Joe Bauer: Welcome to another edition of the Seattle Investors Club podcast. My name is Joe Bauer and I have my awesome sidekick Julie Clark on the call. What’s up, Julie?
Julie Clark: Hey, everybody. How’s it going?
Joe Bauer: I don’t know about everybody out there, but I’m doing pretty good. The sun is shining. It’s actually kind of coming through the window. Maybe I’ll get some vitamin D. I doubt it, but-
Julie Clark: I hear that.
Joe Bauer: One can hope.
Julie Clark: I just checked the ski reporter, the snow report for Stevens Pass this weekend, and it is dumping up there.
Joe Bauer: Big dump, yep.
Julie Clark: Big dump. Yours truly is going to try and hit the slopes this weekend with my two little sidekicks, my little knuckle dragger snowboarder, and my little, I’ll call him my little skier. As I told you, Joe, I am officially a snowboarder now. I’ve converted. Thanks for Joe, rubbing on me.
Joe Bauer: I didn’t realize that Katie was skiing.
Julie Clark: Yes. She is skiing. Her balance is not quite as good as Addison’s, who’s just got this crazy ninja balance. It’s fun.
Joe Bauer: Cool. We can all hope to have crazy ninja balance, which actually leads us into the topic today, which is the three ninja investor strategies.
Julie Clark: Oh, my God. That was smooth, brother. Look at you.
Joe Bauer: The three ninja investor strategies to use in a competitive market. You can have the ninja strategies on the snowboard and in the competitive market like we do.
Julie Clark: Heck yeah, man. Good topic. We are at the start of March of 2018 right now, and not only in the Seattle area market, which we are in here in the Pacific Northwest, shout out to all our peeps in the Pacific Northwest, but the market is hot everywhere, most places at this point. In major cities, across the U.S., so these are actually strategies that can be engaged and employed wherever you’re at, wherever you’re listening from, and let’s just jump right into it because this first one here that I’m going to throw out to you guys is my personal favorite at the moment. I love to try and look and seek for opportunities on all three of these ninja strategies.
Julie Clark: Number one is, when we have a super hot, competitive … When I say that, that means that we’re actually in a seller’s market right now. If you are a retail buyer out there or you’re a retail buyer’s agent, man, you’re working hard these days. It’s super competitive to find a home to buy. If you’re a seller, you’re looking good. You’re getting top dollar for, let’s just say, houses that don’t have all the bells and whistles. It’s surprisingly shocking what some of these homes and properties are going for today, which brings us to our ninja strategy number one.
Julie Clark: I like to say flipping and total rehabs are out and pre-habs are in. When I go to a deal these days, when I am assessing one of our leads these days, flipping is the very last thing that I actually look at. I’m looking at what else can I do in this hot market to minimize my risk, minimize the time I have to hold the deal, minimize the funds we have to invest in the deal and still make top dollar. One of those strategies is what I call and others probably as well, I think, because I didn’t make up the word. I don’t even know where I got it from, but it’s pre-hab. How that works is that you get a property, you secure an opportunity on a lead there with a seller and instead of flipping it, you just clean it up and bring it to what I’ll say financable, move-in ready condition, or not. That’s a little side not there. We’ll go to part A and part B of this pre-hab strategy and I’ll give you some examples, but focusing on the general way to do it.
Julie Clark: The concept is that you get a property, ideally off market. Can it work if you buy it off the MLS? It sure can if you have some extra tools in your tool belt, meaning maybe you’re a broker that has some savings or you’re a contractor or you have some way of competing on the MLS and having some savings. Otherwise, we leave the MLS leads for others. If you are someone just getting started out and you don’t have all the tools in your toolbox that’ll help you be uber competitive in the MLS market, then you want to focus on getting your deals off market from wholesalers, or better yet, getting them on your own, which is a whole other topic that we’ve covered in previous podcasts and tips of the day that you can find out there on YouTube if you search Seattle Investors Club.
Julie Clark: Assuming you are able to secure an off market lead, all you’re going to do is, ideally the homes that we’re looking for need some work. They could be full of stuff. Could be a hoarder house. Could be a partial hoarder house, meaning it’s not the worst kind, but it’s on the path to hoarder house where there’s a lot of crap in the house, a lot of stuff, a lot of belongings around the property all kind of trashed up. Could be that there’s water getting into the house in some way, shape, or form. Could be the roof is bad. All the typical things that you would look for when you’re going to do a traditional rehab, except you’re not. You’re going to stop yourself from doing that. Instead, you’re going to do … The game of this strategy is to do as little as possible and still be able to sell it for major bucks.
Julie Clark: That means that you’re not going to have to replace the roof, you’re not going to replace the windows, you’re not going to do an addition, or you’re not going to improve the basement and build out bedrooms and bathrooms in the basement. You’re not even necessarily going to fix a broken window. You’re going to make sure that you do things that, if somebody wanted to move in and live there, they could, and that the retail buyer, the end buyer’s financing is going to get approved by their bank. That means you’ll have to do things like put an interior drain into a basement that’s taking water, or maybe a French drain or solve that problem somehow. Maybe that costs you three to $6,000 or something like that. Pretty cheap.
Julie Clark: You’re going to maybe throw down some new carpet and do a little paint. If the paint’s not bad, leave it. If it’s nasty in this general way of pre-habbing, you might want to do a little bit of paint, or at least paint a couple rooms that the person moving in, who might be considering to renovate it further themselves, or just trying to get into a good neighborhood on a great lot in a more affordable home than a flip price would be, would move in.
Julie Clark: I’ll give you an example. Out here in the Seattle area, we bought a house in West Seattle on a great lot in a nice neighborhood. Small house. It was 770 square feet on the upstairs and it had a basement that was unfinished, but it had steep stairs going down. Not the ideal situation to finish the basement because it didn’t have great access to get down there, so what we did, is we bought this property off market for a good price, the same price you’d pick it up for as a flip property, and instead of going to town and doing a full remodel, the problems, the challenges with this house were these. It had a roof that was on its last leg. It had an awesome lot, but it was overgrown and messed up. It had water leaking ankle deep into the basement. It had beat up hardwood floors that could be refinished. It was like Craftsman floors. Could be refinished, and it had a kitchen that was workable and had some character to it, but it was old. No range hood vent and just kind of older style cabinets and kind of old school tile countertops.
Julie Clark: It had a deck that you could see would be a cool deck, but it was rickety or had some issues. As far as the furnace and hot water tank and the electrical, there was no knob and tube or anything like that. It was standard stuff. Gas furnace. Not new, not operated. Let’s put it that way. There was one bathroom, and the bathroom was just in, we’ll call it rental condition. Not blinged out for today’s standards on flips, but usable and in rental condition.
Julie Clark: Most people would go in and flip the hell out of this cute house because it’s a craftsman on a great lot, super charm, would be a great flip, but we decided instead to pre-hab it. What we did in this hot market is, all we did was take care of the water issue in the basement. Let’s call that, I think it was about $6,000 to put an interior drain in there. We left the basement totally unfinished. Just installed an interior drain system to get rid of the water so it wouldn’t be a problem for the bank. It’s funny because the buyers didn’t care and you got to make that distinction. You got to remember, who are selling this to? You’re selling this to them, but you got to make sure that they can pay for it and get a loan if they decide to. You don’t want to remove the pool of people who will buy it and finance it because they might pay more than the cash investor. We’re trying to angle our pool towards who’s going to give us the highest and best deal.
Julie Clark: Lots of times cash investors, most of the time, are going to pay a discount. A retail buyer putting a loan on, even though that’s riskier because it’s a contingency, will pay more. There are ways dealing with retail buyers to remove all the contingencies and not have any worries related to that if you’re working with a good broker. If you need one, I’m available. Just contact me. You think about the roof. The roof might or not have passed, but we didn’t bother to worry about that as far as a bank passing it or needing a five year certification. We figure, we got plenty of room. Let them ask us. If they ask us, we’ll do something about it, but in the meantime, we’re not going to because the market is so hot. We can probably get away with doing nothing. There was a broken window, a cracked window. We just left it. That’s easy. Think about it. It’s easy to replace a cracked piece of glass, but the game, the challenge, the fun part is to see how little you can spend on these pre-habs and still get the same big profits that you would with a flip.
Julie Clark: Or maybe you’re not going to get as much of a profit, but you are in and out of there with less risk, less holding time, and that is money if you find yourself in the wrong situation. Plus you can do more deals faster.
Joe Bauer: I got a quick question for you, JC. When you’re going into making this pre-hab versus a rehab offer, are you adjusting the price based off of the pre-hab or rehab, or is it a similar price?
Julie Clark: Good question. I run the numbers both ways. I always run the number as if it was a rehab, and then I secondarily, actually first in my case, because I prefer it, I run the numbers as a pre-hab. I compare the two to see if one allows me to offer more than the other if I have to. Usually it’s about close. There’s not a big difference. Because I have lots of tools in my tool belt, that might be different for me than it is for other people. I run it both ways, and then I know the range if I get pushed or I have to compete if one option is going to be better than the other to compete that’ll allow me to offer a higher price, then I’m going to go with that option if needed. Does that answer your question?
Joe Bauer: Totally does. Do you have a threshold limit that is contained within this pre-hab model versus when it goes into rehab, like a dollar amount?
Julie Clark: No, I don’t, because remember, even though I am focused on doing a pre-hab, my backup plan is that I could always just rehab it. If I don’t get the number or if it doesn’t work for some reason, I could just go and rehab it or make some additional improvements if I needed to. I don’t have a threshold number. I just like to challenge myself because it’s fun, to see how little we can spend.
Joe Bauer: Cool.
Julie Clark: It’s fun.
Joe Bauer: The keyword I heard in there was “backup.” Everybody, did you hear that, backup plan? Always got to have a backup plan.
Julie Clark: Right. Whenever you’re looking at any deal, any property, any deal, you need to know what your multiple exit strategies before you even make an offer. Pre-hab is my go to, rehab is my backup along with whatever else other creative deal structures that I would do with all the tools I have in my toolbox these days. In this particular house what we did is, we went in and put the interior drainage system in there so it would be financable, and then we did a little bit of paint, because not every room needed paint, and instead of spending the money, like 3,000 bucks or whatever to refinish hardwoods, we just threw some carpet down and it looked fresh and new and it was quick immediately when you walk into this home. Now, first impression is, there’s some new paint in this front room and there’s new carpet. There were two bedrooms and one bathroom and a living room and a kitchen on this small house. Small houses are great, guys. Don’t discount small houses. You can really make some money on the small houses. That’s what we did.
Julie Clark: Then, in the kitchen, it was a very small kitchen that had torn up vinyl on the floor, so we just quickly threw down some inexpensive engineered hardwood over that. It was a small area. Call it 50 square feet or something like that, or less. Just to brighten it up, just to give that perception of totally move in ready, but again, these are very low cost things that we’ve done. The next thing we did was, we put on some basic countertops. Nothing fancy, no courts, just a basic kind of inexpensive countertop just to clean it up. In fact, we only did that on one side because one half of the kitchen had some okay tile countertops, and the other side had some weird McGuyver countertop on it, so we only put that countertop on the side that looked weird. It probably cost something crazy, like 100 bucks. It was that cheap. That was that.
Julie Clark: Then, we added a range hood, I think just because we had one available. Otherwise, probably wouldn’t do it. In hindsight, I wouldn’t do that again. I probably wouldn’t do that again, but it wasn’t expensive to do that. Then we nailed some boards that were loose on the deck and just stained it and we cut the grass and obviously, trashed out the place. Literally, that was it. I think we spent about, if I recall, maybe $12,000 at the most. It might’ve even been less because we do so many deals, I can’t remember all the numbers all the time. It was not a lot, let me just say. Again, we did not redo the kitchen. We didn’t even touch the bathroom. We just cleaned up the house. We didn’t paint every room. We only painted a select couple rooms, and we put carpet down for a fresh perk.
Julie Clark: We didn’t replace the cracked window in the glass. We just put it on our form 17 and disclosed it. We didn’t finish the basement or do anything other than make it clean and dealt with the water situation down there. We didn’t put in any new doors, nothing. As little as possible. We didn’t do any landscaping. We just cleaned it and cut the grass. No upgrades to the landscape. We didn’t plant any flowers. We didn’t do anything. We didn’t stage it. Vacant, clean, move in ready. When I say move in ready, another little fun thing is if I did it again now that I know what I know after doing it so many times, I would even do less because you don’t need to make it even as move in ready as we made it, honestly, and people would be all over it.
Julie Clark: I think we bought that property for $350,000, and we had about $12,000 or less in pre-hab costs, and we held it for a few months. Or no, I’m sorry, not for a few months. Why did we hold it? I think it’s because we had the water issue. It took us a minute to solve. We might’ve held it a little longer than we normally would if we didn’t have that situation because it was in the rainy season, and it kept raining while we were doing it, while we were in the middle of fixing this. The roof wasn’t leaking, to our knowledge, it looked like it was on its last leg. We didn’t clean the roof. We just left it.
Julie Clark: We ended up then listing that for sale, and I’m a broker investor, which you all should be if you’re not. Talk about major advantages in the golden ticket in this business, in my opinion. We ended up listing it for, I think 465 or 475, and we had massive multiple offers and we sold it for, I want to say 515. Just killed it for doing not much. That is what I’m talking about. I have a video on it out on a tip of the day. If you go onto YouTube and you search Seattle Investors Club, I think the video is called “Pre-Hab” right on the video, if you guys want to watch that. It has even more information on there. It’s a short video.
Julie Clark: Let me tell you another deal that we did. This is a little bit more of an advanced option, but not really. We bought a house, actually sight unseen in a south Seattle neighborhood and it’d be a lead that we were working on for a year. One day the seller finally calls me and he says, “I’m ready. My wife died.” I’m like, “I’m sorry, but let’s go.” We ended up getting a great deal off market. Sight unseen on this house because it was in such a good location and on a good lot, we knew we were going to be able to do something great with it, no matter what for the price that we were getting it at. There was the seller’s kid on heroin living in the house. Part of the reason it took him so long to call us back is because he couldn’t get him out. We said, “No problem. We’ll take care of that for you.” We closed with them still in the house and we just spent a little bit of time and a tiny little bit of money to get them out of there. Solution. Solved. Easy.
Julie Clark: We end up with this one bedroom house, shack, and in a great neighborhood, up and coming, surrounded by homes that are going new construction, and instead of doing anything, all we did was clean it out, board up the windows, went and got a permit for an addition to the house to turn it from a small 800 square foot house to a cute, rambled 1,250 square foot home. That’s all we did, and we had the permit ready and available, already approved, and we listed it for sale, and we bought that house for, I want to say 140. We were probably into it for about 160, something like that. I don’t know what it was because we had some holding time while we were getting the permits and working on other projects.
Julie Clark: Sometimes you get so many projects, things sit for a minute. The idea is you could do it as fast as you want. Then we listed it for sale for, what was the number that I put it on the market at, was 275, I think I put it on the market for. Again, we’re into it for … I listed it at about $100,000 higher than we bought it for and we got multiple offers and a builder bought it from us, a builder team, who doesn’t just do new construction, but flips additions and they paid 280. 5,000 over our list price. We just killed it, crushed it. Guess what we did? Almost nothing. Work smarter, not harder. There are so many options available aside from going straight to the flip model, guys. That’s the point. Pre-hab is in, rehab is out. In this market, you don’t need to do that stuff. You don’t need to take all the risk, all the time, borrow all the money or invest your own money. Who knows? We’re getting kind of frothy here.
Julie Clark: If it was me, I don’t know. I don’t want to get caught and get a spanking if the market and interest rates continue to rise and the market changes. Right now, you can make a killing in just getting in and getting out. The thing is, if you’ve been int business for a while and you’re out there and you’re a very experienced flipper and rehabber like a lot of our friends are here, and a lot of you around the country wherever you’re listening from are … You guys, you know what the funny thing is about you guys? You guys can’t stop yourself from doing it. You can’t stop yourself. You can’t stop yourself from doing full flips and renovating. This is your challenge. This is the 30 day challenge and I want to hear from you guys. We want to hear from you guys, and I’m going to give you my partner Joe’s email address so we can hear from you guys. I want to hear that you guys have tried this model and had success with it. If that happens, hit us up in the comment section below this podcast. Is that how I say that, Joe?
Joe Bauer: Yep. Hit us up in the comment section at seattleinvestorsclub.com/24.
Julie Clark: Let us know that you tried this model and what experience you had with it. I know there’s a lot of people out there, a lot of contracts who flip, that get into flipping because they’re contractors and stuff. They can’t stop themselves from going full boat. It’s actually kind of funny to me. We’re in the business to make money, in the real estate business, and that means that you need to know what all your options are and like I said, work smarter, not harder with less risk. This is a much less risky way of doing things right now in a frothy market that could turn on us. I don’t know.
Julie Clark: I’m hearing predictions from some of our economists that are out there, that maybe things might change by the second quarter of 2019 or something like that. You got to be paying attention to that. Especially if you’re doing the high end or the $100,000 flips that I know at least in our market people do 100,000 or more. I don’t know. I’d rather do less. Instead of making 60 grand on my flip or whatever the number is you guys make on average on your flips, what if you made 40 grand, but you were done and you moved onto the next one faster and did more? Had more money. I guess there’s a balance.
Julie Clark: The thing is, you might go into it saying, “I’m going to make 40 instead of 60,” but in a crazy market like this, guess what? That ain’t necessarily true. You can still make that 60, because if you are working with a good broker who is listing your stuff than is an expert at negotiation like yours truly or whoever else is in your local real estate investment club that understands how to work it, you guys need to be having those people on your team, you might get more than you think, let’s put it that way, so I challenge you. That’s the pre-hab ninja investor strategy number one that I love today, that I always look at first. You guys ready for number two? Joe, you ready for number two?
Joe Bauer: Heck yeah. Let’s see. What is it?
Julie Clark: That was a bit of a long-winded number one, so sorry. I’m excited about that topic.
Joe Bauer: When people can make more money by doing less, shouldn’t everybody be excited?
Julie Clark: Or the same amount of money potentially by doing less. Doing less and making the same amount of money. I don’t have a crystal ball here. I think you guys are smart enough to understand the concept of what I am proposing to you. Number two, another strategy that works very well today that everybody should be aware of is what we’ll call wholetaling. That’s when you get a property, secure a contract, not a property, it’s a contract that you’ve secured, and instead of wholesaling it to an investor or flipper or whatever, you wholesale it to a move in or a retail end buyer. We’re skipping the investor and going straight to the end buyer. That can happen. You can do that with houses that are pretty houses, guys. These buyers today are having a hard time finding homes to buy. These buyers’ agents are sweating it, burning through their savings, rolling around for months with these buyers trying to get and compete for homes to buy. Not only in the Pacific Northwest in the Seattle area, but many other cities as well.
Julie Clark: Just look at the news. You guys are all following this, I’m sure, so how awesome would it be just to go straight to wholesaling direct to a retail buyer? There are some intricacies, I guess if that’s the word, some fine tuning, some extra things that we might need to be aware of and think of when we do that. First of all, when you’re wholesaling, you should not be listing … Actually, I’m going to back it up. It depends on where you’re at. All the state laws are different in regards to the rules on when you’re considered to be acting like a broker and if that’s breaking any state licensing laws, and that you could get fined and hand slapped and scrutinized, your business scrutinized are different in every state, and that is a whole other topic that we love to talk about and we’re going to be talking about more.
Julie Clark: At least in the Seattle area here, and you can apply this, like I said, if you’re listening from another market, you can do your own due diligence and research on this. We’re not allowed to, either as brokers or as wholesalers, because lots of people wholesale wrong and illegally. Again, another topic for another day, but the best thing you can do when you’re selling your wholesale deals is to be selling those directly to your private, underscore, underlining the word private buyers list. Not throwing it on Craigslist or Zillow or your Facebook page or all that sort of thing. There are many reasons for that, even if it’s allowed wherever you’re at, there are many more trickle down effect reasons on why you should not do that and you should develop and cultivate your own private buyers list. That’s what the players do. That’s how it gets done.
Julie Clark: Who do you want to have on that buyers list? Right now, you’re probably like, “How do I get some cash buyers on my list? How can I buy some mentor guru stuff that’s going to instantly give me a cash buyers list? I’m going to go and find out who all those cash buyers are and get them on my list at all these real estate investment clubs locally.” All a great idea. I don’t know about necessarily buying a program that provides that to you. I don’t think you need to do that, but you know who the number one person I want to have on my list these days, on my buyers list? Brokers.
Joe Bauer: Who?
Julie Clark: Brokers. Other real estate agents and brokers. Why? Because they have the buyers. They have the retail buyers that are going to buy my wholetale details. Does that make sense? When you put it out, you just say, “Add your three percent on top.” They can just gross it up. Gross up the sales price. You can pay them a commission because they gross up or give them a cut of your wholesale fee, because they’ve grossed up the price to their buyer. Happens all the time. It’s normal. You guys get what I’m saying, right? The point is, if I were you, start adding buyers agents and brokers to your buyers list. We, ourselves, could do a better job at that. We’re just working on all this stuff all the time. Everybody always has room to grow and learn. I know we sure do. We’re just sharing info. We’re just swapping stories among friends here, right guys? That’s what we’re doing here at the old nuts and bolts of real estate investing podcast.
Julie Clark: The other thing I want to mention to you guys is, what is something that a retail buyer needs or could need or probably needs? They’re probably going to get a mortgage, right? They’re probably going to want to do an inspection, right, because they’re just a regular retail buyer. You have some options. You could either pay for an inspection on the property yourself as part of your package that you’re offering, or there are actually services out there, inspection services out there, some cutting edge type of inspectors at least out here in the Pacific Northwest in the Seattle area. One’s called Home Vibe. What they do is, they’ll come out and they’ll do the inspection for free and then any buyers who want to buy the inspection report pay them per download, essentially, I guess I’ll call it.
Julie Clark: If you did that a bunch of times and nobody ever bought it, they probably aren’t going to like you very much, but I’m just letting you guys know about Home Vibe, little resource for you that you might want to check out. If you’re brokers that are listing, regular old brokers listing, or what I like to say is, I hope you’re all broker investors, whoever is listening. You might check out Home Vibe for your regular broker business as a resource and tool for your tool belt.
Julie Clark: Probably on those, if you’re going to wholetale, if it’s a property that is more expensive, I’ll say investment property, you could probably get away fine with just doing a cash offer if the price point is lower. If it’s a nicer home and you know that the price that you’re securing the contract at is higher than a wholesaler wants to pay, or that maybe a cash buy and hold buyer would want to pay, and that your end buyer really is going to be the move in retail buyer, you could put a financing contingency into the contract that you sign with this seller. You know what I think, guys? I’m all about honesty is the best policy. You could and you should probably tell the seller what you’re up to. You’re providing a service to them, you’re going to help them out. You’ve given them options if you’re smart.
Julie Clark: One’s a cash offer, quick close where the price is lower, and one is maybe this wholetale option where you’re going to tell them that you can help them get their property sold maybe as an option to just confess and be honest that this is the way I’m going to do it. I have a bunch of buyers and agents that are on my buyers list and I think we can accomplish your goals and we’re going to do it this way instead and that’ll allow me to pay you more.
Julie Clark: Or you’re big boys and big girls, you guys figure out however you want to roll and however you want to talk to the sellers, but remember one thing that’s the most important rule, we don’t hurt people. We don’t hurt sellers. You should never, ever, ever, ever have a seller take any action such as move out or even start packing or sign a lease somewhere if you aren’t 100% sure that you are going to be able to get that transaction completed for them. Either you’re the buyer or you’re going to wholesale it. For God sakes, don’t do that. That is rule number one. Even if you are going to make zero, you stand by the seller and you do the right thing because the feeling that you have of doing the right thing is worth more than the money that you would ever make. If you start going out and doing a bunch of stuff that isn’t on the up and up, it makes all of us look bad and we’re not going to want to hang around you anymore.
Julie Clark: The point is that retail and buyer might need to get financing. Since some of you are brokers out there, you’re following what I’m saying quite easily. You might want to add a financing contingency into your offer as well as maybe a longer inspection period, as maybe having the earnest money due upon removal of the inspection contingency, because maybe the earnest money you’re going to put down if it’s closer to a retail property, still at a discount, no commissions. You’re getting paid as a wholesaler on your wholesale fee, and you’re going to pay the buyers agent, but they’re grossing it up, remember? You’re going to have money available to do that.
Julie Clark: The point is … I’m sorry. I’m losing my train of thought here, is to maybe build in that financing contingency. Of course, a for sale by owner form, paperwork also. One page. That’s something that I always have in my off market deals is a for sale by owner acknowledgment. That’s how you might think about doing that. The challenge might be, and you can talk a lender, is if that buyer is going to be able to finance the assignment fee portion of the deal. Not all deals might qualify, or not all buyers will qualify because you’re probably looking for buyers that are planning to put 20% down and instead of putting 20% down, they’re going to put less down with the bank because they’re going to be using some of that cash to pay your wholesale fee, which might be financable through their loan. There’s more details that need to be discussed about that, but I’m giving you guys a concept today to think about, and you’re welcome to email me at ju[email protected], or throw your questions below on the podcast and we will make sure to get those answered for you guys. That’s wholetaling.
Julie Clark: Instead of wholetaling to an investor, you’re going to wholesale to an end buyer. There could be an agent involved, no problem. In fact, I like it if there’s an agent involved because then that buyer has representation and it’s even more of a legit transaction. You guys ready to move onto number three?
Joe Bauer: Yeah, yeah.
Julie Clark: Sorry, man. I get these long-winded things going on. I didn’t drink enough coffee today. Before we got started, I said [inaudible 00:40:46] I got to heat up my coffee, but then I didn’t drink it, so I’m really [inaudible 00:40:49] today. I’m a little slow today. Buddy. He’s not even listening today. He’s dead asleep. Our sidekick, Buddy, my Labradoodle, normally is very attentive during our podcasts, but today is passed out cold. Something is in the air. We need to go take a brisk walk with a cup of coffee, so I’m going to wrap it up on a little more faster pace with number three. Number three ninja investor strategy to use in a hot market. I’m just going to throw it out to you guys, and this is something we’re going to need to talk more about that we are also perfecting on our team here between Joe and Julie and how we roll at Seattle Investors Club on our personal acquisitions business.
Julie Clark: Number three is that at least over here in the Pacific Northwest, and if you’re listening from other places, you need to check with the local MLS, Multiple Listing Service, wherever you’re at. Here where we’re at, you can actually list a wholesale contract on the MLS. What’s better? Again, it’s kind of a stepped up version of wholetaling. It’s more of the advanced version of wholetaling. You’re going to list your contract for sale on the MLS as a contract for sale. The MLS will want to have, we’ll say, certain language on that and you can call and check in with them, or you can follow up back with us and we might be able to help you with that a little bit. The point is, that means you got to involve a broker who can do that for you.
Julie Clark: I don’t think as a wholesaler or a broker investor that I would list my own property, my own contract. I’m still debating whether I think that’s enough arm’s length or not. You know what the answer is, honestly? You probably can do it, and it’s just all about disclosures, but I always like to start slow with new strategies and that’s something that I am still working on in regards to what the best practices are. I’d be willing to share that with you guys sometime soon. Find a local broker from your real estate investment club. I hope you guys choose brokers that you meet at your local real estate investment clubs because they’re taking the time to learn about how to serve you better. It is a specialty, I think. Good broker investors or good brokers who understand what investors are all about and their wants and needs and business models are the ones you want to work with in your real estate investment business, so just a little shout out to my fellow brokers out there that attend local real estate investment clubs. Good move. We love you and props to you.
Julie Clark: Again, it’s the same talk as wholetaling. You’re going to want to make sure your contract has all the contingencies that you might think an end retail buyer are putting a loan on, might want. That’d be the Cadillac version. If you think it’s going to be purchased by an all cash buyer, then maybe you don’t need to do that. These are things that we need to think about. Again, that’s going to require you paying a commission. You’re going to pay that out of your wholesale fee, because you’re going to be responsible for that. Instead of grossing it up, the list price just needs to be grossed up by you and your broker team so you understand that you’re going to be paying that buyer’s agent commission out of your wholesale fee.
Julie Clark: The biggest challenge with this is not the idea of whether you can or cannot do it, at least out here in the Seattle area. Again, you all are going to check with your local MLS. I’m not your lawyer. I’m not your broker. I’m not your designated broker. I’m not your mama. I don’t know. Joe, you’re not their papa, are you?
Joe Bauer: Nope. Not that I know of.
Julie Clark: What we’re doing right now is having a talk among friends, guys. You guys are all responsible for the rules and the due diligence in your own wherever you’re at. The benefit for all of you in Seattle is that you know I’m going to be ninja checking up on this stuff and making sure that I’m not breaking any rules because I am anti-rule breaker, so if somebody wants to tell me I’m saying or doing something wrong, I 100% want to hear that so it can be corrected. I’m pretty confident and careful in what I say, let’s put it that way. Again, the hardest part is not whether you can do it or not probably. The hardest part is that on the other side, the buyers agents, because the typical, traditional, old school broker, buyers agent, which those are most of them, they don’t get it. They don’t even know what wholesaling is.
Julie Clark: The mountain to climb is not actually the transaction details and the set up and the paperwork and the correct language and disclosures, it’s how you do explain it to the buyers agent. That is a tall mountain to climb, so you need to find somebody that can accomplish that. Like I said, if you’re in the Seattle area and you’re interested in pursuing this, which I am and I have some specialty clients that I’m working on this with as well, because this could be really good, guys. There’s all kinds of question and trickle down effects that come from doing this. Do you want to do it all the time? I don’t know. Do you want to be labeled as somebody in your community that is doing that all the time? I don’t know. Guess we’re going to find out. You got to take the good with the bad. You got to make your own decisions. You got to assess what’s right for you and you probably will get some criticism by trying this, but guess what? You also might make a butt ton, ass load of money and still be able to play by the rules, which is the number one goal.
Julie Clark: If you’re worried about it or you have any questions about it, then don’t do it. Learn, study, look further into it and if you want to join in that with me, then hit me up. That’s what I got today because I am now ready to grab my coffee, kiss my dog, and hit the road.
Joe Bauer: Yeah, yeah.
Julie Clark: Yeah, yeah. Right on. I hope you guys enjoyed that. Three ninja investor strategies to use in a competitive market, pre-hab, wholetale, and listing contracts on the MLS if allowed and if you’re playing by the rules.
Joe Bauer: Love it.
Julie Clark: Boom. Awesome. Love you guys.
Joe Bauer: Good stuff.
Julie Clark: Joe, do you have any questions? Tell them how they can find us.
Joe Bauer: Hopefully, if you guys are still hanging around, we would love it if you guys a rating and review on the podcast. You can do so by going to seattleinvestorsclub.com/itunes and that will take you right over to our iTunes channel. Just so you know, every five star review that we get helps us to get our voices out there a little bit further on the old iTunes, as well as if you want to see our pretty faces on YouTube, we’ve been posting videos up weekly on the YouTube channel, which is seattleinvestorsclub.com/youtube, or just doing a search on YouTube for Seattle Investors Club.
Julie Clark: Right on, right on. And if you guys are interested and you’re in the Seattle area, we would love to meet you in person if you want to join us at one of our monthly meet ups for Seattle Investors Club. We meet in Renton, second Saturday of every month. If you’d like to get on our RSVP list so you get notified of all those meetings, what should they do, Joe?
Joe Bauer: If you just stop by our website, seattleinvestorsclub.com. There’s a pop up that’s going to jump right in your face and ask you if you’d like a free meeting.
Julie Clark: Nice. I love it. All right. That’s good stuff right there.
Joe Bauer: Heck yeah.
Julie Clark: Thanks, everybody, for hanging out. That was a little big long-winded today. Appreciate if you’re still there. I’m sending you … Here it comes. Feel it? Good voodoo. I’m sending you the good luck vibes right through my microphone here. I can’t wait to meet you guys all in person.
Joe Bauer: All right, all right. Good stuff, JC.
Julie Clark: Rock on.
Joe Bauer: We will see y’all on another podcast.
Julie Clark: Over and out.