I like to think of myself as an ethical wholesaler, but there are a lot of guys out there who aren’t. States are getting smart to wholesaling methods that aren’t ethical and that rip off sellers, and that’s what we’re seeing with Oklahoma’s legislature. Because I don’t want you to worry, but I think that you should be cautious, I’m going to lay out some things you should keep an eye on going forward.
Broke wholesalers are tying up properties all over the country. They hear that wholesaling is the fastest, easiest way to make money in real estate (and it is!), but they’re going about it the wrong way. And it’s giving wholesaling a bad name. They’re doing the daisy chain method of wholesaling and bumping up the prices of properties while stringing along a seller who just wants to sell their home before it’s foreclosed on.
Number one, if you’re going to be an ethical wholesaler, you have to have the means to actually close on the property. And number two, you have to have the intent to close on it yourself. And this is key. You can’t put stupid clauses in your contracts. I give some examples of stupid clauses that cause sellers to stop trusting you.
So, listen, it’s normal for a state to want to protect its citizens from this kind of unscrupulous wholesaling. It happened in Illinois, and now wholesalers are required to have a real estate license.
And while you might think this could be a terrible wrench in a wholesaler’s plans, for some of my wholesaler friends with real estate licenses, it’s just reduced their competition in Illinois, providing them with an edge over everyone else.
These kinds of bills aren’t going to go away, so I share how you can prepare for them.
Listen and learn:
- Daisy chain wholesaling deals are jacking up the prices for everyone.
- Find an investor-friendly broker to work with.
- What it means to be an ethical wholesaler.
- Why states resort to these types of bills, and why it’s not always a bad thing.
- New investors would benefit by partnering with local, ethical wholesalers.
- My thoughts on the benefits of having your own real estate license.
Mentioned in this episode:
- Joe’s Book: REI Secrets
- Apple Podcast Reviews
- Predatory Real Estate Wholesaler Prohibition Act
- Oklahoma HB 3104
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