Wholesale, Retail, Flip And Rehab
Someone please explain the differences between, wholesaleing, retailing, flipping, and rehabbing. Are these four different areas of REI, or just different names for similar things?
Thanks
Good day " Vikingchild "
Wholesaling: The process of buying properties at a low price and re-selling them to an investor below Fair Market Value so that both you and the investor can make a reasonable profit.
Flipping: Buying properties below FMV, doing minor repairs ( carpet, paint ) or major repairs ( roof, foundation, bathroom, kitchen ) and then re-selling at at FMV.
Rehabbing: Making repairs
Retailing: Selling, buying at FMV
Fair Market Value ( FMV ): The average price that the property will sell for compared to other similar properties that are within a reasonable distance.
I hope this helps.
[addsig]
Thank you for clearing that up.
You are more than generous. Keep in mind the golden rule. "He with the gold rules". I would take complete control of the property if it is in my name. If you need management, then get management. Giving someone 2/3 of the profit when you are taking the risks and providing the cash doesn't pass my smell test. What makes more sense to me is to pay a fixed amount at close of escrow or when you finance a little cash out. Then the property is yours to do what you wish.
160K sounds like a pretty sweet "finders fee" with you bearing most of the burden. I wouldn't pay more than 10% of the profit as a finders fee in your situation, probably half up front (10K), and the other half after close of escrow (that way if there really isn't a 200K spread, you can make sure he only gets 10%). Or a flat fee up front, and then he is out of the deal all together.
thansk for you advice. that was what i was thinking. to do the deal myself. though they have the connection with the buyer and he may not do that, but that's ok. There are a lot of companies doing variations of using your credit to purchase homes discounted and you split the cash. This one is way off the mark. The actual deal is they get 200K and I get 90K and since I got my mortgage guy to work the loan we all smelled something fishy: he said "Wow, that's a pretty big consultation fee." which of course it ridiculously large. I am pretty much probably goin to walk away though getting so much cash would be nice but not when so much is at stake on my side.
As for the tax consequences unless you have a differing opinion, I think i would only pay what i recieve and as capital gains at the time i sell.
This is bad bad news, and most certainly a fraud. Check the articles, there was a recent posting about this.
Andrew
thanks for all the comments. I did ditch the deal. they were very shocked. the thing was they said to me "who have you've been talking too?" I know they went with another real estate broker cuz the one they had realized something was fishy. the got a broker that was not local. I am sure they inflated the price. Ironally i read the article and the property was located in TX. they thought they were going to walk away with a lot of money with no risk, but not with me! I think I might file a complaint with the TX real estate department.
File a complaint for what? They offered you an opportunity and you passed. There's no fraud there. You get a 100% non-owner occupied loan. It's rented for a year, you walk away with 90k. The only risk is to your credit if the payments are not made on time. You just made 90k for doing nothing. They're the ones that found the deal, they should reap the rewards. The only question is if you felt comfortable working with them. I work deals like this with friends and people I know, which is different when you actually know someone as far as trust goes. Obviously the seller has to agree with that as well for tax purposes, but like I just did with a deal recently, I had them sign a mortgage to a third party and had it recorded so it got paid out of the closing. Unless they somehow screwed you, I don't see why you would file a complaint.
there is no fraud and nothing to report. they just thought they had found a "sucker" for the deal. the finders fee is way out of line......km
they are asking a 200K "fee" as non licensed real estate people. I now found out that is illegal in Texas. Yes what they are doing I believe was/is illegal. that is why i found out they used a broker in another town (property in houston- broker in austin) . the previous real estsate person was spooked and said this is illegal (i never talked to her but these people imply she didnt llike the deal as it was arranged. My guess is being a local she also knew the price is very inflated as well)
I talked to my own mortgage guy (they were not the guy i use and mine is honest to a fault-- he said it all seemed extremely illegal).
not only that i looked up the accessors records and the house appraises at 500K give or take not 900K.. Clearly this appraiser inflated the value of the home. He looked like he cherry-picked the homes and the pics of the ones used as comparisons are far superior in location and appearance.
oh yeah, there some laws broken here...
reklats,
hey did the main guy you talked to have a southern accent? was his int. R.D. if so please send me an e-mail so we can talk as any info you have on this guy and or partners will help alot of other investors they screwed. STAY AWAY FROM THEM - you will lose everything if they are the same guys.