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Real Estate Wholesaling

real estate wholesalingReal estate wholesaling is the process of buying a piece of property at a very low price, marking the price up slightly, then turning around reselling it to a retail buyer, who will then rehabilitate and/or stabilize the property and realize the bulk of the upside value.

The beauty of wholesaling real estate, is that your profits are cash, and they come to you quickly; within a week or two. The sellers wholesalers deal with are highly motivated to sell, making buying at very low prices possible, and the investors they sell to come to the closing table with cash, be it their own cash, or from a line of credit or rehab loan.

In the world of real estate wholesaling, “price” is the central issue. If you can buy a property cheap enough, no matter what it’s flaws there will always be a buyer for it. Also, the lower the price, the more demand there is for a deal and the more the wholesaler can demand payment in cash with no contingencies.

Possible Risks And How To Deal With Them

If you are wholesaling properly you are buying at low enough prices that, even with your profit added on, the price you are reselling for still gets investors greed glands pumping and they are falling over each other to take the deal off your hands.

The only risk you face wholesaling is when you are unable to resell the property because you paid too much to the seller and no investors want to buy.

When you put a property under contract you always have an inspection contingency, so if you haven’t found a buyer by the end of the inspection period you can give notice you don’t approve the condition of the property and the contract is null and void. Any earnest money binding the contract is returned to you as long as you have given notice before the expiration of the contingency.

Finding Deals To Wholesale

The key to achieving low price is marketing; 1) targeting sellers who are motivated and most likely to sell cheap in order to get a quick cash sale, 2) making offers to those sellers, and 3) following up with offers until their properties are sold, either to you or  someone else. The secret to wholesaling lies in numbers, and creating high lead flow, and making a lot of offers. Read more…

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Posted by Ben - August 5, 2014 at 2:00 pm

Categories: Apartment Investing   Tags: , , , , , , ,

Using LinkedIn To Find Private Lenders

private money lenderWhen I say “Private Money” you get really excited.

Right?

Private individuals wiring money to closing so you can pay cash for hot deals, or put up earnest money on a smoking deal you are going to wholesale; cutting out banks and their time wasting underwriting rigmarole altogether.

But then reality hits, and you realize. Real private lenders, that is, not hard money lenders, not brokers, not intermediaries of any kind, but individuals who have money sitting in a bank account or CD, who need to get it out at a “growth” rate of return, have to be searched for, found, a relationship cultivated, and then offered an opportunity to invest their capital.

Bottom line for you; that means prospecting for possible candidates, and then pitching your deal to them.

So, now that we’ve uttered the words “pitching prospects for private money”, what is it that comes to mind?

Nice thoughts?

Or something like …

Let me get this straight. You want me, to loan you, money I’ve spent years saving, so you can go and do, what now … buy some ‘apartment’ deal. Are you crazy!!! What in all creation would possess me to do something like that??? Are you out of your mind??!!”

It may not be exactly this, but if imagining yourself raising private money sets off thoughts similar to the above, don’t worry. You’re not doomed to never raise any money. You’re more like, just … normal. Read more…

Posted by Ben - April 1, 2014 at 11:26 am

Categories: Funding   Tags: , , , ,

Only Cash Flow Matters

by Jeffrey Smith cashflow

2014 Q1 is almost over.

The lamestream media says everything is rosy (yeah, right). The problem with a cliff, even a demographic cliff, is that it is such a sharp drop-off that most folks can’t see the cliff until they are teetering the brink, especially when they are moving fast and thinking about something else.

Two realty brokerage firms in Las Vegas NV (ground zero of 2008 crash) are contradicting each other. One says there is a major downturn coming this year (wait a few months to buy when prices are lower), and the other says buy now before prices skyrocket. Who shall we believe?

The triggers for crashing real estate are: (1) Lack of debt financing and (2) lack of cash flow to service debt. The 2008 crash was caused by #1 when Wall St ran out of Other People’s Money (OPM), and then it was “solved” by the FED buying toxic mortgages with money printed out of thin air. #2 will happen when a sudden shift in demographics causes job losses and a sharp reduction in spendable income. The FED cannot “solve” that problem.

How much debt the FED buys won’t matter when there is insufficient spendable income to service that debt. Any financial calculator will show how Present Value (PV) and periodic payment (PMT) vary proportionately for a certain periodic interest (RATE). The PV and RATE vary inversely for a certain PMT (when RATE goes up the PV goes down). The FED can set rates to zero to try to prop up PV (to hide bank insolvency), but when PMT goes down, the PV must also go down. Read more…

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Posted by Ben - March 11, 2014 at 3:32 pm

Categories: Apartment Investing, Markets   Tags: , , ,

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