15 at 5 #14: What it Takes to Get Your Deal Across the Finish Line

What's going on, people? We're back, 15 at 5 normal edition, after a great episode with Mike last week. Back with Isaiah. What's going on, Isaiah?

Not much, how are you?

Pretty good, pretty good. You know, Isaiah and I, the business is, is going berserk right now, so we're up to our eyeballs and stuff. So just trying to get everything managed and sorted out. Um, but I wanted to touch base on one thing. Drew Tarantino actually suggested we talk about this, which I thought was a great idea. But it was getting the deal to the finish line. So like after the buyer's in place, I know you're dealing with a few things specifically right now in regard to that, but like how does a normal deal go, right? You go out, you generate a lead, you put it under contract, right, if you're gonna wholesale, and then you go find a buyer for it, right? And once you get the buyer locked in, a lot of times like, great, we made money, right? We found the buyer, we made the spread, everything's great. But there's quite a bit of work depending on the deal, quite a bit of work that needs to be done from the time that you lock a buyer in to the time that the check is in your bank account. And I know one of the things I try to implement now, I think you as well, is like, there's no celebrating until that deal's freaking closed, like till everything's done, right? Even after the buyer's already locked in, buyer may need to do inspections, buyer may need to do all these sorts of things that could still affect the deal. So I guess, yeah, just kind of speak to that. Like, speak to your thoughts on once the buyer's locked in, what do you have to take into consideration? And then kind of like, what have we run into in the past issues, whether it's with Brandon or the solar, the one in Connecticut? I guess I could speak to that one.

But yeah, yeah, there's definitely a lot that goes into it when you get on agreement. It's not like You get a paycheck. So it's basically just due diligence period, and that's where you find out if the deal's going to come to fruition or not. And so we've come across a lot of bad things and good things during that experience. So basically, one thing is, I guess, that Somersworth deal, one thing we got to do was help move the tenants. So that was a pretty interesting situation. So basically we had to go to their house, move all the stuff. Their living environment was not the best. Uh, it's pretty funny that I bring my brother, brought a friend, um, Michael. Shout out to Michael.

Yeah.

Uh, yeah, so we had to go get a U-Haul, move them out. So it was basically like the whole idea though was to help them. Uh, so there's a bunch of different processes, but like especially when we, uh, fix buy and hold or wholesale multis, there's people living in the property, so they have to have a place to move. So it's a whole different process. There's a lot more that kind of goes on to it. And so basically with that one, yeah, we had to help them move. And so yeah, the kind of the whole idea was helping. And then also we want to make sure that the buyers that's buying the property, if we do wholesale, they're all lined up to to actually be able to perform, because it kind of basically, I don't know, it's our name on the line as well.

So, what I— Yeah. I think real quick, go back to specifically, so the Somersworth deal. This is like our first, not our first deal, this is like our fourth deal. I remember we were just graduating, but we're still hungry. We're just, we're like, "We're going to make $10K, this is sick." We just wanted to get the money. But go back to that deal, because we had a buyer locked in, right? And then what happened after that? We had the buyer locked in, and then Where did the issues arise?

I'm trying to think. That was a little bit ago. Basically, I think that one, we had a buyer locked in, and then basically there's a ton, so much more work that needed than we thought. I think the foundation had a problem. Everything, like literally everything inside, like it was like mold. It felt so bad. It smelled so bad in there. You need like a mask. That was tough.

Smelled horrible.

But basically with that one, we got super lucky because the buyer ended up being the buyer, the guy who owned the property next door ended up buying the building. So super, super great. Just a quick note on finding the buyer, see who's buying around the area and who owns property around the area. But yeah, on that though, I feel like, Jake, I feel like you have some things to say about it. I kind of forget, it's been a little bit.

Yeah. So we had the buyer in place, right? And great, right? But a lot of times when you're doing a deal, right, this is a classic line we use, right? You always want to under-promise, over-deliver. A lot of times I'm always in there just over-delivering, over-delivering every single time just to get the under-agreement. Like, yeah, we'll help you get out of here, we'll help you get moved, like all these things, right? So we have all these commitments we have to uphold. Um, so we get it under agreement, we get it assigned to the buyer, and but now the tenants they need help moving their stuff to freaking Maine, right? And it's like this whole teeth-pulling process. I remember the tenant was like just completely unreasonable. Like, if we didn't adhere to exactly what he said, he was like, I'm gonna be on the streets like saying like Jake kicked me out of the property, all this crazy stuff. So I had to like calm him down, and we ended up having to get a U-Haul truck. Isaiah, his brother, and his friend, and I I went initially, and we helped him move all of his stuff out of the property, put it in a U-Haul, and then they had to drive 2 hours up to freaking Maine and unload the thing in Maine. Mind you, this is like all after the buyer had already been locked in and everything, right? So we were like, oh great, we made the money. But it's like, no, there's still a lot of work to be done. Um, we had to help this guy find a place to live, which I think he ultimately ended up moving in with a friend. That was one issue, finding a place to live. The second issue was moving his stuff, right? So initially we were just going to pay someone to do it, then we're like, you know what, screw it, let's just— we'll just do it ourselves. So that was one of the things that we had to do to, um, to get that deal across the finish line, which was pretty ridiculous. But, um, that's what the business is about, right? It's about solving problems and helping people out. So, um, yeah, it's about doing a little bit extra. It's not just like— in this situation we did buy in cash, but a lot of people just give the cash offer, right? But there's more things that you need to do behind the scenes in order to help these people out and move them on in their life. And the worst part about it is like, this was the tenant we were helping out. It wasn't even the owner. The owner was like, whatever. Owner was fine, right? It wasn't even the person who owned it. It was like the tenant, the one tenant. So that was just interesting. A lot to be said for that one.

Yeah, the goal in the end though was just to help them out. So it was good. It was gritty. It was gritty that we did that. But I think now we're at the stage where we would actually hire a moving company. That's a thing that differentiates us. Rather than just buying the property, we actually try to do all the other stuff to actually get to the closing table. But yeah, Jake, talk about the solar one. What's going on with that one?

Obviously, I— Yeah, so we have a deal right now, supposed to be signed today. Today we're supposed to close, but this one's in Connecticut, but there's these freaking solar panels. We've never dealt with solar panels before, so we didn't really know what to do. But again, we have the buyer locked in place. Great. We made the money. It's almost like a mental thing. Like once the buyer's locked in, I don't want to do any more work because I'm like, okay, got the deal under contract. We've signed it to the buyer. We made the money. Like I want to be out. I don't want to do this stuff. But I guess these solar panels, like the transfer of ownership, because they were leased solar panels, we have to transfer the ownership from the person who's selling it to the buyer. So it's this whole process of like back and forth and back and forth. And we're still yet to like bring transaction coordinators into our business, which we 100% need to do. It's kind of a mindset thing. It's like, it's like we're kind of— I feel like the mindset we have right now is like when it's like a difficult one, we'll bring one in. But in reality, we should just have someone in every single time because here it is on closing day and like I've been going back and forth for the past 3 weeks with this, with these freaking solar panels. And I should be out just closing more deals versus dealing with going back and forth about these solar panels. So solution to that is transaction coordinator. That's why transaction coordinators are so valuable. And as we build this business and we hope to like maintain 3 to 5 deals a month or whatever we're doing, having a transaction coordinator to do all that stuff. So it's like ideally I get it under agreement, right? I'm out of the deal. Isaiah finds the buyer, buyer's locked in, Isaiah's out of the deal. All that in-between paperwork, oh, we gotta get this lease signed, we gotta get this signed, we gotta do this, we gotta do that. That should all be transaction coordinator. Yeah, you got to pay them $500, $600, but think about the opportunity cost. Okay, am I going to save $500 to just get knickknacked for 3 weeks on all this lease stuff? No, it's not smart.

Yeah, exactly. Yeah. I feel like a huge part of it as well as confirming all the information that the seller tells you. That's huge because you have all this information, the financials and all this stuff. During that due diligence period, you have to make sure you have— that's all that stuff is accurate because you're buying the property based off of what the seller has told you. And we have run into many situations where it's not necessarily accurate. So that's a huge, pretty big aspect as well. But yeah, this is just like the due diligence period. So outside of having a transaction coordinator, we still have to do work in that. We have to confirm everything. If we're going to do an inspection, make sure that looks good. And all that. So there's definitely a lot of work.

I think it's a key point you're talking about, the due diligence period, is you're saying that especially with multi-families, once you lock the buyer in, you may want— so say our due diligence period with the seller is like 30 days, we may want to lock the buyer in at day 10 of that, right? Knowing that our end buyer is going to want to perform an inspection or something, right? So one of the key points is making sure that our due diligence period is long enough, right? Because especially if it's like a multifamily, we have like $10,000 in EMD, right? We don't want the due diligence to run out and the end buyer to be like, "Oh, I actually can't do it for X, Y, and Z reason," and then we're screwed.

Exactly. Then also with the multifamily wholesaling, it's a whole kind of niche, but being able to get in there because you're going in people's apartments, right? So it takes a long— like, yeah, you need to give them 24 hours notice, but there's also a lot of other things too. Consider because sometimes you're not going to— say it's like a 20-unit property, majority of the time you're not going to be able to get in all those. So being able to coordinate that, like the Grondin one, that was difficult to do as well. So that's just another thing to give yourself a little cushion when that stuff happens.

Yeah. That's before the buyer though, right? That's, I guess, getting the buyer. And it's once the buyer's locked in. I guess it's both, right?

Yeah, true.

Yeah, because they're probably going to want to get back in there. Yeah, multifamily is a whole different thing than single family because once you lock in, say you have your buyers through for multifamily, um, even once you get the buyer, that buyer is going to want to do like a final walkthrough again to get in there, you know what I mean?

For a single family too, I feel like it's the same for single family.

No, like a f— uh, I I think it's always—

I guess they would.

They would want to get in there one more time.

Because like the final walkthrough, I guess to digress, but the final walkthrough though is like, you see the property and then you're going to close on it in 30 days. What if the whole thing went on fire on the inside? Then you're buying a property that's been on fire. No, you want to see it the day before so you make sure that that's not the case.

Yeah. So I guess to sum it up, once you have a buyer locked in place, there's still a lot of work that needs to be done. It could be a variety of reasons. The first thing is it could be maybe you promised something to the seller that you need to uphold, right? Typically, you're going to get that done after the buyer's locked in place, right? Once the buyer's locked in place, you know it's a deal, done deal, you have to uphold your promises, which are maybe help the seller move, help the seller get things out of the property, help the seller do whatever, right? There's a variety of things. The second thing is all the paperwork. There's a lot of paperwork that needs to get done. That's another thing that needs to happen after the buyer's locked in place. Place, right? And then the third thing could be things that the buyer wants to do, right? The buyer may need to get in, the buyer may need to do an inspection or do a final walkthrough, all these things. So there's like 3 things you need to, to take into consideration once the buyer's already locked in place in the deal, right? One, it's your promises to the seller. Two, all the paperwork needs to be done, and it really depends on what's in the deal, right? There's solar panels, maybe that's more paperwork and transaction coordinating than normal. And the third thing is everything that your buyer needs. So essentially, there's a variety of things that need to get done once the buyer's locked in place to ensure that this thing gets to the finish line. And you need to make sure that you're like babying it. You need to be there and just really get it there, right? Because it could fall apart before it even gets to closing.

Yeah. And going off of that, I realized when you were saying that, if you're buying the property for yourself, it's the exact same thing. Because rather the buyer being If you're wholesaling, rather than it being a buyer, the buyer is yourself. So you still have to do the exact same thing. It's just rather than somebody else, you do it for yourself. But yeah, a lot that goes into it, but it's creating the systems to get it going, to make it streamlined, which is good.

Yeah, so I think solutions real quick to make this easier for yourself is hire a transaction coordinator if you really want to focus on the acquisitions or the disposition side. Bringing in a transaction coordinator. They don't have to be in-house. You can hire them. That's what I think we're going to start doing is hiring the people out. The one that we're going to use is actually really good. She charges only half upfront and then half when the deal closes, which is pretty cool. I think a lot of people just charge fully upfront. But I think getting a transaction coordinator is really going to help you get it to the finish line. And then obviously just having the systems in place of knowing what you need to do after the buyer's locked in, right? Make like a checklist of everything you need to make sure is good to go, and you'll get paid. You'll be a happy camper.

100%. Good summary right there.

Good stuff. Nice. And that is it. 15 at 5. Um, yeah, let me know— let us know in the comments what you want to, um, discuss next week. Drew, like I said, Drew Tarantino, uh, suggested this one and it was phenomenal. Um, it really wasn't something that gets talked about enough, so I wanted— we wanted to talk about it real quick. Um, anything else? You guys want to hear a quick blurb on, um, in the real estate industry or in anything, honestly, um, happy to talk about it. But let us know in the comments. Hope you guys have a great week.

Peace.