Deshone's Million Dollar Wholesale Business Journal

Im a beginner too and dont know much yet either, but i know how to look over the numbers, and it appears to be a deal that pencils out with good cash flow. I also understand having a reserve for bad debt or other liabilities, but your just starting and the first few deals are gonna be skinny with no reserves built yet. You've gotta put yourself out there regardless to get started and build, build, and build. I would say full on disclosure is always the best bet, then theres no worries.

Ross

The fact is this guy buys maybe 20 houses per year or more, all cash, fixes them and rents them out until he sells them for a huge gain. He's into these properties dirt cheap so his holding costs are cover by having 2 of the 3 units rented. He has many facets to his business, some of them include letting buyers use his resources(mortgage brokers, appraisers, etc) to manipulate the system to the buyers and his advantage. I have chosen not to be a part of that, but that doesnt take away from the fact that he sells properties that are completely beautiful that cashflow positive. I'm getting my own financing. His illegal works I will pass on.

BUMP

This is Crazy!!! How much would a cash investor want to make for investing $232,000. After they pay everyone they're going to walk away with at least $110K profit! This is insane, I have to start doing rehabs,(Get your first wholesale deal first Deshone)

Guys I really need some input on this one, I know I'm not the only one up Lol.

Hi Deshone,
I'm just thinking about what I would do in your situation... the experts on here can correct me as needed. I've got a real estate agent friend (20+ years experience) that just told me a couple of months ago that if I ever need some help with paperwork he would be glad to do it for me (in MN or WI). So that is how I would handle the purchase agreement.
Since this is an assignment, I would make sure I had my "Subject to Finance" clause in the Purchase Agreement.
The only other important thing in my opinion is to make sure you have a set of keys at your disposal after both parties sign the purchase agreement - which is obviously different than the standard RE transaction. I would be interested to find out from the expert wholesalers on here how they normally make sure they get the keys.... and what they do if the owner doesn't want to give the keys up until closing. I had one owner who always wanted to be there. It kind of messed things up.

Roger

Great Tips about the clauses, I will definitely make sure they're in and subject to partner's approval. I'm looking at Dean's contract now and there are just a few lines that I don't get. It says in addition the following shall be added to the sale, what do I write here? Nothing? I'm going to call the Success Academy tomorrow so I'll know they'll help get me through this. If this is my biggest problem, then I'm doing alright. Still would like to hear some other's opinions as well. thanks Roger.

Due Diligence period is long enough to get your inspections done. That way if you find any big issues you get out without any lose.

Best Wishes!

Praise the Lord, it's been a while but some wonderful things have been happening including me closing my first deal. I revamped my entire strategy and focused on a direct mail campaign. I'm more interested in automation than ever because I work 60+ hours per week now and once I'm done, I'm building a business that doesn't require me to be there.

I didn't realize how much a mindset change would affect my business. In December, I realized that I was meant to do this. That's what many people have to get over. You're either meant to do this or you're not. If you're not, you can't win and if you are, you can't lose, no matter how many setbacks you may have. So in December after almost 2 years of struggling in this business, I made my mind up to go all out.

I had a budget of about $1000 to spend to launch. I realize everyone does not have that and that's okay. Deals can come from anywhere but marketing is about volume and consistency. You have to do what works for you. I could not put out enough bandit signs around my full time job to make it work. Yes, I got calls but not enough. If you have the time to put out 50 per week then you can make it work. The key is leads. Lead=Deals And like Dean says, you have to have an abundance mentality. You want your phone ringing all the time. It's going to be hard to build a big successful business with 10 leads per month coming in. You'll be lucky to get one deal every 3 months.

So Think Big Numbers!!! So I said to myself, it's time to pay for convenience. I did a direct mail campaign and sent out about 180 letters. I had about 400 names on my list, but I was trying to cut costs so I wrote the letters and addressed the envelops myself. This was a mistake and I will never do it again. You can do it if you want to cut costs, but I realized something about me. I like speed. I like implementing things fast and then following up. When I have to put major work in before I can launch something, after a while I get tired and discouraged. So i had to realize that and now I pay for speed. Most people wouldn't mind spending $1000 to launch their business as long as they knew it would be successful and I did.

Within 2 days the phone was ringing!

So the second phone call is from a guy who's father had passed away and he was asking what I would consider paying for the property. I asked him if I were to pay all cash and close quickly, what would be the least he would accept. He didn't have a number, so I said something low, around the low 200 range. I knew it was a great neighborhood and total view real estate said the place was worth between $370-$380. He said he was going to talk to his sister who was living with him and he would get back to me. He called me back a month later and asked if I could put my offer in writing.

I called him back and set up an appt. to see the house the next day. I went out and met him, started building some rapport and did a walkthrough. I estimated high on repairs at about $40K. I offered him $180K and we settled and $182K. I contacted my attorney to get the contract written up. He called me back in 2 days and said he had to get $190K. I consented. We wrote it up and I immediately contacted a buyer who had responded to a Craigslist ad I ran on the property. This guy said he wanted to buy 10 deals per month and his brother is a major heavy (cancer doctor) He was in RE 15 years ago and used to buy and sell several houses.

This was my first mistake, working with someone who had been out of the game so long. I hardly did any marketing. This guy turned out to be an inexperienced liar. He tried to make me believe that I had sold him a bad deal so that I would reduce the price. Because of a retaining wall that had to be repaired I was able to get the seller to lower his asking price by $15K and I dropped my wholesale fee from $35K to $20K.

So here are the numbers,
ARV $370-380K
Repairs $60K
Purchase Price $195

He took so long on everything from inspection to title to getting a survey. Everything was a pain and I learned a valuable lesson about working with inexperienced rehabbers. It doesn't matter if they have $100 Million to invest, if they're a headache to work with, it's not worth it. I'd rather work with 4-5 guys doing 2-3 deals at a time.

Anyways, we ended up closing after about a 2 months. I walked away with $18,750 and after my attorney's fee, my profit was $17,500. What a feeling to get that first deal done! It took me 2 years but once everything clicked and I stopped tip toeing it was literally 3 months away and had I been a little more cautious, it could have been quicker. No worries, I've got another marketing campaign launching this week and I have a goal of doing 2 more deals in the next 30 days. Off to the races! God bless

The reason my profit was $18,750 and not 20K, was because the buyer called me a day before we were supposed to close and said he'd close the next day if we lowered the price by $1250. He had already drug out the closing so long, the seller and both our attorneys knew he was a loser, so I had to make a decision. It was either lower the price and close or have him drag us out for another 10 days which at that point was not worth it. He still ended up delaying the closing another 5 days because he had to get the vacant property insurance. Like I said, lesson learned but still made a nice profit.

So im officially ready to go. Finally got my business LLC. MDM Properties is up and running. By the way these are just my wife and daughter's initials. This business is pretty much dedicated to them so it makes sense to me. Also i have my buyers site (www.mdmpropertyvault.com) and my seller site (www.mdmbuyshouses.com) Running. I also odered my business cards. This is my 2nd batch but also is what I consider the real batch. I just have to go back to the bank and open my business bank account which i had closed when i thought real estate wasnt for me. How crazy, never let your dreams die.

So anyways my next batch of letters should be arriving today or tomorrow. That will be about 1400. We are getting ready to blitz northern NJ. God bless!

Great job Deshone! Way to be dedicated and determined. I'm currently jumping over the same hurdle that it took you two years to accomplish. Learning from you and the others in this network, I'm hoping that I can break the barrier and maybe jump through the hurdles in less time. I've already spent about two years peeling through the strategies and all. There's nothing like just getting started. You're a hero because you are sharing your strategies and previous struggles. The information was very helpful. Thanks! Keep up the great work and I'll be following your journal to watch your success. Take care.

Thanks for the encouragement. Im looking forward to the future. One important thing is to get yourself to believe that this is what you're meant to do. Until that time you're just trying it. Once you know that being a successful real estate investor is in the destiny that God planned for you it gets much easier. God bless you

So I must take the time to share with you guys something that im equally as excited on but will need much more counsel in. My wife and I are getting ready to buy our first house and we are going to rehab it and live in it. We are getting an FHA 203k loan. We'll be able to include all renovations in the mortgage and can use any amount on repairs as long as the value after the work makes sense.

So the way I see it we can pick up a nice place at about 65% of arv less the repairs and really do an outstanding rehab heres an example using my last deal's numbers.

I find a place with an Arv of $380k
I buy the place for $175k
To do a regular rehab might be about 60k but say I wanted to put about $100k into it. I would be into this place for about $275k and have a spectacular looking house. one of the best on the block. And im stil about $100k below fmv. I'll have an amazing house with a ton of equity that I could live in very comfortably. Does this make sense?

The second part is how i manage a task like this and how we shoupd screen general contractors. My wife and i have a vision for what we want our house to look like but with this type of a project we want to make sure we're careful and get the most bang for our buck. Any thoughts from anyone familiar with rehabs? Do contractors usually have vision or do i have to design every detail?

So i dropped my first round of direct mail marketing today. Approx 400 yellow letters to absentee and inherited owners. Ive got another 900 that will go out over the next couple days. I want to be able to handle the call volume. Its on baby. Got my new business cards. MDM Properties LLC is officially launched. My only focus is marketing and making deals, rinse and repeat.

I love the way wholesalers get a bad rap in this business. I was just on a forum where a bunch of investors were discussing whether they felt wholesalers provided a valuable service or not. Most said no. This is good for any serious wholesaler that wants to build a big business delivering killer deals. The competition is weak. Most dont have accurate comps, estimate low on repairs and dont package their deals in a way that makes it easy for rehabbers or landlords to decide. All we have to do is nail these things and be professional and most of all really have killer deals and you are basicly the go to guy. Just a bit of encouragement for those that really want to take this seriously. The business is there because most of the amateurs wont last and there a very few pros doing major volume. God bless

I was always taught that it's the little things that make a big impact. Your last statement proves it right. Can't thank you enough!