If you are a builder or Fix and Flipper, you have undoubtedly thought about whether or not to outsource the General Contractor (GC) role on your projects.  The obvious benefit to not hiring a GC is the money you will save, but what is the cost to save that money? A GC is someone that […] Their are a much larger number of ways to access the income that investment properties produce. These include REITs, private equity funds, direct investment, and online platforms such as Fundrise. We dig into those methods more deeply in our article “Ways to Earn Residual Income Through Real Estate.” To understand the difference between Fundrise investments and other real estate investment vehicles, please see our FAQ page. By far my lowest returns for me have been with direct real estate ownership. All of it my fault at every level. Educating your self on cash flow, cap rates, etc. instead of doing back of the napkin calculations is key. I agree, I’ve never found direct ownership to be passive in any way. Email * And much, much more!  Add to Timely Calendar Fellow Newbie! Related Articles This one is my favorite approach. It requires the least amount of work, liability, money, headaches, etc. The reason is, when you find a buyer for your deal, you simply assign the contract to them. The form to use for this is called an assignment of contract and can be found on the resources page for download. Once assigned, they (your end-buyer) are then responsible for everything in the contract that was assigned. They are the ones that are closing on the house, not you. You won’t ever own it. You are simply selling your agreement that you made with the seller of the house. Remodelista Josh Stevens on February 1, 2015 4:00 pm © 2018 Pine Financial Group. All rights reserved. Design by Cyclone Mobile. Thanks for your great resources. They are very clear and good examples to get the process of wholesaling going. In the assignment contract, for the following sentence: John Marion is a Real Estate Agent with REMAX Town & Country in Canton, GA and Microsoft's View. That is one of the key factors why people On the CarrotCast Trevor Mauch unpacks what makes successful and high achieving real estate entrepreneurs tick... from the ACTIONABLE tactics on things like marketing (both online and offline) to the more important but sometimes hard to wrestle topic of the mastering your body and mind. Guests include the top house flippers, wholesalers, apartment investors, agents, and investors... plus experts on things important to high achievers like performance, sleep, happiness, productivity, passive i ... Is there a garage? (Is it attached?) Set up an emergency savings fund first off with at least $5K for unforeseen expenses. You will increase this fund with every purchase. Too many real estate investors came so close to making it but couldn't weather a personal or market downturn due to being overextended. Have enough capital for each home set aside. 5. Get Paid! by Lex Levinrad Beginning real estate investors are often attracted to the quick money that can be made by flipping deals. Flipping deals by assigning contracts is a very lucrative way to make a very nice living ” when the market is going up. In the previous boom there were many “flippers” that made hundreds of thousands of dollars assigning contracts. I even bought some of my houses from people that flip contracts. These people are known in the business as wholesalers.” Please note that flipping contracts is not the same as flipping houses. Flipping contracts is essentially transferring the rights of a purchase contract to another buyer. There are three main advantages to flipping contracts: Requires no cash ” you can put down as little as $10 on a contract No risk ” if you dont flip the deal you dont lose anything Quick cash ” money in your pocket now There is no doubt that these advantages are the reason why so many beginners are attracted to flipping contracts. The majority of the wholesale real estate books and courses that exist are related to flipping or assigning contracts. It is without a doubt the easiest way to start out with no money and no experience. However, there are also some distinct disadvantages to flipping contracts. The main disadvantages to flipping contracts are: You are dependent on your buyers to close. You make no money if you cant flip (assign) the contract. Whatever money you make in assignment fees is taxable so dont spend it all or you wont have enough to pay the IRS when your tax bill comes due. You only make a small portion of the profit. Here is an Flipping vs. Buying & Holding example: Imagine a house that is worth $100,000 that a wholesaler has placed under contract for $60,000. This wholesaler manages to sell the contract to an investor for $65,000 and makes a $5,000 assignment fee. Wholesalers often sell their deals to rehabbers (people that buy and fix up houses). Rehabbers typically look to buy their houses at 65% to 70% of the after repair value (market value when fixed up). So a wholesaler that signs a purchase contract to buy a house for $60,000 should easily be able to assign this contract to a rehabber like myself for a fee of $5,000. This fee of $5,000 is taxable so after taxes of 25% assume that the tax free cash that is left over is $3,750. This is the maximum amount of profit that the wholesaler can get from flipping this contract. Compare this to the investor that buys the contract for $65,000 on a property that is worth $100,000. That investor has just added $35,000 to their net worth. If this property is held long term then the equity should grow over time and as long as the property is not sold there should be no capital gains taxes due. Even if the property is sold, if the investor completes a 1031 exchange they should be able to roll their profits into their next real estate transaction without paying any capital gains taxes. The profit potential is far superior for the buy and hold investor than it is for the flipper. Consider that at an average annual appreciation rate of 5.8% (the historical appreciation rate of real estate in the U.S) what that house could be worth just five years later (answer: $132,564.84). If you owed $65,000 on this house then after five years you would have over $67,000 in equity. And still you would not have paid any capital gains taxes. As long as you do not sell you will never have to pay capital gains taxes. In fact, you would have been able to take advantage of a tax deduction (interest expense), as well as another tax deduction (depreciation expense) which would have lowered your income tax bill. Take a look at the table below to see what a $100,000 house would be worth over 30 years assuming that it appreciated at this average historical rate of 5.8%. Year value 1.00 $105,800.00 2.00 $111,936.40 3.00 $118,428.71 4.00 $125,297.58 5.00 $132,564.84 6.00 $140,253.60 7.00 $148,388.30 8.00 $156,994.83 9.00 $166,100.53 10.00 $175,734.36 11.00 $185,926.95 12.00 $196,710.71 13.00 $208,119.93 14.00 $220,190.89 15.00 $232,961.96 16.00 $246,473.76 17.00 $260,769.23 18.00 $275,893.85 19.00 $291,895.69 20.00 $308,825.64 21.00 $326,737.53 22.00 $345,688.31 23.00 $365,738.23 24.00 $386,951.05 25.00 $409,394.21 26.00 $433,139.07 27.00 $458,261.14 28.00 $484,840.28 29.00 $512,961.02 30.00 $542,712.76 Buying & Holding Real Estate Makes You More Money As you can see from the above table, buying and holding real estate has tremendous long term wealth creation potential. In the previous example of $100,000 house that the wholesaler flipped for $65,000 the maximum profit potential for the wholesaler was $3,750 after taxes. And they did all the work finding the deal (which is the hardest part). Just five years later, according to the above table the house would be worth $132,564.84. The wholesaler has long since spent their $3,750. However as a long term buyer you would own a property with over $67,000 in equity that would be giving you a tax deduction every year. This is the only true way to build fantastic wealth. By year thirty the house would have no mortgage (no payment) and would be worth over $500,000. Lex Levinrad has been a full time distressed real estate investor since 2003. He has been involved in buying, rehabbing, wholesaling, renting, and selling hundreds of houses in South Florida. Lex is the founder and CEO of the Distressed Real Estate Institute, which trains beginning distressed real estate investors about how to find wholesale real estate deals. He specializes in buying foreclosures and bank owned REO homes and offers private mentoring, bus tours, boot camps and home study courses for real estate investors. Lex Levinrad is an accomplished national public speaker and has shared the stage with some of the countries best real estate speakers. Lex Levinrad has authored numerous books about real estate and is also the the founder of the Distressed Real Estate Investors Association (DREIA) and the co-founder of the Port St Lucie Real Estate Investors Association (PSLREIA). This post provided by REIClub.com for creative real estate investors. Copyright 2002-2011 All Rights Reserved. Published with Permission of Author. No part of this publication may be copied or reprinted without the express written permission of the Author and/or REIClub.com. American Apartment Owners Association offers discounts on products and services for all your property management needs. Find out more at www.joinaaoa.org. 7M ago42:12 Commercial Property assignment with transactions and communication done without being present (communication Let’s run down the list of the five ways: Mark Ferguson January 11, 2015 Take advantage of the people that have come before you, and the ones that were in your position several years ago. And, most importantly, take action. Millennial Personal Finance and Investing Blog Closing the Real Estate Deal in Canada Mike – Well put. This might really be one THE definitive real estate investing articles out there. I’m also looking for a mentor feel free to add me as a colleague etc. Danny Johnson on July 15, 2013 at 6:08 pm Yes. I still offer the course. You can find out more about and sign up here: http://freedombyflipping.com In our example you got the property under contract for 92k and you have a 6k assignment fee, so you and the seller will walk away with what you requested. All other fees are the buyers responsibility. See all 112 reviews Amazon Best Sellers Rank: #87,837 Paid in Kindle Store (See Top 100 Paid in Kindle Store) About Me Newest AssetColumn Members Mark Ferguson December 19, 2016 1. Do you have to be a licensed Real Estate Agent in AZ to do a contract assignment? – and if not – This is probably the most challenging part for any business owner – connecting with potential clients! You’ll want to do a combination of in-person social events, creating word of mouth for future referrals, and organic growth with social media. by David Saba @Follow Me That being said, wholesaling is an extremely helpful sidearm to have at my disposal when I come across deals that don't fit perfectly inside the “cookie-cutter mold” that I like to see (and as you can probably imagine, this happens pretty frequently). Meanwhile, “want to sell” sounds a lot different: “I’m curious to see what my house is worth because I may be selling next year.” As you can see, there is a reason behind the need to sell versus the second scenario, where there is just curiosity. So how much do you need to know? As a general rule, I try to uncover any potential disasters that would kill a deal if I were buying it outright (i.e. – what kinds of things would make me turn and run the other direction?). I also need to gather enough information to fill out a property prospectus report. A potential scenario might go as follows: You find a property that you know would be worth at least $125,000 after repairs. You offer $100,000 and put the property under contract. You find a buyer, ask for $115,000 – remember: buy low, sell low – and you close the deal using your own attorney or a title company. Voilà, you’ve just made $15,000 in a relatively short timeframe, and both you and your buyer benefit from the deal. Don’t forget to add your buyer’s information to your buyers list because he or she might want to do business with you in the future, assuming your initial transaction went well. Mansion Global Why were the offers declined? If your read the prior article I discuss the basics such as the importance of the having the correct names (buyer and seller) on the contract, the importance of the property address and the property identification number (PIN), and the additional terms and conditions that should be added. However there is a lot of information that need to be added in the additional terms and conditions that were discussed. Tampa, FL 33614 USA Post your deals & receive offers online, It's FREE. Sponsors 040: Skip Tracing in Real Estate32:48 2y ago2y ago Previous post: Using Pinterest For Rehab Tips and Tricks Christopher J. Kyler Hi Toi, FINANCING REAL ESTATE Joey Arellano on June 24, 2017 11:05 am December 10, 2017 © 2018 Rich Dad® Education. All rights reserved. The Rich Dad® word mark and logos are owned by Rich Dad Operating Co., LLC and any such use is under license. The Rich Dad® Education word mark and logo are owned by LEA Brands, Inc. and their use is under license. The educational training program provided hereunder is not designed or intended to qualify students for employment. Our curriculum is avocational in nature and is intended for the purpose of the personal enrichment, development, and enjoyment of our students. Privacy | Terms of Use 53.) Word of Mouth – Despite all the technology we have today, nothing will ever come close to the effectiveness of word-of-mouth advertising. I go more in-depth at equityrealestateblog.com and I have videos at http://www.youtube.com/c/MarcusMaloney to help you feel more comfortible navigating your way through the process. The first step in a wholesale real estate contract is finding a motivated seller, who is willing to sell under market value. It goes without saying that the lower the price you negotiate with the seller, the larger the lump sum profit for you. Facebook The only money that you will actually need to put down will be the deposit amount that you agree to on the purchase contract. The deposit amount that you put on the contract should be held in escrow with a title company or an attorney. The less the amount of the deposit the better of you will be since less deposit means less risk. If you can get away with only putting down a deposit of $10 or $100 then you should do so in order to minimize your risk. As a wholesaler, if you do not purchase the property then your deposit will be at risk and can be claimed by the seller. For this reason the less you put down as a deposit the better for you as the buyer. Equity capture is when you buy an asset for less than it’s worth. In real estate, it’s when you buy a house in a $100k neighborhood for $50k, fix it up for $20k and you’re “all in” for $70k. 4) You Need a Title Attorney or Title Company That Works With Wholesalers Eddie on January 28, 2016 10:49 am Anthony | December 29, 2017 at 5:32 pm MST When you participate in crowdfunded real estate investing, you are part of a group of people who pool their money with other investors, and then lend or invest that money with experienced rental real estate investment property owners. Think like a seller: One of the mistakes new wholesalers make is thinking that everyone that needs to sell is going to sell. Many sellers you speak with will be in distressed situations that they wish they could get out of. Even though they know selling is what’s best, they don’t always do it. How you talk to sellers is the single biggest thing that will get you more deals. Instead of pressuring them to sign a contract, you need to listen to their situation. Find out everything about their motivation, how they got there and where they will go after they sell. When meeting a motivated seller, you should listen much more than you talk. Have a script in place, but don’t sound scripted. Ask important questions, but listen to the answers. Your seller may not want to move for six months. They may have unrealistic demands to move out. If you ignore these facts, you will work for months without ever closing. Motivated sellers will work with investors that they trust. When meeting for the first time, don’t think like an investors, think like a seller. Margrette on November 7, 2016 10:03 pm Send This to Friend WHOLESALING chevron_right How To Start A Blog Name: Ken LaBrecque says: Andy Munoz on March 14, 2015 3:44 pm Two important points are worth noting here. First, the court acknowledged that Xarin had “an interest in the property” when it signed a purchase contract with Gamboa. As we will discuss later, having “an interest” in real estate allows you to sell your interest, which is specifically exempt from many state licensing laws. Second, the court made an important point that the Xarin did not have a deal with Baker in place when it made the deal with the owner of the property. This is important because the reverse can also be true; if you make a deal with a buyer first, then find him a property, a good argument can be made that activity is brokering on behalf of the buyer. Recent Comments Sales & Marketing Solutions Books Advanced Search New Releases Amazon Charts Best Sellers & More The New York Times® Best Sellers Children's Books Textbooks Textbook Rentals Sell Us Your Books Best Books of the Month Kindle eBooks Coaching/Mentoring There are a few specific techniques I use to find motivated sellers and get deals under contract at ridiculously low prices. I've already explained these techniques pretty thoroughly in a number of articles throughout this blog. If you aren't sure where to start, you can reference these posts below: DHD Advance Canadian Real Estate Investment Coaching / Mentoring 8. Invest in Wholesaling Houses Did this article help you? In the event the property is being rented and their is a long term lease (not month to month), you will need to make a concession to the tenant to make sure they cooperated with the transfer of ownership. This is what I mean by that statement; In most states the lease agreement transfers with the ownership, so if you purchase a property and the tenant have 7 months left on the lease then you have to honor that lease. To avoid this we offer the tenants a cash for keys (CFK) agreement. This is a one page agreement stating that the buyer will offer the tenant money to vacate the property. This is basically offering to pay for the tenants moving expenses. This is negotiable it can be what ever amount you agree upon. Again this is between the new buyer (wholesaler) and the tenant. We inform the seller what we will offer the tenant but this agreement will need to be signed by the legal tenant and the wholesaler. Myself and a couple contractor friends decided we want to start renovating properties. Esurance review (auto loans) Previous The White Coat Investor | December 23, 2017 at 12:11 pm MST Notifications VIA Email Text Message Welcome to episode 21 of the Sick Biz Buzz Podcast! In this episode, George Beatty shares his surprising reason addiction took hold and how he kicked it to dominate Philly's wholesale real estate market. Learn how you can turn your addictive tendencies into positivities in your entrepreneurship. Get the full show notes and other valuable resour ...… Mark Ferguson March 25, 2015 3. Adding value Milky Way Mastery LOG IN Customer Testimonials marvin on October 30, 2013 at 11:28 am Eric Peters on July 28, 2017 3:54 pm How to Wholesale: Example Deal Real estate photography pricing is often one package with a flat fee, including up to a certain number of bedrooms or square footage. You can offer add-ons like dusk photos, extra fees for particularly large estates, virtual tours, or neighborhood photos. Kindle Store HouseFlippingHQ.com/yo – get a free gift for YoPro Nation! Copyright © 2009–2018 Financial Samurai · Read our disclosures Homeowners can be distressed and motivated to sell for an array of reasons. They may be going through a divorce, have legal troubles, have inherited property, or simply have to move fast to relocate or purchase another home. These are often found by reaching out through marketing and via lead lists. wholesale real estate market|wholesale properties atlanta wholesale real estate market|wholesale properties for sale wholesale real estate market|wholesale real estate assignment contract
Legal | Sitemap