October 19, 2025 • 39 mins
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:00):
Our first question is how much earnest money should
(00:04):
I deposit when I'm wholesalingreal estate?
So there are many differentanswers to this, and there's not
a right or a wrong answer.
Now, going back to 2021, 2022,one of the big things that kind
of came about was, I rememberSteve Train was a big proponent
(00:27):
of this.
He called it the scorch theearth mentality, where he was
like, he would come in and hewould put$5,000 non-refundable
earnest money because he wasgoing out and doing
belly-to-belly appointments andseeing the property.
And that was his way of securingit.
Now, I was never a fan of that.
I never felt like that wasnecessary for a wholesaler.
(00:48):
But I also think that we need todifferentiate between a
wholesaler that's going to seethe properties in person to a
virtual wholesaler.
So, like for us, we're neverseeing these properties in
person.
We're never seeing theproperties prior to getting them
under contract.
So, because of that, I alwayswant to put a very small amount
(01:12):
of earnest money down, andthat's to protect myself.
Because if I were to put, let'ssay,$5,000 refundable earnest
money down, there are many, manytitle companies and closing
attorneys that will require amutual release of that earnest
money deposit, even if youterminate that contract during
(01:36):
your inspection period.
So I just I've had money tied upfor months and months inside of
escrow, even though we dideverything right contractually.
So for me, I don't want to endup in a position where I have
earnest money just tied up.
So if you're a virtualwholesaler, personally, I
(01:57):
believe you should put a smallamount now.
Now, one of my good friends inthe industry, Jerry Norton, he
disagrees with this.
And this is where this questionkind of comes from is what is
the right way to handle this andwhat's the wrong way?
I think as a business, you needto make this decision early on
and have a set standard of thisis how we handle earnest money
(02:19):
inside of our business.
So for us, what we do is a verysmall earnest money deposit.
And if a seller requires that weincrease that, it is not
approved until it is brought tomyself or Cassie and we approve
that increase.
Now there needs to be a validreason behind that.
What I will say is it is goingto be very difficult for me to
(02:42):
agree to go above a thousanddollars earnest money deposit on
a property that I have neverseen, and I am not going to
contract the property.
Well, I let me say this again.
I'm not going to go see aproperty until I've contracted
it.
These are standard operatingprocedures that we have.
We do not go see propertiesuntil we have a signed contract.
(03:02):
We're not going to put a largeearnest money deposit down until
we've seen the property.
Okay, so this is how we run ourbusiness.
And so, because of that, we'revery rarely ever putting down
more than$1,000 earnest money onany property.
Now, price point and the type ofproperty does determine this.
We're talking about a commercialbuilding or a small multifamily,
(03:27):
a larger price point,multi-million dollar property.
Of course, we have to increaseour earnest money deposit.
But if we're talking about atypical$50,000 wholesale
property in Birmingham, Alabama,I'm not going to go put$5,000
earnest money down on that.
I'm not even going to put$1,000.
(03:48):
To me, it is a red flag if theseller is mandating that and
wanting you to put down a largeearnest money deposit.
And that is an objection thatyou should be able to overcome
by simply just stating yourprocess and the way that you do
business.
Now, one of the things I alwayspoint back to is the company
that we basically took ourstrategy from and copied, which
(04:11):
is open door.
Now, open door is not going togo out and change the way that
they do their process justbecause the seller mandates it,
and neither are we.
So this is how we do ourbusiness.
And if the seller doesn't likeit, then we're probably not
their buyer.
That is how we handle earnestmoney deposits here at Titanium.
(04:31):
I think for each and every oneof you guys, you should set that
standard in place and not waverfrom it.
All right, let's see here.
Question number two What did Ido with my pen?
There it is.
Cross off number one.
All right, number two is how doyou vet in buyers?
(04:52):
Okay.
So when you're talking, whenyou're doing dispositions and
you come across an in buyer thatsays, hey, I'm interested in
your property.
There are several questions thatyou need to talk to them to make
sure one, they are an actual inbuyer, they're not a daisy
chainer.
And two, they can perform.
So talk about, hey, what areyour intentions with this
(05:16):
property?
What's your exit strategy thatyou see on this?
Is it to be a flip?
Is it to be a rental?
How are you going to fund thisproperty?
Now, common answers on this willbe, oh, it's cash.
Okay, so by cash, what do youmean by that?
Does that mean you're going tobe taking out a hard money loan?
(05:37):
Does that mean you're going tobe using private money?
Does it mean you're actuallygoing to be using your own cash
out of your bank account?
If so, do you have proof offunds?
I need to see where that moneyis going to actually be coming
from.
Now, sometimes newer wholesalersare afraid to ask these
(05:57):
questions because they'reworried that they're going to
run off this in buyer and it'sgoing to feel intrusive.
However, if you've ever been anin buyer, these are very
commonly asked questions bywholesalers, and rightfully so.
We are assigning our rights tothat contract to this in buyer.
(06:20):
So we need to make sure that ifwe are going to do that, they
can perform because otherwise,we're not only screwing
ourselves, but we couldpotentially be screwing the
seller over if we're not doingthe proper due diligence.
So you need to know what istheir exit strategy?
What do they plan on doing withthis?
They can't answer that, that's ared flag.
(06:42):
That sounds to me like a daisychainer.
If they can't tell you howthey're going to fund the deal,
that's also a red flag.
If the answer is cash, digdeeper.
What does that actually mean?
And you need to get proof offunds.
If you get a proof of funds froma lender, you should absolutely
call that lender because thereare many lenders out there that
(07:03):
will give you a proof of fundsby simply entering in the
address to the property andsaying, Yes, we will fund that
deal.
However, that doesn't mean theythey will fund the deal for the
numbers that you are puttingdown on that property.
So it doesn't necessarily meanthat that buyer, that borrower,
is pre-approved for that loan.
(07:25):
Case in point, plan Dinvestments.
Okay.
This is a website better knownas besttransactional
funding.com.
This is like probably the mostfamous proof of funds, fake
proof of funds, really, websiteout there where you can go in
and you can enter in your entityname and the address, and it
(07:46):
will send you a proof of funds.
Now, also here locally, we havea hard money lender called
Wildcat Lending.
You can also request a proof offunds from them and they will
give it to you, but it doesn'tnecessarily mean that that
borrower is approved by creditscore and the liquid capital
that they need to have.
And so it's important for you asa wholesaler, if you receive one
(08:08):
of these types of proof offunds, to call the lender and
verify hey, is titaniuminvestments LLC pre-approved for
a loan at 123 Main Street at$100,000?
If not, that means this in buyeris willing to lock this property
up without being pre-approvedand really not knowing how
(08:31):
they're going to fund the deal.
Now, the other part of this isif the in buyer is using a hard
money loan, you need to see whathappens if the appraisal comes
back at less than what they'reanticipating.
So majority of hard money loans,what they do is called an
after-repair appraisal.
(08:53):
So let's say that we're claimingthat the after-repair value is
$200,000 on a property.
The borrower will then go to thehard money lender, order an
appraisal, the appraiser will goout, and then we'll do an
appraisal based off of what theproperty would be worth after
the repairs are done.
(09:14):
Now, say it comes back at$190,000.
The loan then is less than whatthey initially needed.
Does that mean the inbuyer wouldstill close, or are they going
to want to renegotiate, or arethey going to want to terminate
(09:34):
because the after-repair valueappraisal came back less?
This is extremely important tounderstand because deals can get
lost when the in buyer is usinga hard money lender.
This is very typical of newerflippers.
They don't know any better.
So it's your job as a wholesalerto really vet them out and make
(09:58):
sure they understand theprocess.
Okay, so you're going to begetting a loan from a hard money
lender.
If their appraisal comes backless, how are you going to
react?
Are you going to put theadditional five to ten thousand
dollars down?
Or are you going to want torenegotiate based off of that
appraisal?
Because if so, what you can dois give a contingency that if
(10:22):
the appraisal were to come backand they were wanting back out,
you could continue marketingthat deal to try to find another
buyer to back up that initialbuyer.
Okay.
So those are the ways that Iwant you to vet out buyers.
And then also make sure thatbefore you ever send a buyer
out, that they understand thatthis is a wholesale transaction,
that you are direct to seller,that you do have the property
(10:45):
under contract.
By no means are they to speak tothe seller or try to renego
renegotiate price or talk anynumbers to the seller because
that is taboo in this industry,but you want to make sure that
they don't do that to go aroundyou.
All right.
Number three, how do you vet outyour joint venture partners?
(11:08):
Right?
So, say you have a propertyunder contract and you want to
JV it, or someone has a propertyunder contract and they want you
to dispo it and be a JV partnerwith you.
Now, in the scenario of they'rebringing you the deal and you
are going to dispo the property,which is very common for us, one
(11:29):
of the things that I always wantto bet out is first, do you have
the property under contract?
I am not a company andunderwriting service.
I want to make sure that youhave already gotten the property
under contract.
I am not going to close the dealfor you.
That's not that's not a jointventure partnership, in my
opinion.
Okay.
So I want to make sure, do youhave the property under
contract?
(11:50):
Two, have you already beenmarketing this deal and how?
Have you already put it oninvestor lift?
Have you already hit up all thebuyers on investor base?
Have you put it out in a bunchof Facebook groups?
And at what price did you dothat?
Okay, this is important becausewe don't want to look like a
daisy chainer.
Okay, there's nothing wrong withdoing a joint venture deal.
(12:13):
However, I don't want my companyto have a bad reputation as a
daisy chainer.
If I'm going out and I am nowbroadcasting a deal for$100,000
when you were already marketingthe deal at$95,000.
That makes me look bad, makes melook like a daisy chainer.
So I want to understand do youhave it under contract?
(12:35):
Have you done marketing?
And what were the numbers at?
Also, if that JV partner hasalready done marketing, what was
the feedback from buyers?
This is extremely importantbecause you've already gotten
the pictures, you've alreadydone dispositions marketing.
What was the buyer feedback andwhy hasn't the deal sold?
(12:57):
I'm not a I'm not a wizard,okay?
I'm not a magician.
I can't make in buyers buy dealsany more than you can.
The deal stands on its own.
My job is to turn the lights onand get as many in buy, get the
deal in front of as many buyersas possible.
So I want to understand whatthat feedback has been.
Now, on the flip side, say Ihave a property under contract,
(13:20):
and now I am wanting someone todispel that for me.
And that's probably the morecommon occurrence for you guys
watching this right now.
Make sure that you are givingthe JV partner priority here.
Get the property under contract,get the pictures, put it all
together, and then present it tothat JV partner, same way you
(13:43):
would an end buyer.
I have the property undercontract for this much.
Here are the pictures, here arethe numbers.
I feel like the after repairvalue is this, the amount of
repairs is this, and this iswhat I was wanting to sell for
it.
And set a reasonable askingprice for the end buyer and make
sure those numbers make sense.
(14:05):
Then give that JV dispo partnerenough time to be able to
actually perform.
So often, what we see is theacquisitions wholesaler who got
the property under contract willtake two of the three weeks of
the contract trying to dispo itthemselves, and then they want
(14:26):
to come to us in the 11th hourand hope that we can perform a
miracle, and that's not fair tous, and because of that, we
normally have to turn thosedeals down.
So in the vetting process, it'sreally not that we're vetting
out that JV partner, it's justthat we weren't given the
opportunity to actually do ourjob to be able to locate the end
(14:49):
buyer, get a walkthrough, makesure the title gets cleared, and
get everything scheduled intime, it's just not fair.
So if you are going to JV adeal, make that decision early
on before you take up all ofyour time and then ask the JV
partner to be a miracle worker.
All right.
Number four, should wholesalersget their real estate license?
(15:13):
Now, this has become a morefrequently asked question over
the past several months, andrightfully so.
There are states that are nowcoming down with regulations
that are directly against younot having your license.
Case in point, last Friday I dida video about North Carolina.
October 1st, 2025, NorthCarolina basically put in effect
(15:38):
the North Carolina H797 bill,which claims that if you are not
a licensed real estate agent,you cannot market a deal without
having your license.
This is very similar to thestate of Nebraska, which is also
claimed this, which will alsovery quickly send you a cease
and desist letter if you do notfollow this regulation.
(16:02):
Now, these locations, if you'relocal to that, those states and
you're wanting to wholesale inthose states, then yes, I would
recommend you get your realestate license.
However, you do need tounderstand that with that comes
responsibility and more work.
You are going to have to keepyour license up to date with
(16:22):
continuing education.
There is going to be expensesthat come along with it, but it
does open up otheropportunities.
Case in point, what's the mostcommon type of seller that
you're going to speak to?
The highly motivated seller withthe incorrect price.
Well, what happens with those?
More often than not, they doneed to list that property with
(16:42):
a real estate agent.
So if you are local to a statelike North Carolina or Nebraska,
where they are trying to mandatethat you have your real estate
license, you can solve moresellers' problems by saying,
What I can do for you is I couldjust list that property on the
MLS for you.
That could be an opportunity foryou to monetize and make more
(17:04):
money.
Because one of the things thatI've seen in real estate agents
is they do lack in theirmarketing.
They're not really hammering thephones, they're not going out
and buying PPL like we are.
They're not hammering and coldcalling as much as we are.
How often do we talk to sellersand we hear them say, Oh, I've
(17:25):
already talked to 10 other realestate investors?
But it's very rare for us tocall and say, Oh, I've talked to
10 other real estate agents.
That's very rare.
So I do think that that's anopportunity for you.
So, in the long run, I thinkhaving your real estate license
could be extremely beneficialfor you.
That being said, if you're in astate that doesn't necessarily
(17:45):
require that yet inside theregulation, I would tread
carefully on getting your realestate license.
I don't know if it's asbeneficial as people make it out
to be because of the additionalexpenses and the continuing
education, as well as thedisclosures about you being a
licensed real estate agent,agent, and the fiduciary duty
(18:08):
that you have to that seller.
There is always that fear thatif you're getting a property too
discounted, you do have thatfiduciary duty to kind of let
them know what their property isworth.
So something to keep in mindthere overall, I think it
depends on your location andwhat your business looks like
moving forward in the future.
(18:30):
All right.
Now, staying along the lines ofquestions that have come about
because of regulations going onin the wholesaling world.
Number five is should I doassignments or double closes?
Now, what most people don't wantto talk about with double closes
(18:51):
is the accounting nightmare thatcan come about.
One of the issues with doublecloses is that you are going to
receive a 1099 from the titlecompany for the full amount in
which you receive.
So say I go out and I buy theproperty for$100,000 and then I
turn around and sell it for$110,000.
(19:11):
I'm going to receive a$1099 for$110,000, and then I have to
show that I write off$100,000for the purchase.
Now, this does cause issues, andI have run into issues with the
IRS because of this, where I hadto prove that I didn't actually
receive$110,000 on a doubleclose.
(19:32):
Now I haven't heard many peopletalk about this, and maybe it's
just because I'm unlucky andthat's just something that came
about with some of my earlydouble closes.
But what I would say is if youare trying to decide between
doing an assignment of contractand a double close, always do an
assignment.
It's just the easier way to doit.
The only time that you should doa double close is when you
(19:56):
absolutely have to.
Now, what I hear more often thannot is I'm doing a double close
because of the amount of moneythat I'm making on the
transaction, right?
I'm trying to hide my profit.
Now, I think that's just fear,right?
Fear that your buyer's gonnaback out, or fear that your
seller's gonna be upset that howmuch money you're making.
(20:19):
But you can always do a blindHUD.
And if you're not working with atitle company that does a blind
HUD, or if you don't know whatthat means, it essentially
doesn't show the seller how muchmoney you're making.
You're working with the wrongtitle company if you're not
using a blind HUD.
If your buyer has a problem withhow much money you're making,
(20:41):
then you're working with thewrong buyer.
Now, one of the circumstances inwhich a double close could be
mandatory is if your end buyeris using a hard money loan and
the hard money lender has a capon what they will pay on an
assignment fee.
Now that does happen, and it'snot like a massive red flag, it
(21:05):
kind of makes sense from alender's perspective.
That is where I would absolutelydo a double close, right?
I don't want to lower myassignment fee.
I will do a double close, and Iwill I have in all of our
transactions, we have only donetransactional funding twice.
(21:26):
Okay.
You can find someone that willdo a pass-through double close
where they will take the fundsfrom the in-buyer to fund your
close with the initial seller.
Okay, and you don't have tobring any money to the table,
(21:49):
it's not gonna cost you anytransactional fees.
The only thing that it will costyou is potentially title
insurance, okay?
You might have to in the closingcosts associated with that.
That would be the onlyadditional fee that it should
cost you.
More often than not, you're notgonna have to use transactional
(22:09):
funding.
Now, some hard money lenderswill not allow a pass-through
double close either, and that iswhere you would have to take out
the transactional funding.
More often than not, you canfind that for somewhere in the
range of one percent to twopercent of the funds being
brought to the table.
Ultimately, make it as easy aspossible on you and do an
(22:32):
assignment, all right.
Number six, can you wholesaleduplexes, triplexes, quadplexes,
and small multifamily?
Now, I don't know why I keepgetting asked this question, but
the answer is absolutely whycouldn't you?
This is a great opportunity insome locations in the United
States, it's the bestopportunities in those markets.
(22:56):
Case in point, Alaska.
Anchorage, Alaska has a ton ofsmall multifamily, and in fact,
the majority of investors inAnchorage, Alaska are house
hacking inside of the smallmultifamily.
What I mean by house hacking isthey're living in one of the
units, rehabbing the other twoand renting it out, and having
those two units pay for the unitthe entire building.
(23:20):
Okay.
Other places that this is verycommon Connecticut, Maryland,
uh, Rhode Island, these placesare chock full of small
multifamily that could be cashcows.
Rhode Island, for as small as itis, in certain locations, has
neighborhoods full of triplexes,quadplexes, and fivexes.
(23:43):
That if you plan on wholesalingthere, you absolutely have to do
small multifamily.
Now, what you need to payattention to is the average cash
flow as well as providing equityto your inbuyers.
Where most newer wholesalers runinto a problem when they start
(24:03):
trying to analyze smallmultifamily deals, is they only
look at the cash flow and theyforget about the equity that
needs to come along with that.
Your in buyers, at least themajority of your in buyers, what
they're going to be looking foris the opportunity to be able to
pull all of their cash back outand not be stuck with money just
(24:24):
sitting in a property, right?
In order for it to be awholesale deal, we have to get
it with a discount.
Otherwise, it's a retail dealand they could just go get it
off the MLS.
And so, yes, there are going tobe locations in the United
States that absolute look likefantastic deals from a cash flow
(24:46):
perspective, but from an equityperspective, we're not bringing
them value.
So remember that when you'reanalyzing it, look at what the
other sold small multifamilydeals have gone for, compare the
condition, compare the rentrates, and then get it for less.
That's your job as a wholesaler,and that's how you do those
(25:08):
small multifamily deals.
All right.
Number seven.
Hold on.
Before we get to number seven,coffee break.
Today's episode is brought toyou by Starbucks Cold Brew.
Oh man, fantastic.
Number seven.
(25:30):
When should I build out a teamwhen wholesaling real estate?
So the majority of wholesalers,when we get started, it's
probably either we're doing itall by ourselves or maybe with a
partner.
And then it's when should Iactually start hiring people and
delegating out?
And when can I, RJ?
You always talk about createyour own reality.
(25:50):
When can I start doing that andhaving that life of freedom?
Okay.
When you are in a position dealflow-wise and cash flow-wise in
your business, to where when youhire someone, say they perform
at 50, 60, 70 percent of whatyou can do, your business can
(26:14):
sustain that loss and revenue,as well as knowing that when you
bring someone on, if youanticipate that it's going to
take 60 to 90 days before theystart bringing money into the
doors.
When I hire someone for titaniuminvestments to start doing
acquisitions, I cannotanticipate that they're
(26:37):
immediately going to sit downand start closing deals.
We have to onboard them,introduce them to all of our
systems, train them on how to dothe job, and then get them
started.
And let's be honest, as great asthe training can be at first,
they've got to get the reps inbefore they actually start
producing.
And then to get them up to whatwe anticipate is an acceptable
(27:02):
standard of revenue that theycan bring in, it's going to take
time.
They also have to build up theirown individual pipeline when it
comes to acquisitions, right?
We're going to close deals fromleads that come in today three,
four months down the road, justbecause of the seller's needs,
right?
So your business has to be ableto sustain that stagnant time
(27:27):
when the new person comes onboard.
Now, let's say we hire someoneoutside of just acquisitions and
dispositions, and it's more of asalary perspective, right?
I'm going to hire someone as anexecutive assistant or a
transaction coordinator orsomething along those lines.
Now, this is even more importantto be able to look at your
(27:49):
business and see cash flow-wise,do I have a consistent amount of
money that I'm making everysingle month?
And what does that look like ifI bring this person on?
Can I sustain their salary?
Can I also sustain the time thatit's going to take to train that
(28:09):
person to do their job?
I think this is where mostpeople kind of underestimate
like, hey, I'm going to hire anexecutive assistant.
That means they're going to helpme be more productive.
That's true in the long run, butnot at first.
At first, that person's actuallygoing to take a lot of your
attention away from the revenuegenerating activities that
(28:32):
you're doing inside of yourbusiness.
So I see people want to build ateam a lot quicker than they're
actually ready for.
So if you're newer and you'reready to get to the point where
you want to start hiring, what Iwould recommend is start slow.
Don't try to hire multiplepeople at once.
This is how people want to scaletheir business.
(28:54):
And then you look, and 12 to 18months later, they're no longer
in business.
It's because they put themselvesout of business.
Hire slow, take the time toreally train that person up, get
used to having that person inthat position, and then move on
to the next hire.
All right.
Number eight.
(29:15):
Should wholesalers filememorandums of contract?
Now, you guys have heard me talkabout this before, but I will
reiterate it.
I think one of the most misusetools for wholesalers is filing
memorandums.
In fact, I've talked to manywholesalers that say every
single property that I get undercontract, I'm filing a
(29:38):
memorandum.
And I think that's a misuse ofthe tool.
And inevitably, regulations andbills are going to get passed to
where that is no longer the casebecause we have misused it for
so long.
That being said, there is a timeand place where a wholesaler
should file a memorandum toprotect themselves.
(30:00):
It's though it's not fair to usif we go get a property under
contract, do our recon, find anend buyer, assign it, and then
the seller then tries to go sellthe property to somebody else.
That's not fair to us.
That's why this tool exists toprotect us.
Not just us.
I mean, it's for any buyer outthere.
(30:21):
That being said, when you file amemorandum, make sure that you
are prepared to close not onlythe property that you have under
contract, but every propertythat you have under contract.
This is the part that mostpeople don't understand about
filing a memorandum.
You can actually get in troubleif you're filing memorandums and
(30:43):
you're not prepared to close onthat property.
This is where I think you reallyneed to second guess and
question whether or not you arein a position to file a
memorandum.
This is important for you tounderstand because one of the
worst things in the world thatcould happen is that you listen
(31:05):
to someone and says, Hey, filememorandums on every property
that you get under contract.
And when you do that, itactually gets you in trouble
because you do it with the wrongseller that comes after you and
says, How many properties didyou have under contract at that
time?
Did you have the money?
(31:25):
How were you going to fund it?
And you actually end up introuble.
The other part of this isbecause the industry has misused
this over the course of time,the memorandum is now going to
start losing its strength in atransaction.
Case in point, Texas now has itto where sellers can actually
just go around the memorandum,and that's because it's been
(31:47):
misused by us as an industry.
All right.
Randy always coming in.
First of all, Randy, love thenew thumbnail with the titanium
hat.
RJ needs more likes, double tapthe screens, thumbs up if you're
on a computer.
Thank you, Randy.
I appreciate that.
All right, let's go.
(32:08):
Number nine.
This is a personal question thatI get asked a lot.
Why don't I do more flips andown more rentals?
Okay, so you guys hear me talkabout the hedgehog concept all
the time.
Well, the hedgehog concept comesfrom the book from Jim Collins
Good to Great.
It's a chapter.
(32:29):
I read it in 2021, right when Ineeded to read it, because I
just got done.
Well, I was, I guess I was stillin the midst of getting rid of
quite a few of them, but a tonof flips in multiple different
states, owning a portfolio of acouple hundred properties of
rentals all over the UnitedStates.
(32:52):
And it hurt us very, very badly.
And what most people don'tunderstand is just because you
say you're a real estateinvestor, what does that mean?
Does that mean you're flippingreal estate?
Does that mean you're alandlord?
Does it mean you ownmultifamily?
Are you doing syndications?
Are you wholesaling?
(33:12):
What are you doing?
There's very few people outthere that I know that are
successful doing all of theabove.
However, what I do know is I doknow a bunch of people that are
highly successful aswholesalers, I know people that
are highly successful asflippers, I know highly
successful landlords, butblending that is multiple
(33:36):
different businesses.
And so when I read about thehedgehog concept, that's when I
made the decision that we weregoing to solely focus on one
strategy that was wholesalingreal estate.
We were going to do itnationwide and virtually, and
because of that, we've nowbecome a much more sustainable
(33:59):
and profitable business.
It's not because we can't do aflip, it's not because we don't
have the money or the knowledgeto do it, it's because, as a
business, that would not be wiseof us to take attention off of
what we were doing inside of ourwholesale business to go chase
the next shiny object exitstrategy.
(34:23):
One of the questions I used toask at our two-person, in-person
events here at the office waswho here wants to flip a house?
Almost everybody would raisetheir hand.
Then I would say, Now, why doyou actually want to flip a
house?
And it was very rarely becausepeople wanted to make money, it
was because of an ego.
They wanted to say that theybought something ugly and made
(34:46):
it pretty.
(35:22):
But focusing on one thing andbecoming great at it, that has
become to the point where nowfinancial freedom is a reality.
All right.
Let's find that's the ninthquestion.
My tenth question, I've got togo back over here to my list.
(35:43):
How do I feel about real estateagents in wholesaling?
Okay, so this is more of aquestion in regards to us making
on-market offers or direct toagent.
What I would say is severalyears ago, there were some
(36:05):
industry leaders that were verybig on direct to agent, Jerry
Norton, Jamil Damjee, PaceMorby.
They were talking about it alot.
They stopped talking about it.
We're not seeing as much of thatgoing around in the industry.
We're not seeing that as likethis is what you need to do.
(36:26):
And what I don't see is a ton ofwholesalers highly profitable
just from working with realestate agents.
Is there power with having anetwork of real estate agents
that can bring you deals?
Absolutely.
However, I do not believe thatshould be a core focus inside of
(36:50):
a wholesaler's business in 2025and moving into 2026.
I believe the opportunity thatexists today with the increase
in the softwares and thetechnology, especially with AI
going to become a bigger part oflead generation and the
(37:10):
softwares that are going to becoming down inside the
wholesaling industry.
I don't think it's as necessaryfor us to know real estate
agents as much as we had to,especially when we got started.
Right?
We didn't have comping softwaresthat could pull comps anywhere
in the country.
So when we started doing dealsin Baltimore, Phoenix, Portland,
(37:35):
I had to go develop arelationship with a local real
estate agent in each of thosemarkets so then they could pull
a CMA on every single propertythat we wanted to offer on,
which then in turn made uscompensate those real estate
agents.
They were working for theirmoney, they were bringing value
(37:57):
because it was necessary.
Nowadays, I don't see that beingthe case.
We have PropStream, Privy, othercomic softwares that eliminated
that need.
(38:35):
And I don't think it is in theindustry anymore because very
rare do I hear people talkingabout hey, I'm getting all these
deals from real estate agents.
Now, if you're listening to thisright now and you're getting a
ton of deals from real estateagents, prove me wrong.
Let me know how many deals areyou closing a month that solely
(38:57):
come from your network of realestate agents.
I'd love to hear it because I'mnot hearing about it in the
industry.
However, it could be because I'malways that guy.
I'm the PPO guy.
Maybe that's why people aren'ttalking about it in my sphere in
the industry.
All right, guys, that's our 10frequently asked questions about
(39:17):
wholesale and real estate.
Our first question is how much earnest money should
(00:04):
I deposit when I'm wholesalingreal estate?
So there are many differentanswers to this, and there's not
a right or a wrong answer.
Now, going back to 2021, 2022,one of the big things that kind
of came about was, I rememberSteve Train was a big proponent
(00:27):
of this.
He called it the scorch theearth mentality, where he was
like, he would come in and hewould put$5,000 non-refundable
earnest money because he wasgoing out and doing
belly-to-belly appointments andseeing the property.
And that was his way of securingit.
Now, I was never a fan of that.
I never felt like that wasnecessary for a wholesaler.
(00:48):
But I also think that we need todifferentiate between a
wholesaler that's going to seethe properties in person to a
virtual wholesaler.
So, like for us, we're neverseeing these properties in
person.
We're never seeing theproperties prior to getting them
under contract.
So, because of that, I alwayswant to put a very small amount
(01:12):
of earnest money down, andthat's to protect myself.
Because if I were to put, let'ssay,$5,000 refundable earnest
money down, there are many, manytitle companies and closing
attorneys that will require amutual release of that earnest
money deposit, even if youterminate that contract during
(01:36):
your inspection period.
So I just I've had money tied upfor months and months inside of
escrow, even though we dideverything right contractually.
So for me, I don't want to endup in a position where I have
earnest money just tied up.
So if you're a virtualwholesaler, personally, I
(01:57):
believe you should put a smallamount now.
Now, one of my good friends inthe industry, Jerry Norton, he
disagrees with this.
And this is where this questionkind of comes from is what is
the right way to handle this andwhat's the wrong way?
I think as a business, you needto make this decision early on
and have a set standard of thisis how we handle earnest money
(02:19):
inside of our business.
So for us, what we do is a verysmall earnest money deposit.
And if a seller requires that weincrease that, it is not
approved until it is brought tomyself or Cassie and we approve
that increase.
Now there needs to be a validreason behind that.
What I will say is it is goingto be very difficult for me to
(02:42):
agree to go above a thousanddollars earnest money deposit on
a property that I have neverseen, and I am not going to
contract the property.
Well, I let me say this again.
I'm not going to go see aproperty until I've contracted
it.
These are standard operatingprocedures that we have.
We do not go see propertiesuntil we have a signed contract.
(03:02):
We're not going to put a largeearnest money deposit down until
we've seen the property.
Okay, so this is how we run ourbusiness.
And so, because of that, we'revery rarely ever putting down
more than$1,000 earnest money onany property.
Now, price point and the type ofproperty does determine this.
We're talking about a commercialbuilding or a small multifamily,
(03:27):
a larger price point,multi-million dollar property.
Of course, we have to increaseour earnest money deposit.
But if we're talking about atypical$50,000 wholesale
property in Birmingham, Alabama,I'm not going to go put$5,000
earnest money down on that.
I'm not even going to put$1,000.
(03:48):
To me, it is a red flag if theseller is mandating that and
wanting you to put down a largeearnest money deposit.
And that is an objection thatyou should be able to overcome
by simply just stating yourprocess and the way that you do
business.
Now, one of the things I alwayspoint back to is the company
that we basically took ourstrategy from and copied, which
(04:11):
is open door.
Now, open door is not going togo out and change the way that
they do their process justbecause the seller mandates it,
and neither are we.
So this is how we do ourbusiness.
And if the seller doesn't likeit, then we're probably not
their buyer.
That is how we handle earnestmoney deposits here at Titanium.
(04:31):
I think for each and every oneof you guys, you should set that
standard in place and not waverfrom it.
All right, let's see here.
Question number two What did Ido with my pen?
There it is.
Cross off number one.
All right, number two is how doyou vet in buyers?
(04:52):
Okay.
So when you're talking, whenyou're doing dispositions and
you come across an in buyer thatsays, hey, I'm interested in
your property.
There are several questions thatyou need to talk to them to make
sure one, they are an actual inbuyer, they're not a daisy
chainer.
And two, they can perform.
So talk about, hey, what areyour intentions with this
(05:16):
property?
What's your exit strategy thatyou see on this?
Is it to be a flip?
Is it to be a rental?
How are you going to fund thisproperty?
Now, common answers on this willbe, oh, it's cash.
Okay, so by cash, what do youmean by that?
Does that mean you're going tobe taking out a hard money loan?
(05:37):
Does that mean you're going tobe using private money?
Does it mean you're actuallygoing to be using your own cash
out of your bank account?
If so, do you have proof offunds?
I need to see where that moneyis going to actually be coming
from.
Now, sometimes newer wholesalersare afraid to ask these
(05:57):
questions because they'reworried that they're going to
run off this in buyer and it'sgoing to feel intrusive.
However, if you've ever been anin buyer, these are very
commonly asked questions bywholesalers, and rightfully so.
We are assigning our rights tothat contract to this in buyer.
(06:20):
So we need to make sure that ifwe are going to do that, they
can perform because otherwise,we're not only screwing
ourselves, but we couldpotentially be screwing the
seller over if we're not doingthe proper due diligence.
So you need to know what istheir exit strategy?
What do they plan on doing withthis?
They can't answer that, that's ared flag.
(06:42):
That sounds to me like a daisychainer.
If they can't tell you howthey're going to fund the deal,
that's also a red flag.
If the answer is cash, digdeeper.
What does that actually mean?
And you need to get proof offunds.
If you get a proof of funds froma lender, you should absolutely
call that lender because thereare many lenders out there that
(07:03):
will give you a proof of fundsby simply entering in the
address to the property andsaying, Yes, we will fund that
deal.
However, that doesn't mean theythey will fund the deal for the
numbers that you are puttingdown on that property.
So it doesn't necessarily meanthat that buyer, that borrower,
is pre-approved for that loan.
(07:25):
Case in point, plan Dinvestments.
Okay.
This is a website better knownas besttransactional
funding.com.
This is like probably the mostfamous proof of funds, fake
proof of funds, really, websiteout there where you can go in
and you can enter in your entityname and the address, and it
(07:46):
will send you a proof of funds.
Now, also here locally, we havea hard money lender called
Wildcat Lending.
You can also request a proof offunds from them and they will
give it to you, but it doesn'tnecessarily mean that that
borrower is approved by creditscore and the liquid capital
that they need to have.
And so it's important for you asa wholesaler, if you receive one
(08:08):
of these types of proof offunds, to call the lender and
verify hey, is titaniuminvestments LLC pre-approved for
a loan at 123 Main Street at$100,000?
If not, that means this in buyeris willing to lock this property
up without being pre-approvedand really not knowing how
(08:31):
they're going to fund the deal.
Now, the other part of this isif the in buyer is using a hard
money loan, you need to see whathappens if the appraisal comes
back at less than what they'reanticipating.
So majority of hard money loans,what they do is called an
after-repair appraisal.
(08:53):
So let's say that we're claimingthat the after-repair value is
$200,000 on a property.
The borrower will then go to thehard money lender, order an
appraisal, the appraiser will goout, and then we'll do an
appraisal based off of what theproperty would be worth after
the repairs are done.
(09:14):
Now, say it comes back at$190,000.
The loan then is less than whatthey initially needed.
Does that mean the inbuyer wouldstill close, or are they going
to want to renegotiate, or arethey going to want to terminate
(09:34):
because the after-repair valueappraisal came back less?
This is extremely important tounderstand because deals can get
lost when the in buyer is usinga hard money lender.
This is very typical of newerflippers.
They don't know any better.
So it's your job as a wholesalerto really vet them out and make
(09:58):
sure they understand theprocess.
Okay, so you're going to begetting a loan from a hard money
lender.
If their appraisal comes backless, how are you going to
react?
Are you going to put theadditional five to ten thousand
dollars down?
Or are you going to want torenegotiate based off of that
appraisal?
Because if so, what you can dois give a contingency that if
(10:22):
the appraisal were to come backand they were wanting back out,
you could continue marketingthat deal to try to find another
buyer to back up that initialbuyer.
Okay.
So those are the ways that Iwant you to vet out buyers.
And then also make sure thatbefore you ever send a buyer
out, that they understand thatthis is a wholesale transaction,
that you are direct to seller,that you do have the property
(10:45):
under contract.
By no means are they to speak tothe seller or try to renego
renegotiate price or talk anynumbers to the seller because
that is taboo in this industry,but you want to make sure that
they don't do that to go aroundyou.
All right.
Number three, how do you vet outyour joint venture partners?
(11:08):
Right?
So, say you have a propertyunder contract and you want to
JV it, or someone has a propertyunder contract and they want you
to dispo it and be a JV partnerwith you.
Now, in the scenario of they'rebringing you the deal and you
are going to dispo the property,which is very common for us, one
(11:29):
of the things that I always wantto bet out is first, do you have
the property under contract?
I am not a company andunderwriting service.
I want to make sure that youhave already gotten the property
under contract.
I am not going to close the dealfor you.
That's not that's not a jointventure partnership, in my
opinion.
Okay.
So I want to make sure, do youhave the property under
contract?
(11:50):
Two, have you already beenmarketing this deal and how?
Have you already put it oninvestor lift?
Have you already hit up all thebuyers on investor base?
Have you put it out in a bunchof Facebook groups?
And at what price did you dothat?
Okay, this is important becausewe don't want to look like a
daisy chainer.
Okay, there's nothing wrong withdoing a joint venture deal.
(12:13):
However, I don't want my companyto have a bad reputation as a
daisy chainer.
If I'm going out and I am nowbroadcasting a deal for$100,000
when you were already marketingthe deal at$95,000.
That makes me look bad, makes melook like a daisy chainer.
So I want to understand do youhave it under contract?
(12:35):
Have you done marketing?
And what were the numbers at?
Also, if that JV partner hasalready done marketing, what was
the feedback from buyers?
This is extremely importantbecause you've already gotten
the pictures, you've alreadydone dispositions marketing.
What was the buyer feedback andwhy hasn't the deal sold?
(12:57):
I'm not a I'm not a wizard,okay?
I'm not a magician.
I can't make in buyers buy dealsany more than you can.
The deal stands on its own.
My job is to turn the lights onand get as many in buy, get the
deal in front of as many buyersas possible.
So I want to understand whatthat feedback has been.
Now, on the flip side, say Ihave a property under contract,
(13:20):
and now I am wanting someone todispel that for me.
And that's probably the morecommon occurrence for you guys
watching this right now.
Make sure that you are givingthe JV partner priority here.
Get the property under contract,get the pictures, put it all
together, and then present it tothat JV partner, same way you
(13:43):
would an end buyer.
I have the property undercontract for this much.
Here are the pictures, here arethe numbers.
I feel like the after repairvalue is this, the amount of
repairs is this, and this iswhat I was wanting to sell for
it.
And set a reasonable askingprice for the end buyer and make
sure those numbers make sense.
(14:05):
Then give that JV dispo partnerenough time to be able to
actually perform.
So often, what we see is theacquisitions wholesaler who got
the property under contract willtake two of the three weeks of
the contract trying to dispo itthemselves, and then they want
(14:26):
to come to us in the 11th hourand hope that we can perform a
miracle, and that's not fair tous, and because of that, we
normally have to turn thosedeals down.
So in the vetting process, it'sreally not that we're vetting
out that JV partner, it's justthat we weren't given the
opportunity to actually do ourjob to be able to locate the end
(14:49):
buyer, get a walkthrough, makesure the title gets cleared, and
get everything scheduled intime, it's just not fair.
So if you are going to JV adeal, make that decision early
on before you take up all ofyour time and then ask the JV
partner to be a miracle worker.
All right.
Number four, should wholesalersget their real estate license?
(15:13):
Now, this has become a morefrequently asked question over
the past several months, andrightfully so.
There are states that are nowcoming down with regulations
that are directly against younot having your license.
Case in point, last Friday I dida video about North Carolina.
October 1st, 2025, NorthCarolina basically put in effect
(15:38):
the North Carolina H797 bill,which claims that if you are not
a licensed real estate agent,you cannot market a deal without
having your license.
This is very similar to thestate of Nebraska, which is also
claimed this, which will alsovery quickly send you a cease
and desist letter if you do notfollow this regulation.
(16:02):
Now, these locations, if you'relocal to that, those states and
you're wanting to wholesale inthose states, then yes, I would
recommend you get your realestate license.
However, you do need tounderstand that with that comes
responsibility and more work.
You are going to have to keepyour license up to date with
(16:22):
continuing education.
There is going to be expensesthat come along with it, but it
does open up otheropportunities.
Case in point, what's the mostcommon type of seller that
you're going to speak to?
The highly motivated seller withthe incorrect price.
Well, what happens with those?
More often than not, they doneed to list that property with
(16:42):
a real estate agent.
So if you are local to a statelike North Carolina or Nebraska,
where they are trying to mandatethat you have your real estate
license, you can solve moresellers' problems by saying,
What I can do for you is I couldjust list that property on the
MLS for you.
That could be an opportunity foryou to monetize and make more
(17:04):
money.
Because one of the things thatI've seen in real estate agents
is they do lack in theirmarketing.
They're not really hammering thephones, they're not going out
and buying PPL like we are.
They're not hammering and coldcalling as much as we are.
How often do we talk to sellersand we hear them say, Oh, I've
(17:25):
already talked to 10 other realestate investors?
But it's very rare for us tocall and say, Oh, I've talked to
10 other real estate agents.
That's very rare.
So I do think that that's anopportunity for you.
So, in the long run, I thinkhaving your real estate license
could be extremely beneficialfor you.
That being said, if you're in astate that doesn't necessarily
(17:45):
require that yet inside theregulation, I would tread
carefully on getting your realestate license.
I don't know if it's asbeneficial as people make it out
to be because of the additionalexpenses and the continuing
education, as well as thedisclosures about you being a
licensed real estate agent,agent, and the fiduciary duty
(18:08):
that you have to that seller.
There is always that fear thatif you're getting a property too
discounted, you do have thatfiduciary duty to kind of let
them know what their property isworth.
So something to keep in mindthere overall, I think it
depends on your location andwhat your business looks like
moving forward in the future.
(18:30):
All right.
Now, staying along the lines ofquestions that have come about
because of regulations going onin the wholesaling world.
Number five is should I doassignments or double closes?
Now, what most people don't wantto talk about with double closes
(18:51):
is the accounting nightmare thatcan come about.
One of the issues with doublecloses is that you are going to
receive a 1099 from the titlecompany for the full amount in
which you receive.
So say I go out and I buy theproperty for$100,000 and then I
turn around and sell it for$110,000.
(19:11):
I'm going to receive a$1099 for$110,000, and then I have to
show that I write off$100,000for the purchase.
Now, this does cause issues, andI have run into issues with the
IRS because of this, where I hadto prove that I didn't actually
receive$110,000 on a doubleclose.
(19:32):
Now I haven't heard many peopletalk about this, and maybe it's
just because I'm unlucky andthat's just something that came
about with some of my earlydouble closes.
But what I would say is if youare trying to decide between
doing an assignment of contractand a double close, always do an
assignment.
It's just the easier way to doit.
The only time that you should doa double close is when you
(19:56):
absolutely have to.
Now, what I hear more often thannot is I'm doing a double close
because of the amount of moneythat I'm making on the
transaction, right?
I'm trying to hide my profit.
Now, I think that's just fear,right?
Fear that your buyer's gonnaback out, or fear that your
seller's gonna be upset that howmuch money you're making.
(20:19):
But you can always do a blindHUD.
And if you're not working with atitle company that does a blind
HUD, or if you don't know whatthat means, it essentially
doesn't show the seller how muchmoney you're making.
You're working with the wrongtitle company if you're not
using a blind HUD.
If your buyer has a problem withhow much money you're making,
(20:41):
then you're working with thewrong buyer.
Now, one of the circumstances inwhich a double close could be
mandatory is if your end buyeris using a hard money loan and
the hard money lender has a capon what they will pay on an
assignment fee.
Now that does happen, and it'snot like a massive red flag, it
(21:05):
kind of makes sense from alender's perspective.
That is where I would absolutelydo a double close, right?
I don't want to lower myassignment fee.
I will do a double close, and Iwill I have in all of our
transactions, we have only donetransactional funding twice.
(21:26):
Okay.
You can find someone that willdo a pass-through double close
where they will take the fundsfrom the in-buyer to fund your
close with the initial seller.
Okay, and you don't have tobring any money to the table,
(21:49):
it's not gonna cost you anytransactional fees.
The only thing that it will costyou is potentially title
insurance, okay?
You might have to in the closingcosts associated with that.
That would be the onlyadditional fee that it should
cost you.
More often than not, you're notgonna have to use transactional
(22:09):
funding.
Now, some hard money lenderswill not allow a pass-through
double close either, and that iswhere you would have to take out
the transactional funding.
More often than not, you canfind that for somewhere in the
range of one percent to twopercent of the funds being
brought to the table.
Ultimately, make it as easy aspossible on you and do an
(22:32):
assignment, all right.
Number six, can you wholesaleduplexes, triplexes, quadplexes,
and small multifamily?
Now, I don't know why I keepgetting asked this question, but
the answer is absolutely whycouldn't you?
This is a great opportunity insome locations in the United
States, it's the bestopportunities in those markets.
(22:56):
Case in point, Alaska.
Anchorage, Alaska has a ton ofsmall multifamily, and in fact,
the majority of investors inAnchorage, Alaska are house
hacking inside of the smallmultifamily.
What I mean by house hacking isthey're living in one of the
units, rehabbing the other twoand renting it out, and having
those two units pay for the unitthe entire building.
(23:20):
Okay.
Other places that this is verycommon Connecticut, Maryland,
uh, Rhode Island, these placesare chock full of small
multifamily that could be cashcows.
Rhode Island, for as small as itis, in certain locations, has
neighborhoods full of triplexes,quadplexes, and fivexes.
(23:43):
That if you plan on wholesalingthere, you absolutely have to do
small multifamily.
Now, what you need to payattention to is the average cash
flow as well as providing equityto your inbuyers.
Where most newer wholesalers runinto a problem when they start
(24:03):
trying to analyze smallmultifamily deals, is they only
look at the cash flow and theyforget about the equity that
needs to come along with that.
Your in buyers, at least themajority of your in buyers, what
they're going to be looking foris the opportunity to be able to
pull all of their cash back outand not be stuck with money just
(24:24):
sitting in a property, right?
In order for it to be awholesale deal, we have to get
it with a discount.
Otherwise, it's a retail dealand they could just go get it
off the MLS.
And so, yes, there are going tobe locations in the United
States that absolute look likefantastic deals from a cash flow
(24:46):
perspective, but from an equityperspective, we're not bringing
them value.
So remember that when you'reanalyzing it, look at what the
other sold small multifamilydeals have gone for, compare the
condition, compare the rentrates, and then get it for less.
That's your job as a wholesaler,and that's how you do those
(25:08):
small multifamily deals.
All right.
Number seven.
Hold on.
Before we get to number seven,coffee break.
Today's episode is brought toyou by Starbucks Cold Brew.
Oh man, fantastic.
Number seven.
(25:30):
When should I build out a teamwhen wholesaling real estate?
So the majority of wholesalers,when we get started, it's
probably either we're doing itall by ourselves or maybe with a
partner.
And then it's when should Iactually start hiring people and
delegating out?
And when can I, RJ?
You always talk about createyour own reality.
(25:50):
When can I start doing that andhaving that life of freedom?
Okay.
When you are in a position dealflow-wise and cash flow-wise in
your business, to where when youhire someone, say they perform
at 50, 60, 70 percent of whatyou can do, your business can
(26:14):
sustain that loss and revenue,as well as knowing that when you
bring someone on, if youanticipate that it's going to
take 60 to 90 days before theystart bringing money into the
doors.
When I hire someone for titaniuminvestments to start doing
acquisitions, I cannotanticipate that they're
(26:37):
immediately going to sit downand start closing deals.
We have to onboard them,introduce them to all of our
systems, train them on how to dothe job, and then get them
started.
And let's be honest, as great asthe training can be at first,
they've got to get the reps inbefore they actually start
producing.
And then to get them up to whatwe anticipate is an acceptable
(27:02):
standard of revenue that theycan bring in, it's going to take
time.
They also have to build up theirown individual pipeline when it
comes to acquisitions, right?
We're going to close deals fromleads that come in today three,
four months down the road, justbecause of the seller's needs,
right?
So your business has to be ableto sustain that stagnant time
(27:27):
when the new person comes onboard.
Now, let's say we hire someoneoutside of just acquisitions and
dispositions, and it's more of asalary perspective, right?
I'm going to hire someone as anexecutive assistant or a
transaction coordinator orsomething along those lines.
Now, this is even more importantto be able to look at your
(27:49):
business and see cash flow-wise,do I have a consistent amount of
money that I'm making everysingle month?
And what does that look like ifI bring this person on?
Can I sustain their salary?
Can I also sustain the time thatit's going to take to train that
(28:09):
person to do their job?
I think this is where mostpeople kind of underestimate
like, hey, I'm going to hire anexecutive assistant.
That means they're going to helpme be more productive.
That's true in the long run, butnot at first.
At first, that person's actuallygoing to take a lot of your
attention away from the revenuegenerating activities that
(28:32):
you're doing inside of yourbusiness.
So I see people want to build ateam a lot quicker than they're
actually ready for.
So if you're newer and you'reready to get to the point where
you want to start hiring, what Iwould recommend is start slow.
Don't try to hire multiplepeople at once.
This is how people want to scaletheir business.
(28:54):
And then you look, and 12 to 18months later, they're no longer
in business.
It's because they put themselvesout of business.
Hire slow, take the time toreally train that person up, get
used to having that person inthat position, and then move on
to the next hire.
All right.
Number eight.
(29:15):
Should wholesalers filememorandums of contract?
Now, you guys have heard me talkabout this before, but I will
reiterate it.
I think one of the most misusetools for wholesalers is filing
memorandums.
In fact, I've talked to manywholesalers that say every
single property that I get undercontract, I'm filing a
(29:38):
memorandum.
And I think that's a misuse ofthe tool.
And inevitably, regulations andbills are going to get passed to
where that is no longer the casebecause we have misused it for
so long.
That being said, there is a timeand place where a wholesaler
should file a memorandum toprotect themselves.
(30:00):
It's though it's not fair to usif we go get a property under
contract, do our recon, find anend buyer, assign it, and then
the seller then tries to go sellthe property to somebody else.
That's not fair to us.
That's why this tool exists toprotect us.
Not just us.
I mean, it's for any buyer outthere.
(30:21):
That being said, when you file amemorandum, make sure that you
are prepared to close not onlythe property that you have under
contract, but every propertythat you have under contract.
This is the part that mostpeople don't understand about
filing a memorandum.
You can actually get in troubleif you're filing memorandums and
(30:43):
you're not prepared to close onthat property.
This is where I think you reallyneed to second guess and
question whether or not you arein a position to file a
memorandum.
This is important for you tounderstand because one of the
worst things in the world thatcould happen is that you listen
(31:05):
to someone and says, Hey, filememorandums on every property
that you get under contract.
And when you do that, itactually gets you in trouble
because you do it with the wrongseller that comes after you and
says, How many properties didyou have under contract at that
time?
Did you have the money?
(31:25):
How were you going to fund it?
And you actually end up introuble.
The other part of this isbecause the industry has misused
this over the course of time,the memorandum is now going to
start losing its strength in atransaction.
Case in point, Texas now has itto where sellers can actually
just go around the memorandum,and that's because it's been
(31:47):
misused by us as an industry.
All right.
Randy always coming in.
First of all, Randy, love thenew thumbnail with the titanium
hat.
RJ needs more likes, double tapthe screens, thumbs up if you're
on a computer.
Thank you, Randy.
I appreciate that.
All right, let's go.
(32:08):
Number nine.
This is a personal question thatI get asked a lot.
Why don't I do more flips andown more rentals?
Okay, so you guys hear me talkabout the hedgehog concept all
the time.
Well, the hedgehog concept comesfrom the book from Jim Collins
Good to Great.
It's a chapter.
(32:29):
I read it in 2021, right when Ineeded to read it, because I
just got done.
Well, I was, I guess I was stillin the midst of getting rid of
quite a few of them, but a tonof flips in multiple different
states, owning a portfolio of acouple hundred properties of
rentals all over the UnitedStates.
(32:52):
And it hurt us very, very badly.
And what most people don'tunderstand is just because you
say you're a real estateinvestor, what does that mean?
Does that mean you're flippingreal estate?
Does that mean you're alandlord?
Does it mean you ownmultifamily?
Are you doing syndications?
Are you wholesaling?
(33:12):
What are you doing?
There's very few people outthere that I know that are
successful doing all of theabove.
However, what I do know is I doknow a bunch of people that are
highly successful aswholesalers, I know people that
are highly successful asflippers, I know highly
successful landlords, butblending that is multiple
(33:36):
different businesses.
And so when I read about thehedgehog concept, that's when I
made the decision that we weregoing to solely focus on one
strategy that was wholesalingreal estate.
We were going to do itnationwide and virtually, and
because of that, we've nowbecome a much more sustainable
(33:59):
and profitable business.
It's not because we can't do aflip, it's not because we don't
have the money or the knowledgeto do it, it's because, as a
business, that would not be wiseof us to take attention off of
what we were doing inside of ourwholesale business to go chase
the next shiny object exitstrategy.
(34:23):
One of the questions I used toask at our two-person, in-person
events here at the office waswho here wants to flip a house?
Almost everybody would raisetheir hand.
Then I would say, Now, why doyou actually want to flip a
house?
And it was very rarely becausepeople wanted to make money, it
was because of an ego.
They wanted to say that theybought something ugly and made
(34:46):
it pretty.
(35:22):
But focusing on one thing andbecoming great at it, that has
become to the point where nowfinancial freedom is a reality.
All right.
Let's find that's the ninthquestion.
My tenth question, I've got togo back over here to my list.
(35:43):
How do I feel about real estateagents in wholesaling?
Okay, so this is more of aquestion in regards to us making
on-market offers or direct toagent.
What I would say is severalyears ago, there were some
(36:05):
industry leaders that were verybig on direct to agent, Jerry
Norton, Jamil Damjee, PaceMorby.
They were talking about it alot.
They stopped talking about it.
We're not seeing as much of thatgoing around in the industry.
We're not seeing that as likethis is what you need to do.
(36:26):
And what I don't see is a ton ofwholesalers highly profitable
just from working with realestate agents.
Is there power with having anetwork of real estate agents
that can bring you deals?
Absolutely.
However, I do not believe thatshould be a core focus inside of
(36:50):
a wholesaler's business in 2025and moving into 2026.
I believe the opportunity thatexists today with the increase
in the softwares and thetechnology, especially with AI
going to become a bigger part oflead generation and the
(37:10):
softwares that are going to becoming down inside the
wholesaling industry.
I don't think it's as necessaryfor us to know real estate
agents as much as we had to,especially when we got started.
Right?
We didn't have comping softwaresthat could pull comps anywhere
in the country.
So when we started doing dealsin Baltimore, Phoenix, Portland,
(37:35):
I had to go develop arelationship with a local real
estate agent in each of thosemarkets so then they could pull
a CMA on every single propertythat we wanted to offer on,
which then in turn made uscompensate those real estate
agents.
They were working for theirmoney, they were bringing value
(37:57):
because it was necessary.
Nowadays, I don't see that beingthe case.
We have PropStream, Privy, othercomic softwares that eliminated
that need.
(38:35):
And I don't think it is in theindustry anymore because very
rare do I hear people talkingabout hey, I'm getting all these
deals from real estate agents.
Now, if you're listening to thisright now and you're getting a
ton of deals from real estateagents, prove me wrong.
Let me know how many deals areyou closing a month that solely
(38:57):
come from your network of realestate agents.
I'd love to hear it because I'mnot hearing about it in the
industry.
However, it could be because I'malways that guy.
I'm the PPO guy.
Maybe that's why people aren'ttalking about it in my sphere in
the industry.
All right, guys, that's our 10frequently asked questions about
(39:17):
wholesale and real estate.
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