Should You Wholesale in North Dakota? Here's What I Found

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Transcript

North Dakota Wholesaling Disclosure Rules

Price Points And Buyer Activity

Best Cities And Border Strategy

Title Closings And Compliance Risks

Final Verdict And Listener Questions

SPEAKER_00 0:03

Welcome back to Wholesal and Around the World, the North Dakota edition. Now, if you've been following this series, you know that population rank matters and how I feel about virtually wholesaling in a state. And North Dakota, I'm sure you already can anticipate it doesn't have a large population. It ranks 47th overall in population with just nearly 800,000 residents. And also, you could probably anticipate that North Dakota is a place that you probably shouldn't be wholesaling a lot in just because of the fact that there's not going to be a ton of buyers. There's not going to be a ton of deal volume. However, North Dakota is not awful. But it is definitely one of those places where you kind of want to have the buyer relationship before you try to go out and get deals. Because there are some things going against North Dakota, the population rank, the lack of buyer activity. It also has regulations, which is kind of odd because regulations make sense in some locations, like Ohio, which has a similar regulation as North Dakota. Ohio had a ton of volume in regards to wholesale transactions. So I understood why there would be a need for regulations. However, North Dakota, let's be honest, there probably wasn't a whole lot of wholesale transactions going on in the state. For them to step up and say, we need a regulation, that one felt a little bit out there. South Carolina made sense. Pennsylvania made sense. The regulation might not have made sense, but the fact that the need was there made sense. Ohio, Indiana, Oregon, all those made sense. North Dakota is the one that just kind of makes me chuckle and be like, I think y'all were just kind of jumping on the bandwagon and maybe not realizing the need for this. But let's talk about what the regulation is. You must disclose to all parties that you have equitable interests in the property, that you intend to make a profit, and that you may not be able to convey title to the property. Okay. So they basically want transparency, which I have always said all the regulations that mandate transparency and honesty to the sellers, I welcome. It's just a little bit funny because North Dakota is also what is referred to as an abstract state. Iowa, Oklahoma, also abstract states. This is an outdated way of conveying title in the property ownership. And it really slows things down. And so when it comes to the need that North Dakota had in regards to fixing the real estate transactions, I would have liked for them to have tried to attack the need for an abstract than coming after the wholesalers. That being said, I do think that this regulation was kind of cut and dry. Uh, you know, the the need to just disclose to all the parties that you're going to have equitable interest, which is what the contract was already doing. But they're now wanting it on a separate document, okay, in that we intend to make a profit. It felt like they were trying to cut our legs out from underneath us. But in reality, it's no different than a realtor going to a homeowner and saying, I intend on listing your property and I intend on getting paid a commission for this. So again, I don't think anybody ever has a problem saying, oh, you're going to go do something and then you intend to make profit. I think everybody already understood that. So again, that transparency doesn't really bother me. The fact that we have to say that we may not be able to convey title to the property, that one is a little bit wild to me because that's like saying any buyer out there might not be able to close and fund on a deal. I mean, let's be honest, if I'm getting a loan, there's a chance that the loan might not, the property might not appraise. I might not meet the qualifications for the loan. I guess that's in disclosures already. So they were just wanting everything outlined. A little bit unnecessary, in my opinion, but overall, I don't hate this regulation. If every state came down with this regulation, it's not like I would be horrible in comparison to, say, like Pennsylvania or Oregon or Nebraska or South Carolina. All right, whatever. Now, moving back to North Dakota specifically, all right. One of the things about North Dakota is that when you look at the price points, overall, it's a pretty affordable state. Now, this is where if you just look on the surface and you say, hey, I'm going to go to the more affordable states, North Dakota would fall in line with there. And it might not be the best place for you to begin your virtual wholesaling journey because you need that buyer activity. You need to see properties being flipped, you need to see a significant amount of landlords. And North Dakota kind of lacks in that area in comparison to other states, specifically in the Midwest. Like you go over to Minnesota, you go to Wisconsin, Michigan, Indiana, Ohio, Illinois, those places, you're not going to have issues with dispositions and finding those in buyers. And so because of that, it's on the lower side of where I would want to do deals. But if you do have a buyer, because of the fact that there's not a ton of transaction, wholesale transactions going on in either North or South Dakota, it could be a little honeyhole for you. Now, the past two years, I've spent time up in Fargo and Grand Forks, North Dakota. They're both pretty cool little cities, very similar to other Midwest towns. There's plenty of properties there that are in physical distress elements. I feel like there are motivated sellers. So there is a need there. I just feel like if you are going to take the chance to either be doing lead generation yourself or even purchasing leads in North Dakota, I think you need to know who that buyer is going to be. Establish that relationship before. Essentially reverse wholesaling, which I never really recommend. Like this is one of the few places that I'm saying, hey, I think you need to know who your buyers are going to be. Specifically in Fargo and West Fargo, I think that's probably the best place for you to wholesale in North Dakota. Bismarck, also going to be a great area. And then uh Grand Forks. Grand Forks, because um that's where the University of North Dakota is. It's a college town, North Dakota State is in Fargo. It's also right on the border of Minnesota. I think that gives you a great opportunity to also pick up deals in Moorhead, Minnesota, where we've done deals. So it's kind of the same market. Your buyers will also buy in Minnesota as well as North Dakota. So it gives you an opportunity to still be able to do deals that maybe other people are not paying attention to. Just make sure that because you're not going to be doing a ton of volume in North Dakota, that you are compliant with the disclosures to your sellers. And also just quite frankly, the title companies and the closing attorneys that you're going to be working with, they're probably not going to be extremely wholesale friendly just due to the lack of popular or the lack of transactions and the lack of a deal flow that comes in in this regard. So again, important to have that buyer up front because maybe they know a great title company or closing attorney that will work with you, that understands what an assignment of contract is, isn't going to try to blow up the deal and will work with you just like they do in any other state. So listen, overall, North Dakota, I don't hate the market. It's just that I never look at it and say, that's where my next deal is coming. I think overall, we've done less than 10 deals ever in North Dakota. We've done more deals in Moorhead, uh, Minnesota than we have in Fargo, North Dakota, funny enough, which is just the way that it works. It's one of those places that due to the population, due to the buyer activity, you're never going to have a ton of opportunities. But don't just frown upon it and say, hey, I'm not going to ever work deals there or leads there. Look for that opportunity to build a relationship with an in buyer that everybody else is not going to be paying attention to. That is the opportunity that exists in both South and North Dakota. I expressed that in our episode with South Dakota. I showed you a live seller close there, and that was directly from the fact that we knew we had a buyer relationship. You could do the exact same thing here in North Dakota. So overall, it's never going to be a good market for you. But it could be if you have the right buyer relationship. So for those of you that are currently doing deals in North Dakota, let me know. Do you agree or disagree? Or just in fact, if there is anyone that actually watches this episode and is doing deals, I'd love to hear from you in the comments. Where are you doing deals? How many deals are you doing? Are you able to achieve volume there? I'd love to hear from you. Regardless, show me some love. Like today's video. We'll see you guys tomorrow.