What's Your Take On Wholesaling? | King Closer Reacts

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Transcript

Welcome And The React Format

SPEAKER_03 0:05

What's going on, everybody? Welcome back to the King Closer X. I am the King Closer, RJ Bates III, and this is the series where I'm going to watch some YouTube videos and see if I agree or disagree. Let's get into the first

Out-Of-Market Deals And CRM Reality

SPEAKER_03 0:17

one.

SPEAKER_05 0:17

The biggest lesson from this deal is that you shouldn't automatically throw away an opportunity just because the property is outside your normal market. You may need to get creative. You may need to work with an agent. You may need to partner up with another wholesaler, and you may need to call local landlord property managers, builders, or investors. So that being said, the solution actually may be different than what you normally do, but that does not mean the deal is impossible. You also need a real follow-up system. Your CRM should not be just a place where leads go to die. It should actively help you stay in front of sellers until they are ready to make a decision. Because sometimes that lead that may look difficult, inconvenient, or completely outside your market can actually become a $20,000 deal.

SPEAKER_03 1:04

Oh, it's good to see my boy Steven Morales back on YouTube. Listen, I I agree with the location. Uh that the aspect of, hey, just because this is in some of a rural market, um we don't want to pass on it. And he's right. There's times where you absolutely need to reach out to the local real estate agents or maybe even JV. That's one of the things that we pride ourselves inside of titanium university. Shout out to the titanium dispo houses. If you want to work with them, go to titaniumdispo.com. That's the first time I think I've dropped that on YouTube. So a little shout out there on King Closure House, titaniumdispo.com. But uh the the part there about the CRM, uh, listen, I I this the drip sequences are important inside of CRMs. Just don't find yourself relying on technology and the CRM to resurrect those older, slower converting leads.

What Wholesaling Is And Isn’t

SPEAKER_03 2:04

It still falls on the shoulders of the acquisitions rep.

SPEAKER_00 2:07

What is wholesale real estate? You find a house, you offer the owner a certain price point way lower than what it's worth, you find an investor, you sell it to the investor, and you get the middle part of the investment. Example, you find a house for 100K under contract, you put it under contract, you find an investor that'll buy it for 110k, guess who keeps it 10k. So easy, right?

SPEAKER_03 2:29

So, yeah, I mean, we've we've seen these videos come across on King Closer Racks time and time again. And I just don't like the narrative of, yeah, you're getting a property for way less than what it's worth. And that's not necessarily the case because in his scenario, the end buyer is willing to pay $110,000. And that's what makes that deal profitable for the end buyer because he's gonna come in, he's gonna rehab the property, increase the property value, and then he needs to make profit for doing that. That's just the cost of running a business, right? They have to be profitable. We don't sit there and say, as a realtor, hey, what you're going to do is you're gonna list a property and you're going to end up taking part of what the homeowner's equity is. So you're gonna list a property for $100,000 and then you're going to walk away with your $5,000, $6,000 in commission and you're stealing that from a homeowner. That just feels a little bit icky in the fact that in the wholesaling side of things, that's how we say it. But you don't have to. We're we're coming in, we're providing a service for the homeowner. We're providing a service to that end buyer who needs to purchase it at that property or at that value because that's what they needed at in order for them to be able to rehab the property and then sell it for a profit. So just kind of change the narrative there a

Licensing, Disclosure, And New Rules

SPEAKER_03 3:58

little bit.

SPEAKER_01 3:58

Notice you said when you got started, there was some rumors going around saying you if you want to be an investor, you shouldn't be licensed. I keep hearing it too. Uh as I said, I don't know who's who's starting that, but uh, we're in a world of changing regulations. If you are uh a wholesaler and you're doing off-market deals, you're going to have to be licensed in the future. That's my belief. Every every day we're sorry, every week I'm seeing new uh regulations coming out, state after state after state. The big wholesaling companies like here in Houston, if you want to work for them, they require you to be licensed. The state doesn't require you to be licensed. There's no regulation right now in Texas that says you have to be licensed to wholesale. But guess what? It's best practice, all their guys are licensed.

SPEAKER_03 4:40

So it is kind of I I hear what he's saying, but as new regulations come out, it's actually moving away from the license requirement, and it's more moving towards the disclosing that you're a wholesaler requirement, which actually falls into our laps of transparency, authenticity, and not really needing to be licensed. Now, when he's talking about these big box wholesalers like New Western Acquisitions, Networth Realty, they have always required their reps to be licensed. This is not new, this is not because of the regulations. This has been the way that way for over a decade. So nothing has changed there because of the regulations. Are there states out there where you being licensed do benefit you? For example, Nebraska. Yes, but that is very few states out there so far in regards to regulations.

SPEAKER_02 5:36

I never make an offer without running the numbers first, the cap rate, the NOI, and the projected assignment fee. I just sent my first offer without even knowing what cap rates are. I only call motivated sellers with vacancies, code violations, or properties that have been sitting on the market for too long. I've been calling random property owners off Zillow hoping someone wants to sell. I have a contract template ready to go before I even get a seller on the phone. I got a seller interested, but I have no idea what to put in the contract. I built my buyer's list before I started looking for deals, so when I find one, it's gone in 48 hours. I finally found a deal, but I don't have a single buyer to send it to. I closed my first deal in 60 days because I focused on one step at a time and didn't quit when it got hard. I've been at this for three months and I still haven't closed anything.

Cap Rate Confusion And Buyer List Myths

SPEAKER_03 6:19

Wow, that was a cute little video there. Um there's some things I I agree with that there was a lot of takes there, and some things I'm I'm adamantly going to disagree with. Um the running uh needing to understand the cap rate and the NOI and all that, that's specifically for rental properties. And I actually think that the majority of times we should be running our numbers based off of flip numbers. That's where you can buy the deepest, it's where you can buy the best deals for you as a wholesaler and for your in buyers being the flippers, because you can also assign deals that are run under flips to landlords. Then the the aspect of uh what was the other one that he said? He he needs to have buyers before getting a property under contract. Again, kind of old school thought process there. You know, when we look at the technology that exists today with investor base, investor lift, and deal uh deal speed, speed deletes, uh dispo software, these these softwares give us the information for the buyer. So we don't have to build the buyer's list, the buyer's lists are already built out there for us. We just literally have to swipe our card and have access to it. So there were some things that I I don't necessarily agree with. Now, having a contract template and all of that, that makes sense. But then there at the end, he says, you know, I focused on one step at a time. And then I got a question: how did you focus on one step at a time? If we're talking about, hey, I'm gonna go out and I'm gonna focus on building a buyer's list before I even get a deal. Is that really focusing one step at a time? Because shouldn't it be, hey, let's focus on learning lead generation, let's focus on acquisitions, comping and underwriting. Then when we get that under contract, now we can focus on dispositions, maybe even not focus on dispositions, partner up with somebody that is great at dispositions, and I just continue to focus on my acquisitions and my pipeline. I just, it's a broken train of thought, in my opinion. And I've seen this time and time again with people that come in, they they get lost on, hey, I need to go talk to all these buyers and ask them what their buy box is. But when you really talk to end buyers, you find out that that's really one of the most annoying things that they get. So you don't have a deal, you just want to know what I would buy. I call me when you have a deal. I want to analyze the deal and we can talk about that. So just kind of old school

Live MLS Negotiation Call Breakdown

SPEAKER_03 8:52

bots.

SPEAKER_06 8:52

So the price to get this for is probably gonna be ARV times 0.7, subtract your 125, puts you at 144. They're asking 174. Anything below that becomes my profit.

SPEAKER_04 9:03

Hello, guys, Nubian.

SPEAKER_06 9:04

Hey there, Nubian. My name is Richard. I was calling you about the Leisure Woods property. I'm wanting to do a little flipping. Is this thing still available?

SPEAKER_04 9:10

Oh, yes, it's still available. We have received uh a few offers, it has to be a total remodeler from top to bottom.

SPEAKER_06 9:17

I figured. I was estimating about 125. I wanted to give you guys a verbal offer and then also see if I could get my contractor in there just so I can remove my inspection period and submit earn it. Oh, that would be great. Because I don't honestly, I don't need I I know it's all destroyed, so I don't really need to inspect. I'm I just need to get my contractor in there for a loose a loose rehab estimate here. I probably wanted to come in around 140,000, um, which is not too far off of list price. I can also cover closing costs. And um, yeah, I don't really need to inspect after I get my contractor in there. Do you think that offer is competitive?

SPEAKER_04 9:48

It is competitive, uh being very, very honest with you. We have one at 155, but uh given the fact that you don't you won't have the any inspection fee, then my my client might be interested about that as well. Okay, yeah. Um but I'm going to send you the log box and then you will keep me posted if you're still interested after seeing the project.

SPEAKER_06 10:08

Absolutely. I I've got 27 other projects right now, so I think we've got excellent. I think it's right up my alley. I'm not too concerned about this massive rehab.

SPEAKER_04 10:16

Excellent. Thank you so much. I really appreciate it.

SPEAKER_03 10:18

I I like how Richard navigates his conversations with on-market deals and realtors. This is like one of a handful of calls that I've seen of his, and he's really got that nailed down. Um, I like how he comes in, he's he's prepared, he's got his little narrative there. How I'm gonna get my contractor in, we're gonna get that rehab estimate, and then I'll go hard with earnest money that's extremely competitive with MLS deals. Now, I don't do MLS deals anymore. We only do direct to sell or off-market, but this is a very uh competitive strategy for somebody when they're getting started. I I think it does struggle with kind of scaling um without a lot of technology and a lot of offers that don't go necessarily that way. I do also like the fact that he picks the phone up and calls the agents and really kind of negotiates and gets that verbal confirmation from the agent itself. So I'm I'm kind of a fan of Richard and how he navigates that strategy.

Final Takeaways And Audience Prompt

SPEAKER_03 11:19

All right, guys, that's our episode of The King Closer Reacts. Let me know, did you agree or did you disagree with my takes in the comments? Regardless, show me some love, like today's video, and we'll see you guys tomorrow.