Flip This Wholesaler

So, I ended up getting that deal sold that I talked about in my last last post, although it was a huge pain in the ass, and I’m only making 2k on it.

None of my buyers who I thought would be interested in the deal, were interested , and after marketing for several days and not getting any positive feedback, I finally decided to just dump it.

Like I mentioned in my last post, these piece of crap houses can sometimes be hard to sell, even if they are dirt cheap, and especially if they are frame and have only 2 bedrooms.  The house I have under contract is frame with only 2 bedrooms, plus the 2nd bedroom is really more of a glorified closet, so it’s essentially a 1 bedroom house. Which is kinda hard to move.

When I made the offer on this, I put a 7 day closing in the contract figuring that the bank would send their addenda back with a closing date several weeks out, like they usually do. It turns out that the seller is a private lender with just a few properties to sell, and doesn’t need twelve years to close like most of the big banks do. So, what I’m trying to say is, I didn’t really have a whole lot of time to find an end buyer. The seller is ready to close Monday.

The guy I’m selling it to is a wholesaler/investor who does quite a bit of business, and is one of the buyers I had in mind when I said in my last post that I could probably just dump it for a few grand if I wasn’t able to find another buyer.

The seller wouldn’t agree to close at my title company, but since this was just a regular assignment deal (or so I thought), I figured it would be fine to close somewhere else- I mean what kind of title company doesn’t know what an assignment is?

I’m sure you can probably see where this is going…

So, I went by the seller’s title company Wednesday morning to drop off my EMD and also to let them know that I’d be sending over an assignment contract later in the day as soon as I got it back from my buyer.

You should have seen the look on the lady’s face when I told her I was assigning the contract.  She pulled her glasses down on her nose and did one of these…(seriously, she did)

I totally knew what was coming before she even opened her mouth…

She proceeded to tell me that it’s not legal to do an assignment, because you can’t change the terms of the contract without the seller’s consent.  I then tried to explain to her what an assignment agreement was and that I was not changing the terms of the original contract, but rather assigning my rights in the contract for a 2k fee.  Needless to say, I didn’t get very far with my explanation before she cut me off, shut the little window divider thingy in my face (seriously), and told me she’d have to check with the attorney and see what he had to say about it.

Awesome!

So, she came back a few minutes later and explained to me that yes, I could assign the contract, but I couldn’t assign it for a fee, because that would be changing the terms of the initial contract. Which is illegal.

??

Are you effing kidding me, lady?

At this point, as much as I wanted to sit there and argue with her (and also smack that condescending look off her face), I knew that it was going to be a complete waste of my time and energy to do so, so I just told her I’d be back later once I talked to my end buyer to see what he wanted to do.

My end buyer, thankfully, is as cool as the other side of my pillow and agreed that there was no sense in trying to argue with the morons over at the Law Offices of We Just Make Shit Up As We Go.

So, we wrote up a new assignment contract that says I’m assigning the deal to him for $0, and he’s going to pay me a consulting fee of 2k once the deal closes. There are several other ways we could have structured it, but most of them would involve a second closing, and since my assignment fee is only 2k, a good portion of that would get eaten up in closing costs.  Plus, doing a double closing would mean extra money for the seller’s title company, which would kinda be like rewarding them for being stupid…… “Hi, you’re a dumbass- congratulations, here’s $500!”

I don’t think so.

So anyway, that’s the story. The title is clear and we’re closing on Monday, which is good. There was also some other drama that went on with this deal, but unfortunately I can’t talk about it in public for reasons I can’t talk about in public. I know that’s totally lame, but that’s all I can say about the situation at this point.

In other non-real estate related news, I’ve decided to chop all my hair off again, which I’m doing tomorrow, and am very excited about. (Sorry Mom).

Here’s the picture I’m taking in with me….

I likey.

Alright, then. That’s all I’ve got for today. I’ve got offers to make and miles to run…

Later Alligators!

P.S.
Is dumbass one word or two? I asked on Facebook, but we seem to have a split jury.

P.P.S.
Thanks to all of you who are participating in the 30 Day Challenge with me! Let’s knock ‘em dead this month guys!

Hola amigos- I hope you all are enjoying your Father’s Day weekend so far!

I’m just sitting here stuffing my face with some delicious guacamole that I whipped up earlier today, and since Chef Steph hasn’t made an appearance for quite some time, I thought I would share a few pics of my handiwork …

Behold- delicious guacamole:

Yummy.

I also whipped up another Reader Mail video for your viewing pleasure, wherein I answer John’s question about the closing process of a wholesale deal with a private seller.

(Try not to pay attention to the fact that there’s no apostrophe in the word “Tonights” in the intro to the video. Apparently I picked another font that does not believe in apostrophes). Awesome.

Let me know if you have any questions about the video, and enjoy the rest of your weekend…

Later Alligators!

P.S.
Hey Carey- if you try the guacamole “recipe”, let me know how it turns out.

Wow, what a day it’s been!

The lady I talked to last night about buying her house told me several times that she needed a really fast close (like next week).

I was supposed to go see it @ 1pm today.

The phone rang at 8:30 this morning, and I almost didn’t answer it because I was sick and was still sleeping.

I answered anyway, and it was the seller telling me she wouldn’t sign any contract unless I could close by Tuesday of next week.

She said she would be willing to lower her price if I could close by then.

I offered 80k, and she said no, then offered 90k. She said she could do 100k.

So I told her I would make a few calls and get right back to her.

I called one of the investors who has been helping me out  and gave him the details.

He told me to go for it, but to try to get it cheaper.

He said he would put the word out to his cash buyers right away.

So I called the seller back and told her I could close Weds. maybe Tuesday.

She said she would take 90k if I could close Tuesday. I told her I could manage that (I figured if I couldn’t find a buyer by the end of the day, I would buy this with my Dad who has cash).

Right after I hung up with her, I get a call from an investor who I have become good friends with (she is just starting out with wholesaling as well), asking me if I have been talking to a lady selling a house in Tarpon Springs (that’s where the property is).

Turns out my friend had spoken with the lady last night, and already has a cash buyer. She was on the other line with the lady when I called her back this morning.

We ended up deciding to work the deal together (we have another property that we’re doing the same thing with). We figured between the two of us, we could find a cash buyer and split the assignment.

So, we both drive out separately to look at the property, and I end up getting the contract for 90k.

While I’m at the house, I get a call from Lee saying he has a cash buyer who can close tomorrow for 100k.

Meanwhile, the other buyer my friend had lined up is on his way out to look at the property (he lived an hour away), so we decided to wait for him to see the property and see if he would offer higher.

He calls us back and says he will pay $112k.

At this point we are both ecstatic. We tell him to meet us at Starbucks to sign the assignment, show us proof of funds, and give us a deposit.

Now he tells us he is going to be using hard money and doesn’t want to give us a large deposit (we asked for 6 grand).

After a few more phone calls, we decide that it would be best to go with the investor who I spoke to earlier. I ended up meeting his partner an hour later and getting the assignment for 10k. He brought me a bank statement from today showing he had the funds, and is putting a 1k deposit at the title company. We are set to close on Tuesday.

I am still a little bit in shock that I actually found a deal, got in under contract, and found a buyer all within 24 hours. It is kind of surreal. If this deal closes on Tues., and the Nightmare Deal closes on Weds, I will have made 15k within 8 days!!!

I also wanted to add that the lady who I bought the house from today went down a list of investors from various sources (newspaper, flyer, signs, etc), and called all of them. I was one of only two (my friend who I am splitting the assignment with is the 2nd), who actually called back promptly and went over to make an offer.

This was a REALLY GOOD deal, and I know that if I didn’t answer the phone this morning, I would have lost out on it. Whoever coined the phrase “you can’t steal in slow motion” was right on the money (no pun intended).

Another point I wanted to make was that if you find a good deal, you will have absolutely NO PROBLEM finding a buyer!! I know I had heard this a million times before, and never really believed it, but it is true. Once the word got out today about this deal, everyone and their Grandmother wanted in on it. I’m not kidding. We found a cash buyer and had a 10k assignment within 6 hours of getting this under contract.

Even if these deals were to go south, I still will be grateful for the experience and confidence I have gained in working them through. Every deal I do, I learn something else and gain a little more confidence in myself.

My last two days of work are this coming Saturday and Sunday. It really hasn’t sunk in yet. I have been either waiting tables or bartending since I moved to Florida in 1994. Almost 13 years of waiting on people.

Sunday will be one of the happiest days of my life.

I never heard from the buyer who looked at the house on Saturday. I’m glad I just have an option on this one because I don’t think it’s a good enough deal and don’t think I’m going to find a buyer. Also, it is a subject-to deal, and I don’t really feel good about assigning it to someone I don’t know.

I didn’t get much done today. I am starting to panic about finding the next deal. Also worrying about what would happen if the two deals I have under contract don’t work out. I will basically be Screwed (with a capital S). Just one of those days, I guess, where I start to doubt myself. I had a long crappy weekend at work. Had to break down and ask a friend for a short term loan to get me through the month. Have been dreading doing it and now feel like a big fat loser. Just need to regroup and forge ahead. Going to get up extra early tomorrow and get as much accomplished as I can.

My day started off with a phone call from the investor that is buying my latest deal, asking for my fax number so he could fax over the assignment. It was nice to get that squared away first thing.

I made some phone calls and sent some emails to sellers.

Around 1:30, I got an email from the buyer who I assigned a deal to a few weeks ago (the one that had to re-sign the contract). He said he just got back in town and his mortgage broker hadn’t yet received the new contract (we signed last Weds.)

The realtor was supposed to fax it over once she got the seller’s signature. I called the title company and they said they hadn’t received it either. After leaving several messages with the realtor, and getting no response, I figured that the realtor had either (1) forgot to fax the contracts in or (2) went around me and sold the deal to another investor- or was buying it herself.

After about 4 hours went by, I was on the verge of a nervous breakdown. I had to go to the investor meeting @ 7pm to try to find a buyer for the latest deal I’m working on (the subject-to deal with the California investor).

I really wanted to stay home and cry, but I had to go. I called the realtor 2 more times on the way to the meeting just to see if maybe she would answer. No such luck.

While I was sitting at the meeting trying to imagine how fun it was going to be telling the seller that their deal had been yanked out from under them, my phone rang. It was the realtor calling to say she had recently faxed the contract to the mortgage broker and the title co.

She said she was sure she had already sent them, maybe the fax got screwed up or something.

riiiiiiight.

My guess is the contract was sitting in the back of her car under a bag of Fritos until about right after she got my first voicemail. Whatever the case, the title co and mortgage broker SHOULD have the contracts now.

On a lighter note, there seemed to be some genuine interest on the deal I presented at the meeting tonight. I am expecting to get a few phone calls about it tomorrow.