The Business Of Wholesaling

Hello To The DG Family:
I have been gone awhile now, as I have been very busy. The year is coming to an end, and it always becomes a flurry of activity to get deals done and get into gear for the new year.

For those who don't know me and there are many, my name is Paul Jacobi and I live and work in Fort Lauderdale, FL. I live right on the ocean and it is wonderful.

Every day that I wake up and see the ocean and the beach, I realize how thankful I am to have been able to make real estate a full time business.

I have been at this for ten and a half years of which 7 and a half have been full time. I did this for three years part time, and it was a really great preparation period and a period of getting my feet wet.

Guys like Mike Laurita are big advocates of learn what you need to do and go to it. Mike is like a marine drill sargeant and in a way, you have to respect that.

I wholesale and this is all I have ever done and will ever do. I like money and I do this for the money, I have no shame in saying that to anyone.

I also like to surf and swim and run on the beach with my dog Gino, who is a big old rotweiler, about 90 pounds. The last thing I want to do is be disturbed by tenants or a manager who can't do their job and this is why I do not buy and hold. I kid you not!!!

The purpose of this thread is to dig deep into wholesaling. I know there are alot of new people here, who are still wondering how it is done, and because they still have questions and uncertainties, they have not done a deal yet.

Lets cover the very first thing you must have to get going. That would be what is called comfort or as some would call it, confidence.

You have to get off the couch right now and go look in a mirror and you need to say the following, and I am serious about this. You must say:

My name is_________ and I am a real estate investor. I may be new but I am as good at this as anyone else who does this.

You are and do not allow anyone else to tell you any different. There are motivational books out there that will tell you to tell all your friends and family what it is your doing. That's great, go right ahead, but don't get upset when they tell you you can't do it.

When someone says that you can't, please realize that they know nothing about this business or know very little, so what they will say is to be expected.

My grandmom used to have a saying and it was this. People will tell you that you cannot do what they can't do. Very good advice.

The next thing you must do is educate yourself. Realize right away from the start that your not going to go out tomorrow morning and put a million dollar estate home under contract and flip it, for big dollars. It happens once in awhile, but not often enough to make a steady living.

I can do it, Tammy R can do it, Mike Laurita and a few others can do it, because we have all built a infrastructure where we have the contacts and it takes time to do it.

I live on the ocean, and if anyone knows Fort Lauderdale and Las Olas Blvd off Ocean Blvd, you know the area I live in. If I was out looking for the huge home deals, chances are I would pass by ten properties that I could make money on right now. I would rather wholesale ten medium priced homes, than one huge home deal.

Alot of people who get into wholesaling, don't really understand what it is. Wholesaling is getting properties under contract and assigning that contract to a end buyer for an assignment fee. Thats is it, very simple.

Now there have been discussions and arguments on this forum about whether this is legal. Many who start these conversations do so after talking to a realtor and being told it is not legal.

It is legal to do and as long as the contract does not state that the contract is not assignable, then the contract is assignable.

Now another point of conversation has surrounded putting the phrase "And/or Assigns" on a contract. First of all, you do not put that phrase next to your name at the top of the contract. You put it next to where you signed the contract at the bottom, so if I was to sign a purchase contract to lock up a deal, I would sign my name, Paul Jacobi and right next to it, I would print my name and then the wording And/or Assigns. THis makes the contract assignable.

Now if your dealing with a bank, chances are this won't fly, because the bank still believes and fails to understand that your not assigning the home or the purchase of the home or property, your assigning the contract, huge difference.

When you wholesale real estate, you own the contract and that contract can be assigned. Once again, your not assigning the property, but the contractual obligation and the terms surrounding that purchase to another individual or entity.

Now there has been alot said and alot written about the importance of a buyers list. My buyers list consists of contractors and others who have cash to buy, they also must have a pof letter on file with me. If they do not have cash, then they don't make it onto my list, it's that simple.

Now here is how to streamline your buy and sell process and there is no magic to this. It is as follows. Only look at properties that meet your buyers needs. I never look at a property unless I have it already sold and neither should you.

If you are out there lining up a deal then trying to find a buyer, you are playing russian roulette with your business, in other words, spinning your wheels in a sandtrap without a possibility of getting out of it any time soon.

Now allow me to tell you why buyers who don't have cash don't make the list. If a buyer needs to go get a loan to buy, there is a real chance they may not be able to get a loan. I have friends who have 880 credit scores and they cannot get a loan and no, they won't use hard money.

Cash talks, loans walk, it's that simple. It is written in stone and is not negotiable.

Also, when you assign the contract, get half your fee up front and the balance at closing. If your fee is $6,000.00, it is really nice gettin $3,000.00 at the front end and this is not refundable. In other words, if they can't close or don't close, this is a penalty to them for not coming through as they promise, and when the buyer has money on the line, they will take the deal very serious. This is a business and you must stand firm on your policies, period!!!

I am going to go for now, tomorrow I will post a thread about comps and determing the ARV yourself and I guarantee you will be very surprised at how simple it is.

For those who have written in and said in a post that they did the comps using a online service such as Zillow and nothing is adding up, you will know why after you read tomorrows post. Hint: Online services are not accurate at times for a reason and it has to do with the way the data is collected and provided to you.