Is Disclosure Necessary When Flipping?

The best way to practice real estate investing long term is to create a situation where everyone in the deal gets enough to make their efforts feel validated. Sharing the profits in the short term shows respect for the seller, indicates a level of honesty and honor, and encourages the seller to refer my services to people in their situation which creates a long term profitability. Sellers often become buyers down the road, if not immediately. I want them to call me instead of a bank. peace,

That's exactly my philosphy! I guess I just hate when seller's pass on my initial offer when I tell them my intentions.

A deal is not a deal unless everyone is happy.

Honesty is alway's the best policy.

Sometimes, I feel I'm too honest to be an investor, but that's what I live by.

Certainly it has and will alway's payoff.

Thanks Dana! I feel your answer way's from "On High"!

Rodney

Off to my next appt. Have A Great and Prosperous Day!

I agree. Disclosure, disclosure, disclosure...and written, at that. It will save you lawsuits and ill feelings down the line! The disclosure form is mentioned in a few of DG's books, I just can't remember the exact spot; there are examples floating around too of investors with their brief one-page disclosure form that they sign with the sellers stating that they are REI's and intend to make x amount of profit on this transaction.

For anyone who's licensed, also, it's required by law.

I don't think you have to show all your cards as an REI buyer, but at a minimum disclose what everyone's interests are. Good topic!

Take care,
Chad.

I always fully disclose my intent to make a profit. I tell my sellers up front that one way or another I am going to sell their property for more than I paid them for it. This is how I make a living. I am either going to keep the property and do the fix/flip myself or sell it to one of my fellow investors for a profit. I just want to make sure that the seller is happy with the purchase price we have agreed on. What I do with the property is not their concern as long as they get paid what we agree on.
Remember Rodney, whether a property is free and clear or not, you can only pay so much. Do not just "low ball" some silly number. Base your offer on ARV minus repairs and all other costs minus yours and your buyers profit. Show these numbers to the seller, either they say yes or they say no. At least they will understand you did not pull your offer out of a hat and are trying to rip them off.
This offer, when wholesaling is usually very close to 65% of ARV minus repairs. That is your MAX offer.

What I see WAY more than a seller being upset that you made money on the deal are wannabe investors that get a sellers property under contract and do not have the capability to actually close the deal. They run around trying to find a buyer on a deal they paid to much for, can't find one (true on REOs also) and end up wasting the sellers time, giving the property back to the seller or bank. This hurts real investors way more than a greedy seller. I personally have NEVER had trouble with the seller. He/she knew everything that was going on from the start and I CLOSE!!

Good luck and have fun today, we are in a great business!

Michael Mangham
MD Home Acquisitions LLC

I always tell everyone up front what my intentions are with each deal. That way you don't get in trouble down the line and put in all that work and the deal falls through because of non disclosure.

Totally agree Chad!

I do have the form you are talking about. It's an Option to Buy Form that states exactly what your intentions are.

Again Thanks!

Rodney

Once again, I totally agree. Truth is parallel! Disclosing how and why I'm making my offer is exactly how I chose to do it. I did just that this morning.

Thanks Michael! I'm on the right track!

Rodney

Only had a deal to fall short once in my 17 yr career because I failed to disclose.

Experience is the Teacher!

Thanks!

Great advice Michael....I agree 110%. Everyone should

Michael is exactly right. I run into so many sellers that have been fleeced by new investors not performing. It really becomes an uphill battle as the sellers lump all investors together. So if you can't perform, please go get a job at McDonald's or Wal-Mart and leave real estate investing alone.

I agree...

Here in Washington we are certainly required to disclose.

Happy Investing!!