The DealMachine Real Estate Investing Podcast

176: Make $70,000 Wholesaling in South Carolina in 2024?

South Carolina passed a law this year about wholesaling real estate, so we interviewed Cory Boatright about making money from run down homes under the new law. Cory has wholesaled over 1000 deals virtually in all 50 states and created a company called Take Down Funding to help wholesalers. Key Talking Points of the Episode 00:00 Introduction 02:01 What do new regulations on wholesaling require investors to do? 03:32 What are the advantages of acquiring properties instead of wholesaling them? 04:11 How are different state regulations changing the way wholesaling is done? 06:54 Why is wholesaling being regulated? 10:03 What solution is wholesaling providing distressed homeowners? 13:03 What are the big ticket items that need to be evaluated when acquiring homes? 15:18 How does Take Down Funding work? 19:40 Who are eligible to leverage the Take Down Funding program? 22:59 Why should real estate agents and investors learn to work together? 25:58 Where is Take Down Funding available? Links Website: Take Down Funding https://www.takedownfunding.com

Duration:: 26m
Broadcast on:: 15 Jul 2024
Audio Format:: mp3

South Carolina passed a law this year about wholesaling real estate, so we interviewed Cory Boatright about making money from run down homes under the new law.

Cory has wholesaled over 1000 deals virtually in all 50 states and created a company called Take Down Funding to help wholesalers.

Key Talking Points of the Episode

00:00 Introduction

02:01 What do new regulations on wholesaling require investors to do?

03:32 What are the advantages of acquiring properties instead of wholesaling them?

04:11 How are different state regulations changing the way wholesaling is done?

06:54 Why is wholesaling being regulated?

10:03 What solution is wholesaling providing distressed homeowners?

13:03 What are the big ticket items that need to be evaluated when acquiring homes?

15:18 How does Take Down Funding work?

19:40 Who are eligible to leverage the Take Down Funding program?

22:59 Why should real estate agents and investors learn to work together?

25:58 Where is Take Down Funding available?

Links

Website: Take Down Funding

https://www.takedownfunding.com

all right Corey I've got a few questions for you I know you've got this new solution for these states and cities where wholesaling we hear is not allowed anymore because of maybe a recent law that was passed I'm curious do you have like a master list or off the top of your head where some of those locations are sure so South Carolina being the first one that really passed a hard and fast law stating that you know wholesaling without a license is gonna be illegal if you don't own the property as well so that's pretty interesting marketing that has a change to it for South Carolina it's got teeth in it mean that if you violate it you can really have some potential jail time and also Oregon right now is another one that you can actually be have a felony against you if you continue to wholesale without actually doing it the correct way which is according to the law they want you basically to be licensed and I also let's see the writing of a wall where people are going to mean have to have the property in their name basically own the property to be able to market it to the public here in Oklahoma is another example David where I live and they had some changes here where you have to be licensed and they tech basically say you can't public markedly you can't market publicly a property that you don't own so there's some cut-and-gray between like assignment and double-close you know if you double-close you technically are on the feed for five minutes so you do sell a property that you own versus assigning it you don't own the property you're just assigning it to another buyer you're basically assigning a contract not necessarily a house you know there's all of those kind of different discussions that are taking place right now but the writing of the wall I see with regulations is you are going to need to own the property in order to market it and most these people whether it's a license whether it's a contract for assigning the contract or a piece of property they aren't they don't own it and they're marketing it so even even on the double-close you're still not owning that property before you market it to find your end buyer and so we're a proponent of wholesaling so I want to make sure I'm very clear on that too David we have a pretty good sized wholesaling company you know we do over hundred deals a year we've closed over 35 different states and so I'm a proponent for wholesaling and I just see the writing on the wall that you have to have some more tools in your tool belt than you had before in order to you keep up with some of these regulations if you don't want to lose a lot of money in your wholesaling operation I think that got it something that I like to think about if you're able and when when I started I wasn't able to do this this because I started with no experience at all it was just getting my first deal but as you do this you start you're you're starting to play with some big numbers of cash a lot of wholesalers are and they should be stacking some cash up so that you can take a deal down because I think you do have better leverage and have more power to sell for a better price when you take it all the way down there's deals that we do that with now it's like I know I could wholesale this and make a decent assignment fee but I could also just take it down get it on the market and make an even bigger fee so I think that there's also just strategically analyzing what is a better option for me is it better to take it all the way down and do it versus not nothing I was thinking about too are there not to get too in the weeds on this are there states that that ownership is by contract and it wouldn't necessarily make a difference if you take it down or market it or not take it down and market it the the language is being used Ryan you perhaps in good points of language is being used is an interest in a property and as we know you know from wholesaling you know whenever you and this is the the argument too right I don't own the house I don't I'm not wholesaling or I'm not assigning a house I'm assigning a contract I have an equitable interest you've heard this term thrown around many times and and that's true you have an equitable interest in a property while these regulators they're they start to notice those those that language being used you know and they're kind of using it against us so they don't want you to have any mean interest in the property and being able to market it public there I've got the South Carolina bill here actually it says wholesaling means having a contractual interest in purchasing residential real estate from a property owner then marketing the property for sale to a different buyer prior to taking legal ownership okay so it also says wholesaling does not refer to the assigning or offering to assign a contractual right to purchase a residential real estate so it seems like in South Carolina all they're doing is they're actually protecting wholesaling but they're preventing people from lying about advertising the property it is still okay to say that I'm going to assign this contract to somebody yeah if you're a they put that in there if you continue reading the rest of that that that bill that you're reading that law basically it's it states in there that you can assign a property still like to your brother or sister maybe a what other family member but you can't profit from that property so that they're they're trying to basically say you can still assign it but you can't make you can't make money and profit from from that deal so they they cover it both ways okay so why do you think that Oklahoma and South Carolina you know also has been around a long time if you go and you read you know rich dad poor dad the book that we've all read that got us all excited about real estate he talks about wholesaling in there right it's it's he doesn't use the word wholesaling but he says well I had this apartment complex under contract and you know I could have cash floated for 20,000 you know per year but instead I just assigned the ability to close on it to someone else and made $600,000 that day and so it's really really an old strategy why do you think some of these regulations are coming about now we've made actually over three hundred thousand dollars on assignment in California and so these six bigger assignment deals do happen they're probably from few and far between now but the big reason right now is there is a lot so I always look at wholesaling in some degree as the pawn shop of real estate I've been kind of criticized by saying that but you know if I go into a pawn shop with a gold watch and I paid 10 grand for my Rolex watch do I expect to get 10 grand out of it no the very fact that I went into the pawn shop I already know that I'm probably gonna get maybe 1,500 the $4,000 for that watch because I'm entering into a situation where I'm talking to someone that's likely gonna pay me cash they're gonna buy it as is they're not gonna really have any formalized quote inspections that they have to go through and they're taking risk right it's also liquidation strategy to the marketplace I feel like wholesalers provide a great opportunity for liquidation to the marketplace and you know there there is there is a need I believe there is a big need for a wholesaling however there is a lot of people that take advantage of someone let's say the little old lady that's 75 or 80 years old will paint the kind of worst picture she has a property worth $200,000 and you go and negotiate with her and she ends up taking $30,000 to that property and then you turn around and you assign that property for $100,000 and you make $70,000 off the poor lady that's 75 or 80 years old and I'm telling you this is the example that the not the board of real estate the the National Association real estate Association what they're what they're looking at is kind of these worst examples and they're calling wholesalers in the same category as predatory and they would actually be correct with some wholesalers but the challenge is David and you know this and this is the one of the big you know one of the big things that that you've contributed and made an impact into this world on on deal with she is there's great wholesalers there's ones that actually know how to treat people they have values in their company and just like a a car business if you go down to someone and in trying to buy a car and and you get it you get this kind of sleazy guy that you know is gonna take advantage of you and lie to you and all this other stuff or you go to a really good car dealership and they treat you right they give you an extra warranty they give go above and beyond you have both sides and you're always gonna have the ones that do things the right way and the ones that do things the wrong way and as of right now nowhere is really looking at the ones that are doing things wrong and they're trying to make an example of all wholesalers are that way all wholesalers see you know you might as well just brought it to us as a real estate association so we could have made the Commission you could have made more money and their eyes that's what they're thinking you could have made more money and then you know we'll take care of you you know we have these guidelines that you have to abide by etc the challenge with that is that there's a lot of people that contact us David they call us whenever they could have called a real estate agent it had the opportunity to call a real estate agent but they didn't or they had their own reasons why they would never use a real estate we've got recordings of people that say you know one of the questions that we ask our our representatives asked the clients they call us the home sellers because why didn't you this is this sounds like a great house David why didn't you call a real estate agent and you know what they say I don't want to deal with the real estate agent I had a bad experience dealing with a real estate agent I don't want people dropping through my house I feel there's a bunch of reasons of why that these home sellers don't want to work with real estate agents and it's really difficult to get that message across in a positive way in a way that's like hey it's not me saying I don't want to work with the real estate agent it's a homeowner says they don't want to but guess what they still need to sell their property and then they have urgency involved with it David they have reasons of why they want to sell that typically just don't associate with the typical understanding that a real estate agent is kind of built on which is I want to make I want to sell the property for as high as I can and I want to make a commission you know from from doing that they don't like to get into kind of these other creative situations where the homeowner needs these different certain little things to be able to sell the property not the traditional way of agents think right hey guys if you know you want to quit your job in the next three months make sure you're subscribed to this podcast because we've got some incredible frameworks with step-by-step instruction that you're not going to want to miss also leave us a rating in review to let us know your favorite parts and why you want to get financial freedom that so this is a good transition you kind of broke down how wholesalers three types of properties wholesalers operate and I wanted to read through those and then ask you you know how do you know if you're doing a good job you know buying this type of property at this type of discount so you got pretty houses which need cosmetic light rehab 60 to 70% of the full market price yucky houses just medium rehab 50 to 60% of the full market price and then scary houses which need you know major repair full gut maybe they had fire damage and they might buy that at 25 to 50% of the of the market so it's it's pretty easy for me to see how the yucky and the scary houses they actually do take you know a big discount for that because they're having to risk their capital to fix that property up right or somebody somebody's going to have to right so that's why there's a big discount there but let's say it's like a pretty house you know there's maybe less risk you know why why or how do you know if it's okay to take something like that you know for 60% or 70% of the market price so on pretty houses pretty houses for you know if I asked someone that hey it would you say your house is a pretty house doesn't need a whole lot of words maybe a little bit of cosmetic maybe a little paint a yucky house which like you said needs a little bit more word maybe have some holes in the walls maybe needs you know maybe has a little hole in the roof somewhere something a little bit more involved or scary which is like you would you know don't recommend me walking in or something here been in fire damage and people tend to you know say well my house is pretty even when it's scary right and so what we tend to do is we really look at you know what are some of these kind of big items that cost the most amount of money right which is a roof in a roof cost a lot of money the central heat and air cost a lot of money whether even there or not or if it's working or not you know the foundation is another big issue people don't tend to want to buy home with foundation issues so you know we look at that particular issue plumbing you know big issues with plumbing if there's anything there or which house has ever been in the fire and you like electric stuff that's you know how old electric is so we look at some of these kind of big items and we determine right off the bat from that like are those things all in good shape also the other thing is the year of the house typically homes that are like built in 2000 or above just in general are usually gonna be in that kind of like yucky to pretty category typically not always but typically you know it's kind of like finding a used car that's the 2000 or above car right it's it has some miles on stuff but it usually doesn't mean like you know it's a 1962 car or a 1972 car right where you feel like wow this things had a lot more you know wear and tear on it I have a lot more things to be considered about right so the year of the house is a big one you know that we consider they also those other items like the hot water tank the that central heat and air and you know the roof those are big items that we also want to look at because those are going to cost a lot of money for capital expenditure for for rehab but when we're looking at each one of these properties for our company takedown funding to be able to help these wholesalers whether you're new or old to the game to be able to actually take these properties down because maybe you don't have three hundred thousand dollars in your bank account and you're not liquid you can't go find somebody to get that or maybe you've tapped out completely but you need that money to be able to take that deal down because you know it's a great deal you've negotiated on it you you spent the time you've wrapped it up it's a great deal but you just can't market it and you don't have a way or maybe you're gonna lose it if you don't take it down we found a way to be able to individually underwrite those deals and we want to be able to do it in a way that's kind of first of its kind that you don't actually have to put any money in besides like a three hundred dollar home inspection that's it like a lot of these other companies out there they charge 10 20 30% down or more depending on situations with the house or your credit or whatever it is whether that's a hard money loan or versus like a private lending loan but it's gonna go off your credit or what we are coming out of the first of its kind with takedown funding to allow people to be able to take that deal down because we individually underwrite those deals and so David we know if it's gonna be a pretty house or a yucky house or a scary house because this is what a part of our one of our businesses is this wholesaling and collectively with the team that we have we got over 50 years of experience from wholesaling in that market got it so basically if I'm trying to wholesale in South Carolina I could do everything the same way but just like use your company to take it down yes and at the end of the day we're your partners we're your strategic partners too I'm not gonna say here and tell you that it's gonna be cheap we're not a cheap date but guess what you can get the deal done and you may not need us but if you do need us we're gonna be strategic partners with you it's gonna typically be just a little under 50-50 of what your profits gonna be but we also want to take part in working this deal with you we want to get you the highest amount possible for this property and guess what we know where those retail buyers live or where we know where those high buyers live is if usually off the MLS if you're able to take that deal down and now you have an agent right that represents that deal to be able to get it upon the MLS for you that's gonna get you typically a higher offer because those buyers that are coming off the MLS are not typically the ones that are living off of like cash buyers or necessarily the ones that are the fiction flippers or the rehabbers there are some on there but they're usually like the HD TV type folks that are on there that are not necessarily looking for those huge 70% minus repairs kind of formula that we normally hear about in wholesaling they are looking for a different element of that property it may be where the location is may be the school so where we're finding is that if you can take a deal down yeah you may lose some money to be able to you know partner with us on on on doing the deal however you have to think about how much more that you're gonna potentially sell the property for and you'll have full control over right many times we are so frustrating David that I can't get in I have to schedule with the tenant at the schedule with the owner if that I imagine just being able to take a deal down changing the locks putting the code on it now you have full control right you could show it at 12 o'clock at night or eight o'clock in the morning is you can show it 50 times or four times so you have a lot more control to be able to do it yeah but well what happens if it doesn't sell yeah so we have another situation that we're also your strategic partner and we are gonna underwrite that deal if we believe that it works for us and the way that we believe it's gonna work for us is there's got to be enough money there for you to turn around and profit and we're gonna have that conversation with you it is individual for each one of the properties but to answer your question we're gonna give you a full 90 business days okay if you have to be able to get rid of that deal and full 90 business days David and we're the ones putting up the money for it guess what we don't want to lose money and you don't want us necessary to lose money right and so we're gonna take that deal back and we're going to actually end up liquidating it ourselves and then at that point we'll our our agreements all after 90 days okay cool so if you're like a beginner are you might like able to send deals for you to see if they're good deals like you do you want people to do that yes we do we actually want you to just send them to our application line that takedownfunding.com it says apply for funds we are looking at what a little video David that's kind of an instructional video that says before you apply please watch this quick video because we don't we won't we don't want you know 90 percent 90 percent LTV type deals it's not really it that's not a deal we all know that so we want you to have some education of what we're kind of looking for and also what we think is going to be a partner for our success okay got it so you would be looking for 60 to 70 percent of the value type deals max it sounds like so at what stage if I'm a beginner would I be asking you if it's a good deal like if I get a call back from a mailer or if I've actually gone to the property and gotten it or contract you know like what at what stage is good to engage with you guys to answer that question that's a great question and so we are we're again we're working on kind of a we don't want to necessarily delve into the full educational aspect of it but we do want to create some kind of watch this video before you submit kind of that filter that allows you not you know so you don't waste time like you say you don't want to spend time in waste time so we want to make sure that that you know you're not submitting the 80 cent on the dollar deal 90 cent of the dollar deal if it's kind of on the fence and you think okay there could be this could be on the fence we're fine with you going ahead and submitting it we can underwrite it pretty quick and let you know pretty quick if if we think the deal is gonna work or not and we actually have alternative ways so if the deal doesn't completely find out a hundred percent which is what we want to offer the marketplace David because it's the first of its kind imagine the wholesalers has spent all this money they might spend 5,000 10,000 whole dollar sometimes spend 20,000 or more a month on marketing and then they get the deal and now someone's telling them that hey oh by the way now that the wholesale the deal especially in South Carolina you have to take down the property well if you don't have the funds available or maybe you've tapped down in your credit line what do you do you spent all this time negotiating you have a great deal you know you want to let that go to the waysides so we actually have other ways that allows you to do that deal even if it's not a hundred percent so what's that look like you know typically we want to just let you come in at a hundred percent but if it doesn't work we may say well we will go ahead and still do the deal but maybe you have to put a little skin in the game maybe it's gonna cost you ten thousand dollars for an option or five thousand dollars for an option or whatever it is we still find a way to try to make that deal work if we paint there's a potential for you to turn around and prop it awesome well it seems like very timely to create this what what's the best way to go find and check that out is it take down funding dot com got it take down funding dot com just how it sounds easy to remember and I do believe that even though South Carolina is kind of leading that way Oklahoma or Oregon Washington's coming into play in other places and Nebraska so other states are looking at this I think there's a there's a term called copy legislation and remember the deal in South Carolina took from like January to like you know June to get that thing ran all the way through maybe a little bit earlier it only took like four or five months for them they run that thing all the way through and right now with nargating hits with you know this big lawsuit over you know 400 million dollars they got they got hit with they don't want to lose any more fees right so they want more people to be able to become agents so they collect those commissions which is understandable right but they're also kind of throwing all the wholesalers into this bunch of like bad wholesalers situation we don't want that we actually want to work with agents we believe with takedown funding especially and with wholesaling in general is that there could be co-opetition instead of a competition typically it's real estate agent versus wholesaler David I hate that I can't stand that because both people have this zero-sum mentality and it never works it never works long-term you have to look long-term working with each other we can bring you deals that are great deals that you can make commission off of you can bring us deals that we can buy and we can make you commission and so we all need to think about ways to work together instead of having this zero-sum mentality love it well takedown funding is the website you can go to if you guys are in one of these states where you're not sure if you can wholesale and again South Carolina is one of those states potentially I don't know I haven't seen the profit part that you mentioned Corey I'll have to go back and read the rule but it it seemed like it was protecting wholesaling to me so definitely just you know taking that as an action item for me to read through and I really appreciate you being on Corey thank you so much no problem we spent about two with two attorneys that enclose over a thousand real estate transactions and with wholesalers and let us know about that assignment issue so you know I'm speaking about not for me as a legal standpoint but talking to attorneys you know and just seeking counsel really on this David it's kind of it's a new thing and we just think that regulations are coming in hard and heavy and you just got to be prepared for it it's confusing because at the same time you know one of my clients uses Harry Marsh law in South Carolina and continues to close wholesale deals so it definitely is confusing and I think even some attorneys are confused I don't know it's not clear exactly so how to definitely need to do some research on that myself and if you're in the state as I mean would definitely research that as well and either way though it sounds like you've created a great solution with takedown funding to be able to wholesale and help dispel that deal and if you're a beginner could even give feedback early in the process on if it's a good deal or not and so for those reasons I mean I'm very excited about what you talked about today and we we are also expanding right now David we're in South Carolina we're in Georgia we're in Tennessee we're in North Carolina right now and we're in Florida and so we're expanding pretty quickly so if you're in any of those states we definitely would love to have a conversation with you and as we continue to grow this baby the little baby where as we continue to watch the baby grow we believe that it is going to be a large company and we'll be able to fund in all the states in the United States excellent thank you so much man we'll see you next time all right see you guys thanks for listening to the deal machine real estate investing podcast please leave us a review and follow along wherever you're listening to your podcast you [BLANK_AUDIO]