Wholesaling HUD Homes
This is a continuation of “The Great Escape” interview with Eric Thiele. Eric is working with Sean Terry and Flip2Freedom.com to learn how to start up a successful wholesaling business. In this section, Sean and Eric discuss how to find an escrow company.
Sean: Part of the criteria with that realtor is hoping they have a NAID designation. What that means is they can bid on HUD home properties for you. That’s going to be another avenue that we’re going to do other than deploying marketing, where he’s also going to be bidding on properties as well with my guidance.
Anyways, we’ve got the broker, courthouse, and the third thing we want to do is we want to find an escrow company—a title company or closing agent that can close these transactions. The best way to find a closing agent is to attend a REIA group, which are real estate investment clubs. Do you have any clubs there?
Eric: Yes, we do. There’s a large club in Austin and in the neighboring town called Round Rock, Austin—another active community of investors, so I plan on attending both of their meetings in the coming months.
Sean: Okay, perfect. What he’s going to do is find out when those meetings are. He’s going to attend the meetings, and he’s going to do a couple different things. Number one, he’s going to get a referral for closing agents because those meetings are investor-driven. It’s for investors, by investors. These investors will have good closing agents that they can refer. Maybe the wholesaler agent that he has that wholesaled the property, maybe he has a good referral that he can provide.
What he wants to do on this initial assignment is get some names of closing agents, and then, next week’s episode, when we dive in on marketing and analyzing data, we’re going to give him specifically what he’s looking for in that title person.
The next thing is, at the meetings, we want to find out who all the other wholesalers are. We’re doing this because we’re trying to find out what the competition is selling their properties at. If we’re going to open a burger joint, and there’s a McDonald’s and Burger King on the corner, well, we don’t want to have burgers that we price at twice as much, unless it’s a super-awesome burger. We want to have something that is in line with the competition, but provide an extra value in some way.
The way we can do that is get on everybody else’s mailing list—all the other wholesalers’ mailing lists. You’ll see what price point they are doing it. Is it 70% at ARV (after repair value) at 70% less repairs? Are they doing it at 85% of ARV or are they using assessed value minus something. Every state does it differently, but you’ll gauge to see what everybody else is doing. Also, to see what other properties they have for potential wholesaling opportunities. That’s that, we want wholesalers. Also we want to network with fix-and-flip guys and also, buy-and-hold guys because they could be potential buyers to build your buyers’ list. What you’re looking for are those people that can act quickly, pay cash, and close quickly.
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