much so, that they can really f over ther other party - that’s bad and it’s those types of uses that prompt state congresses to pass BAD LEGISLATION to “protect” the victims of such crap.
First, it is NOT necessary you have a business or marketing background to be successful at real estate investing. BUT you MUST learn the basics of business and marketing/sales to be successful long term. You don’t have to become an expert, but you must understand the fundamentals or have someone working with you who does. Anytime you’re dealing with people understanding the basics of interfacing with people successfully is essential and this is what the basics of marketing and sales are all about. Learn how to build rapport with people, learn how to find out what people need and then seek to fulfill those needs. Learn how to talk with people with sincerity and with a genuine desire to help them with their situations, while of course structuring things in a way that is beneficial to you as well.
When dealing with any type of money making venture, real estate or otherwise, you must understand the basics of business. You cannot expect to become a serious investor without knowing how to track your financials, not knowing the difference between a balance sheet and a profit and loss statement, and so forth.
There are many many resources you can use to learn about this type stuff from a practically unlimited amount of reference materials on the net to community college offerings, etc.
Many real estate investors think they can just learn the technical aspects of real estate and ignore all the rest but such is not the case. At the same time, don’t try to learn everything and become an expert on business and sales before you get in. Find a good CPA, and maybe a part time bookkeeper who undertands real estate to help you with the financials. Read a book or two and remember to be genuine in seeking win/win solutions to the problems of those sellers you interface with. Start slow and build from there.
Many get what I refer to as “analysis paralysis” or they use wanting to learn everything before they get their feet wet as a way to avoid jumping in the water. At some point you have to just get started and that’s when the real learning begins.
Just go in realizing you have a LOT to learn if you’ve never been in business for yourself and being an active real estate investor is just that – being in business for yourself. You’ll have to buckle up, work hard, and eventually you’ll have the tools in place to do well.
With regard to “weasel clauses” I NEVER refer to them in such a manner. I always refer to them as what they are – contingencies. I NEVER put bogus contingencies in my contracts. I see people put such ridiculous clauses as “my partner must approve the final walkthru” when the only partner is their alter-ego, etc. Put the deal together, add valid contingencies such as appraisal contingencies, repair contingencies, financing contingencies, and other contingencies that make sense. It is wise to ALWAYS protect your interests. If I walk away from a deal with no valid contingency as to why then I gladly let my earnest money go to the seller as they have been damaged – hence I put reasonable earnest money amounts down, maybe $500 or so when possible. If you’ve had property you were selling and the buyer walked away with no good reason you’ll what I mean. Keep in mind though that you should do all in your power that you can to NOT have to walk away without a valid reason. I cannot recall the last time when we walked from a deal without a very good and valid reason as outlined by a reasonable contingency clause – but we do walk away from deals that have issues which come up in the due diligence period. AND if we put contingencies, such as repair contingencies, or whatever is needed for the specific deal – then we clearly explain going in the issue that MAY exist and that if it comes to pass we’ll not be able to close. Protect yourself but do so in a manner that you would consider acceptable if YOU were selling the property and receiving the contingency from a competent buyer and EXPLAIN the contingency to the seller going in so they understand.
If you find the deal is good enough, and you work to sell your contract hard enough you’ll find someone to buy the contract. The MOST IMPORTANT thing is to find a good deal and structure a good contract and then have your buyers for the contract in mind before you sign so you can turn it quickly.
If you put little enough earnest money down such that your inability to resell your contract or to close happens then you’ll be OK in the long run.
You should NEVER go into a deal with an idea of backing away from it or not honoring your commitment.
One final comment on contingencies. Put reasonable contingencies but don’ t load your offer up. Contingencies can scare sellers or make them feel you’re looking for a way out. Sometimes we only put one or two contingencies although we could put more.
There is nothing wrong with protecting your interests when entering into a bi-lateral contract.
Good luck with your investing!