Notes & Pics – September 2017 TBI’s Networking Event

Thanks to everyone who attended The Boston Investor’s Networking event this week.  There were some great questions in the Q&A segment that made for some awesome discussions.

 

  • What are the average margins when wholesaling? Is $5-20k range accurate?
    • That average seems accurate to most
    • One investor mentioned that the ability to get larger wholesale spreads ($20k+) is dependent on knowing who the buyer is and what they rehab costs are and their desired profit margins
  • Any legal challenges with assignments or double closings?
    • Some attorneys don’t know how to do a double closing
    • Some attorneys won’t be able to do double closings because their title insurance company will not insure these transactions
    • Find a good attorney who understands wholesaling
    • Nobody noted any legal challenges
  • Have you wholesaled to an owner occupant?
    • Consensus was that there’s too much risk, a lot of back and forth and more emotions are involved
  • Do you always include language in contract that allows you to assign deal?
    • Yes, use the term “and/or assigns” in the contract
    • The term nominee shouldn’t be used because of it’s limitations.  Nominee only allows the buyer to assign it to another company that they own
    • If the sellers asks about the term “and/or assigns”, tell them that you are not sure which company you will be buying their property in
  • RE: Short Sales – are people seeing longer or shorter turnaround time?
    • Seems to be longer because the properties are going through price review 3 or 4x before being accepted
    • Used to be that they just wanted offers, but because the market is changing so quickly they want better offers
  • Anyone have any luck buying bank owned properties directly from the bank?
    • Someone suggested calling the president of small, local banks for portfolio’d properties
    • Often asset management companies are hired by banks so you could try to reach out to them.
  • How do you estimate ARV?
    • Access MLS for comps. Look at direct area comps especially in the urban areas – a street away from each other could make a big difference in price. Find out specific reasons for price changes.
    • For newer areas – access MLS, run comps & research what agents sold most properties in the area. Talk to the agents about what they know about what that area. Make sure to do your own research before seeking out the agents
    • Redfin is a great option if you don’t have access to the MLS
  • How do you find agents who sell a lot of homes in a specific area?
    • On MLS – Click Search – Run Sold homes for that area, export the list and including the agent names.  Sort by agent name.
    • Use Keyword Search – TLC, Needs work, etc. to filter agents who are investor friendly.
  • Wholesalers – do you have two websites – one for buyers and one for sellers?
    • Some have two sites and others have just one
  • Are there any agents who also wholesale properties?  Is it legal?
    • This is a very grey area
    • A lot of people include disclosures on their marketing materials stating that they are also an agent but they don’t want to list the home, they want to buy it
    • Some agents weren’t comfortable wholesaling because they felt it breached ethical boundaries
  • Skip tracing & cold calling?
    • Works depending on the quality of the leads
    • Keep calling and calling, until they tell you stop – just like direct mail
    • Follow up is always key
  • Structure a flipping business in an LLC?
    • Setting up a corporation has two aspects to consider – legal & accounting
      • Corporations require an annual meeting, meeting minutes, etc so if you’re not maintaining this, one could pierce the corporate veil
      • Partnerships don’t have as many requirements as corporations and provide great asset protection.  Most investors use LLCs
      • S Corp status – Allows for taxes to pass through to personal taxes so you don’t have double taxation like C corps.  Also, can take distributions that are no subject to self employment tax

 

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