For me, RE investing is like a juggling act in that I will find myself either looking for deals, money or labor(or a combination). Most investors that I know find themselves in similar situations. Sometimes one may be “deal heavy” and logistically not able to coordinate an additional project. Usually they will wholesale flip these deals to other investors. No “player” is going to care what the investor/seller makes in the deal if it “pencils” for the investor/buyer. Further, the goal is to flip quickly, real investors can write a check - wannabes need to consult their pets, or something. Houses are just inventory after all. A real “investor” is not going to sabotage your deal if they want to do business with you again, besides that would be treading on dangerous ground. Know thy Buyer.
Tie Up Properties-For Joe Kaiser - Posted by John Estell
Posted by John Estell on November 30, 1998 at 09:35:44:
Mr. Kaiser, I read what you said about tieing up a property then finding an investor to buy it. How much does it cost to tie up the property and for how long. Doesn’t the seller want this done asap. If the deal doesn’t work don’t you loose the money if any that you used to tie it up. I’m brand new and I’m learning. How much profit would a investor look for in order for them to be interested? Thanks.
Re: Tie Up Properties-For Joe Kaiser - Posted by Joe Kaiser
Posted by Joe Kaiser on November 30, 1998 at 10:20:14:
John,
None of this stuff “costs” anything if you’ve figured out how to do it properly. There’s always a way to make it happen without having to pay it out of your own pocket.
Whenever you buy a property there’s a natural period of time it will take to get it closed, 30 - 90 days. Obviously, the seller would like it done the sooner the better and I wouldn’t recommend tying him up for more than a week or ten days. In that week you find an investor who will pay you dough to step into your shoes as purchaser. If you can’t find such an investor, you politely decline to follow through with the purchase (not a big deal after only a week or two . . . a VERY big deal 90 days down the road).
As to profit, figure out what the investor needs plus what it will take to get it into marketable condition, and deduct that from the market value. That’s your potential profit, less whatever is owed of course.
Do it right and investors will write you $4k and $6k checks all day long.
Re: Tie Up Properties-For Joe Kaiser - Posted by Redline
Posted by Redline on November 30, 1998 at 14:06:47:
Caveat: You’ll most likely have to attend simultaneous closings where the wholesaler pays you and in turn pay off the seller. (The difference is your profit).
IOW: You don’t get paid until the deal closes and clear title is delivered. The wholesaler also won’t know how much you profited from the deal which is a good thing.
Oh yeah, try and offer $0 to tie up the property for 7-14 days to find a buyer. If they insist on something, offer $50.00. I wouldn’t go higher. If you can’t find a buyer you don’t want to be out $$. What’s 2 weeks worth to them when the property is sitting anyway?
Posted by Joe Kaiser on November 30, 1998 at 14:22:42:
RL,
You need a much better plan. I haven’t done a double closing in a decade . . . and I insist on getting paid upfront, whether or not the deal ever closes (with a couple exceptions).
Although not the real focus of the new abandoned properties course, there’s some thirty pages there devoted to this very thing (I included a couple chapters on the “Investor Peek, Retail for a Week” technique which is a pretty good description of what you’re looking for).
Posted by Redline on November 30, 1998 at 15:26:36:
Hey ho … now I’m spinning in circles!
I’m just repeating what some credible sources here have told me. I’ve been told just assigning the deal is not so easy because 1) clear title is a question (why would they pay you before they get clear title) and 2) they may object to how much your asking for (with simultaneous close they don’t know).
Now, I think you’re going to say:
I present pretty good evidence of clear title right upfront.
Too bad.
In which case I say … GREAT! If it works for you, I will certainly give it a shot. It would be better for anyone to try and assign and get paid now, then have to wait to get paid later. Anyone else wanna share here?
I suspect that Joe and Jim have dealt with these investors multiple times and the investor knows that they are not going to stiff them with a bad title. They are going to run their own title search. Just starting out without the investor knowing you I suspect they will be hesitant to hand over cash. If they are you are always allowed to take it. Most cash investors will have a title company that can do a preliminary search in a matter of days if not hours.
Re: I was told THIS was the plan! - Posted by JPiper
Posted by JPiper on November 30, 1998 at 15:40:29:
We all have our own techniques I suspect. Mine happens to be the same as Joe’s. I haven’t done a simultaneous closing in quite some time. I simply assign the deal.
Just because someone knows what I’m making doesn’t imply that I have to accept less for my deal. If the first buyer doesn’t want my deal, I call the second buyer, and so forth, until it is sold.
As a matter of fact, if a buyer creates too much difficulty I don’t call them back with future deals…something for the buyer to consider.
What if you bought a deal and closed…where your price is a part of the public record. Are you telling me that you might have to sell it for a “reasonable” profit as defined by your next buyer??
Re: I was told THIS was the plan! - Posted by Redline
Posted by Redline on November 30, 1998 at 20:19:46:
I guess I would just give it a shot. I mean, in reality I’m not going be 100% sure about the title myself. I sure don’t have the time/opportunity to go to the courthouse myself, so it’s all dependant on the word of the seller/realtor and what info they have.
I’d make that clear, and have them do a prelim. If they like what they see, they can pay me. If not … NEXT!
Posted by Redline on November 30, 1998 at 20:16:42:
JPiper: I totally agree. What I might make on the deal should have NOTHING to do with what some investor will pay for it … but I’ve heard that’s not 100% the case.
I’ve heard it said a few times here and at Joe’s board that sometimes if you’re clearing a tidy sum on the property, wholesalers can get greedy and upset and try to sabotage the deal because of it. Obviously I’m talking about someone you DO NOT have a prior relationship with - which I believe is the case with our original poster and would be the case with me.
Doesn’t make much sense to me because yes, I could and would just shop it to someone else.
When I try this type of deal, I will definately attempt to assign it and get paid up front. It sure beats waiting around until close. Hopefully, it will work out for me as it does for you guys.