How Daisy Chainers Can Ruin Your Wholesale Deal!

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If you’re new to my channel my name is RJ Bates III. Myself and my partner Cassi DeHaas are the founders of Titanium Investments.

We are nationwide virtual wholesalers and on this channel we share EVERYTHING that we do inside our business. So if you’re looking to close more deals - at higher assignments - anywhere in the country… You’re in the right place.

Who is Titanium Investments and What Have We Accomplished?

Over 10 years in the real estate investing business
Closed deals in all 50 states
​Owned rentals in 12 states
​Flipped houses in 11 states
​Closed on over 2,000 properties
​125 contracts in 50 days (all live on YouTube)
​Back to back Closers Olympics Champion
Trained thousands of wholesalers to close more deals

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Chapters

• 0:00 Introduction to Daisy Chainers
• 1:03 Joint Ventures vs Daisy Chains
• 3:22 How Daisy Chainers Operate
• 6:31 Protecting Your Deals
• 9:15 Series Conclusion and Next Steps

Transcript

Speaker 1: 0:07

Welcome back to Wholesale and Red Flags, the series where I discuss things that you need to be aware of before it costs you your deal making it to the closing table. Today, we're going to be talking about daisy chainers. These are wholesalers that take your deal, they don't have any equitable interest and they try to just sell it off to another end buyer, and it's been rampant throughout of our industry for years. Right, and, quite frankly, it's something that we have done a pretty decent job of here at Titanium avoiding, and so I want to talk about some of the ways that you can avoid this happening and why this can actually end up costing you your deal making it to the closing table. So, first and foremost, I want to explain. There is a difference between doing a joint venture and a daisy chain. All right, a joint venture is where you set the expectations with another wholesaler up front. There is an agreement signed and executed, submitted to the title company, and also the expectation of how the assignment fee will be split and dispersed upon closing and funding. Okay, now, this I actually recommend for many people when they're first getting started into wholesaling is hey, jv, that dispo out to someone that has already developed the relationships with the end buyers. They have that skillset and they can move that deal with ease. So you don't stop your lead generation, you don't stop with your acquisitions calls, you don't stop with your follow-ups. So then you have to go do another task, which is dispositions. And it's really hard for wholesalers to find that, especially when they're sole openers, find that time to be able to do both acquisitions and dispositions. So I actually recommend doing joint ventures early on in your career. In fact, for the first couple of years here at Titanium we almost solely did joint venture deals.

Speaker 1: 2:17

The difference between a joint venture and a daisy chain is when there is not a signed agreement in place and the expectations are not set, and what they're doing is they're taking your deal, this wholesaler is taking your deal, and then they're adding their fee on top and marketing it out without your permission, or even sometimes with your permission, but not understanding how this is going to work. Because one of the things we never want to do is stigmatize our deals by saying, hey, my ASCII price is $100,000. And then the next thing, you know, the end buyers in the group or in the community and in the market start seeing well, this same property was sent to me by daisy chain, or number one at 120,000, daisy chain or number two at 110,000. And you're asking for a hundred thousand. It shows a a lack of control in your business and what I've seen is most in buyers will actually just got to push back and say you know what? There's plenty of deals out there for me. I don't quite understand and know what's going on with this deal, so I'm going to pass on this one. Bring me the next deal when I don't see it at three different prices and it will crush your deal and your marketing because in buyers will not even give you the time of day, they won't even run the numbers on it, they'll just kind of back away, even if you are in control of the contract. So each and every time you do marketing of your assignment contract, it's very important that one you know who you're reaching out to right. This is why we really don't like going into Facebook groups and posting or Facebook marketplace, because a lot of times that is the lowest hanging fruit for daisy chainers. They can go in and they can see your deal existing.

Speaker 1: 4:20

And okay, rj has got a property under contract. He's asking for a hundred thousand. I'm going to go submit it, or I'm going to push it out at 110, 120,000,. I'm going to go submit it, or I'm going to push it out at $110,000, $120,000. And I've got zero skin in the game at this point. So they don't care if the deal doesn't move. They can just do this hundreds of times, over and over and over again, without investing anything except for the time and energy to take that deal, repost it, add their fee on top and when the buyer comes along, then they reach out to you and they will pretend to be a buyer. Or, if they happen to be a honest daisy chainer which, quite frankly, I don't think I've seen very many of them they will come to you and say, hey, I presented this in front of one of my end buyers and I've got an offer at this price, front of one of my end buyers and I've got an offer at this price. The other reason why this rarely works is because, as a wholesaler, if you're asking $100,000 for the price for the property, then $110,000 and $120,000 probably doesn't work for your end buyer, right? So it just by nature the daisy chainer is always setting themselves up to fail and this is why they don't build relationships with those end buyers and eventually have a negative reputation inside of the market.

Speaker 1: 5:43

So, posting your deal on Facebook marketplace, facebook groups, like if it's the city real estate investors, dfw, real estate investment right, where there's 40, 50, 60, 70,000 people in there, it sounds like a great idea. But you're opening yourself up for those daisy chainers to come in and stigmatize that deal. The other thing that can happen is daisy chainers will at times, not go out and try to market that deal. They'll try to snake the deal from you, right, they'll reach out directly to a seller and say, hey, I saw this deal got posted over here. This person is trying to wholesale your deal. Now, if you do business the way that we do and you're transparent with sellers, the seller will just call you and say, hey, I got this weird call from one of your competitors saying that you're marketing the deal, which I already knew, but I just wanted to let you know. That's like the super shady way of doing things.

Speaker 1: 6:43

And then the other thing that the way that you protect yourself from the daisy chan outside of not putting it out there for the masses to see, is when you utilize the dispo softwares that exist today. Right, the investor lifts the investor base, the deal speeds. These allow you to see who you're sending the deal out to and you can also see the tags on their profiles. So if I go to post this deal inside of InvestorLift, I could say I only want to send it to cash buyers, I only want to send it to flippers, I only want to send it to land buyers, and so if it has the tag of wholesaler, you don't want to send it to them. Well, for one, why would you want to send a deal to a wholesaler? You're literally asking for that deal to be daisy-chained or to have them reach out and say hey, do you want to JV this? That's not the power of the Dyspo softwares. The Dyspo software is putting you directly in contact or seeing the end buyer's contact information so you can reach out and you can do the dispositions of this deal.

Speaker 1: 7:54

So, choosing the end buyers that you send this deal out to wisely paying attention to those tags, truly learning the software and leveraging all of the different facets of it that's the key here to protecting yourself from daisy chainers. When you receive address, requests, inquiries, incoming calls from the end buyers, it's always important for you to vet out these end buyers and ask what is your true intention of this? Do you plan on flipping it? Do you plan on holding it as a rental? How do you plan on financing this deal? Do you need a walkthrough? Do you have proof of funds, truly putting them through the vetting process and understanding what is going on? The last thing I would say about this is trust your intuition. Trust your intuition inside that conversation when you're betting them. If something just doesn't add up, that probably means that this is not going to be the solution for you and what you're looking for inside of this deal.

Speaker 1: 8:59

Deals can get lost when daisy chainers attach themselves to your deals. The more that you can keep your deal private to where the masses don't see it, the better it will work out for you. Now, this can be extremely difficult when your deal's not moving in a timely manner. Right, we all want to go into InvestorLift and blast it out to 5,000 to 7,000 emails at a time. We want to send out a ton of text messages. I get it.

Speaker 1: 9:25

The issue with that is not only are the good end buyers going to see it, but the bad wholesalers in this industry are also going to see it, and it opens you up for the risk of someone trying to daisy chain your deal. Again, the priorities here are pay attention to who you're marketing it. Again, the priorities here are pay attention to who you're marketing it. Really. Eliminate yourself for putting your out there in public forums where you have no control, but ultimately take control of that contract during the acquisitions phase. If you do this with transparency and explain to the seller the process of what's going to happen, even if someone tries to stake the deal, daisy chain the deal, you will be in control because the seller is going to appreciate that authenticity and understanding what you're trying to accomplish as a solid wholesaler.

Speaker 1: 10:19

So, guys, this is our last episode right now for a while, that we're going to do about wholesaling red flags. To be honest with you, I didn't think that this was going to be a long running series. I figured it was going to be shorter, but at this point I'm just going to be honest with you. I'm struggling to come up with specific red flags that last a long time. So I'll keep the series open when something does arise inside of our business to say, hey, that could be a good red flag series, but we're going to stop doing them every single week we're going to transition to a new series for you guys.

Speaker 1: 10:53

I appreciate all the messages and the comments that I've gotten about the love about wholesale and red flags. Here's one way that you can revive the series. Is there a specific red flag that you have seen inside of your wholesale and business and maybe you didn't know how to overcome it? If you have one of those, drop it in a comment below Me and my team will analyze it. We'll see if it would make a good video and if it would, you'll see the Wholesale and Red Flag series come back. Like I said, I appreciate y'all's support. Drop those comments with any ideas you have. Show me some love and we'll see you guys tomorrow.