Re: Things that make me cringe….. Daisy Chain Deals.

I feel it’s my responsibility to keep our WREIA members informed on the current trends in our industry.

Buckle up. I’m fired up about this topic.

I’m going on a bit of a rant here because I HATE seeing so-called “investors” taking advantage of other people.

One of the biggest trends right now is shaking up the world of WHOLESALING.

In short, wholesaling is defined as getting a property under contract and assigning or selling the contract for a fee.

There are dozens of ways to control a property using various types of contracts.

The biggest shake-up in our industry is happening because seasoned or “mature” investors are going back to the wholesaling model.

Some of them tell me the biggest reason they are doing this is related to RISK.

Risk of money.

Risk of time.

Risk of liability.

I’m sure you have noticed the atmosphere in our country at the moment. People are angry about a lot of things.

So, some seasoned investors are fleeing to safety. Wholesaling a property is much less risky than performing an entire renovation and then trying to sell the property.

Regulations among the mortgage industry are clamping down on loans. Perhaps rightly so, perhaps not.

Regulations in the building industry have created a wide ranging number of inspectors for everything from electrical, structural and plumbing codes to chimney and mold inspections. Perhaps rightly so, perhaps not. We aren’t going into that debate here.

Wholesaling AVOIDS most of those regulation issues.

Wholesaling a property quickly passes on the risks associated with purchasing, renovating and selling or renting a property.

Perhaps I am a dying breed. I like to renovate homes and have enjoyed it for the better part of two decades.

I enjoy fixing up old houses and get satisfaction from “doing it right” and making them safe for a new family to enjoy.

We buy plenty of homes every year from wholesalers – but something is starting to bother me in the world of wholesaling, and you need to be warned about it.

The dreaded DAISY CHAIN DEAL.

They were really big a few years ago in Atlanta. So big that they got to be a problem for a lot of investors. No one in the community knows who to trust in these deals after a while. Lots of things can go wrong when so many people are involved.

Whether I get this deal “notice” buy phone, text or email the conversation goes something like this:

“Hi John, I have a deal for you. You have to act fast because it is going to be gone today.”

I’ve heard this before, of course, but my reply is usually – “Tell me about the deal.”

At this point they begin to tell me about a deal that I also got in my email two days ago, with an additional $2,000 tacked onto it. That’s a “finders fee” they explain to me.

Ok, great. This probably means that over the next few days half a dozen other “wholesalers” are going to tell me about this great deal using email, text and maybe even a few phone calls.

It’s become absolutely terrible….

BECAUSE NOW IT’S GOING NATIONWIDE.

We are starting to hear about “deals” in Texas, Arizona, Colorado, Michigan and half a dozen other states.

A few well known “real estate teachers” are talking about software that let’s you do all this in your pajamas.

Let me tell you – on a couple of occasions I might have taken a call from home. But I have never done a deal without someone from my office laying my eyes on the property. Never.

Do your due diligence people. Check those comps. Make sure you are looking at recent sales, not sales from 3 years ago and 9 miles away.

You don’t have to go far to find horror stories of over excited people who paid cash for contracts on homes – only to find them demolished with an additional enormous city tax bill.

My point is this – Be careful and know who you are dealing with in 2017. There are lots of shady people running around “daisy-chaining” trying to act like big wigs with lots of deals.

Now, why are the seasoned people starting to wholesale again? Because some of them are good marketers.

There is no harm in being a good marketer. My hats off to them.

The seasoned investors also see a national market. If they can get a property under contract and sell it to a list of national buyers, why not go nationwide and start looking for deals?

Better yet – if they can “partner” with other wholesalers and promote the property to their list – everyone wins – right?

Maybe.

Then again, maybe not.

When the deals are spread so thin, and every nickel is taken out of a wholesale deal before it hits the renovator – then we are no longer talking about a deal. It’s just another property for sale.

I think this trend of “master wholesalers” daisy chaining deals is going to be a disaster – with lots of carnage along the way. The little guy trying to do a couple deals a year is going to get taken advantage of – and lots of people are going to be confused at closing tables when they find out 6 other people are getting paid a couple grand for “marketing” a property to their email and text lists.

Ugh…..

Be careful.

As someone who wants to either become a wholesaler, a true wholesaler, you need to learn to market for properties – not buyers – as so many GURUS are starting to teach.

If you are someone who wants to flip properties, LISTEN UP. If you learn to market for properties you can save yourself thousands of dollars – sometimes 10’s of thousands of dollars. More importantly you can finally ignore all those daisy chain wholesalers.

Learn to find good deals. That my WREIA friends is what I am going to be talking about at WREIA this Monday night.

Come out and join us. Network with real people doing this business who aren’t hiding behind emails and daisy chain “deals”.

I’m fired up about this topic.

It’s going to be a good night.

Do you have recent experience with a “Daisy Chain” and want to share your story about your business – can you get in touch with me? I would like to hear your story and maybe we can share your lessons learned with our WREIA members next Monday?

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Interested in a seat or a WREIA Membership?

Save a few dollars and reserve your seat early.

Tremendous Savings and Additional
“Members Only” Perks for WREIA Members

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Join us on Feb 13th and expand your belief that other people are out with me right here in the DC area making money in Real Estate.

Let’s FOCUS and make 2017 a great year for your business!

Let me know how I can help you,
John Peterson
301-881-5541
Washington REIA Network, President
Profitable Property, Founder

P.S. Interested in a lender or construction partner for your pending project? Yes, we do that. We lend to and partner with people all over the DC area. Call the office and lets set up a time to talk through or walk through your project.

Re: Tiny Houses

NFL superstar “Neon Deion” Sanders used to live in a 29,000 Sq. Ft. mansion.  He sold it in 2014 and downsized to only 7,000 square feet.  But why in the world is he thinking about moving to a 600 sq. ft. tiny house?

 Downsizing is a hot topic.

One of the struggles that investors, especially new investors, face is their inability to fund a GOOD project.

Let’s be clear on something.  If it’s a good deal – the money will be there IF you are looking in the right place.

That is a powerful statement that many people breeze past.

FIRST – FUNDAMENTALLY, it must be a good deal.  If your deal is too “thin”,  private money and hard money will run the other way – or even worse – will slow you down while they “review” the deal.

If you are trying to find money through friends and family, they might not know what a “good” deal actually is – and in most situations, working with friends and family – especially as lenders – can be a recipe for relationship disaster.

A short video about our next WREIA meeting in Bethesda where we will be talking about “Finding Money and Finding Deals” is posted here:

SECOND – The money will be there IF you are looking in the right place.

“Some people are crazy” is a blanket statement we all hear from time to time.  Well, let’s all be honest – that extends into business too.

It’s a fact of life that we all run into people who “rub us the wrong way”.  We think that one person may be terrific, while your good friend may have a different opinion of that same person.

A big reason we might  have a rewarding business relationship with one person and not another may be where we SOURCE that relationship.

At our monthly WREIA meetings we see a lot of people that become lasting friends based on their shared passion for real estate.  They may come from different ethnic, cultural, political or religious backgrounds, but because of their shared love of real estate, they have a deep common bond.

It’s a beautiful thing to see our WREIA members truly bonding – especially over shared success stories and even stories about their struggles.  Successful people WANT to help the person that is just getting started or facing an obstacle.  Our WREIA organization is full of successful investors.

When it comes to financing a property – if your source of funds comes from someone who is a great investor because they have a sizeable stock portfolio that could pose problems down the road.

Someone who has had success building a stock portfolio by trading stocks, but never held real estate, may not have the temperament for a six to 12 months renovation project.   You can’t liquidate a house by pushing a “sell” button.

Remember, this all hinges on that fact that a GOOD deal makes life much, much easier.  When you FIND a good deal, you can screw up in a lot of other parts of this business and still find success.

So – come on out to our WREIA meeting this month and join us as we discuss the process of finding a GOOD deal here in the DC area and marrying it to the RIGHT type of capital.

John Peterson
301-881-5541
Washington REIA Network, President
Profitable Property, Founder

Re: Pet Cemeteries

Of all the renovation shows, few get the negative feedback that “Flipping Vegas” receives.

When I bring up the show to a few friends I heard these descriptive replies:

“I *&$#ing hate that show.”

“Garbage TV.”

“Unbearable.”

“It’s everything wrong with America today.”

Calm down a minute already. It’s not that bad.

When it comes to that “special type of acting required” for reality TV that we mentioned in our post about the Flip or Flop couple – well, this cast takes it to a whole new level.

“Overacting” might be a better way to describe the show.

Everything is a major catastrophe.

I did a quick search to find what the broader internet audience thinks of “Flipping Vegas” – I will spare you the bitterness. Let’s just say the feedback amongst my flipping friends was not far off the internet consensus.

Here is a clip from the Cat House episode where Scott Yancey talks about “hemorrhaging” money. (As he does on every episode.)

You get a taste of his special type of acting skills.

However – if you watch the episode you will also find a take-a-way from the episode. My discovery was that it is possible to respectfully deal with a previous owners love of their pets.

Specifically, dealing with a home-made pet cemetery.

I am a pet lover. I grew up with pets. I have owned pets. I think they are valuable and can help teach our kids responsibility and compassion.

That said – the previous owner of the “Cat House” obviously took things too far.

That house was really in bad shape. When you have to remove up to 4 feet of drywall from the pet “debris” – things have gotten out of control.

For a few hundred dollars they had a local “licensed” professional deal with the remains of the few cats buried and memorialized in the back yard.

Now, after a thousand renovations, I have seen pet memorials on properties.  Numerous times.  We usually just ask the previous owners if they have a desire for the memorial if we thought there might be any value. Otherwise, we have been reluctant to due much of anything.

Now I know it is actually possible to exhume the remains and have them properly cremated. Which perhaps is safer for the environment and respectful as well.

Maybe this was a little gory topic for the weekend? Maybe. But now you are equipped with something to talk about that doesn’t involve the weather.

Re: HGTV Reality TV

P.S.  Interested in a lender or construction partner for your pending project?  Yes, we do that.  We lend to and partner with people all over the DC area.  Call the office and lets set up a time to talk through or walk through your project.

Re: HGTV Reality TV

First up – Happy New Year!

Did you take a few days or weeks to unwind a bit?  Are you ready to tackle the new year?

Personally, I could use a few more days of unwinding – but the calendar (and the bank account) says it’s time to get back to work.

Thank you to all the WREIA members who joined us for the “Members Only” event in December.  We had a good time together, and I really enjoyed the feedback.

Now – it’s time for all of us to start executing the 2017 game plan.

Top of the TO-DO LIST – Plan to join us on Jan. 16th for the WREIA 2017 Kickoff meeting.  We are going to have a little fun bouncing ideas based off the top HGTV shows.

Like some of you, I spent a “little” time over the break binge watching some of my favorite renovation shows.

Some of these shows just made me laugh with their drama and lack of details.  But a few actually had some key points I want to share with you.

More on that over the next few days.

For now, dust off that winter coat and break out the winter boots.   We have a few weeks of cold ahead of us – but it’s no reason to curb your enthusiasm for the year ahead.

What do you say we get together on the 16th and start executing the 2017 plan together?

I am convinced we have the best group of WREIA members in the DC area.

Let’s get this 2017 Renovation Party started!

P.S.  Interested in a lender or construction partner for your pending project?  Yes, we do that.  We lend to and partner with people all over the DC area.  Call the office and lets set up a time to talk through or walk through your project.

Re: Your 5 Closest Friends

On Thursday, December 8th at the Pike & Rose La Madeleine Restaurant, we will have a special room set aside for our WREIA members.

As I scroll down through the list of our current WREIA members, I consider it an honor just how many of these people I count as my friends.

For some of our members the friends they have met at our monthly meetings and other WREIA members have played a huge role in their success.

There was an article a couple years ago in Entrepreneur magazine titled “Why the Five People Around You Are Crucial to Your Success”

One of the standout lines in the article jumps off the page just a few paragraphs in:

“It all proves that the company that a businessperson keeps can have a profound effect on him or her and subsequently the success of a business. ”

If you spend the estimated 4 minutes to read the article you will probably pick up a few more “nuggets” that will leave a positive impression on your day.

The bottom line is – Your friends matter.  Make sure they are motivating you.  Make sure they are bringing out the best in you.

Do you want to surround yourself with the right people in 2017?

Do you want to expand your network with the right people in 2017?

Do you need that slight edge that might nudge you ahead of your competition?

As it says in the article above – you could be one epiphany away from a renewed excitement in your business.

I invite you to join us for some top tier networking tomorrow at our WREIA “Members Only” event.

P.S. We are still closing “partner” deals in December.  Interested in or need a lender or construction partner for your pending project?  Yes, we do that. Call the office and lets set up a time to talk through or walk through your project.