213 – Making $50,000 on His First Wholesale with Ruben Beraza

Synopsis

Finally closing your first real estate deal is an awesome experience. You think back to all the hard work you’ve put in and the things you put in place that finally led you to that deal. Today, we hear about the amazing details of the first deal that Bay Area real estate investor, Ruben Beraza, closed on while in the middle of the COVID-19 pandemic.

Key points

Ruben’s been a real estate investor since 2017/2018. I actually had him in my show when he had just started his real estate journey. So it’s exciting to hear once again from him just as he’s closed on his very first deal.

Finding A Deal That’s Not In The Market

Prior to getting that deal, Ruben had been cold calling agents for 4 months. In the beginning of December 2020, he got a call back from an agent he called the previous day. Apparently, her client was about to back out of escrow for an ongoing deal.

Ruben got all the details about the situation with the deal, the address, then he ran the comps and passed it on to his partner, Sean.

They saw the potential with the property. So they submitted an offer together for $1.3M, which got accepted a few days later.

Here’s the amazing thing about that deal. The property was located on the east side of Woodside, a fairly wealthy area. And the property was initially listed for $1.9M and was put in escrow at $1.85M.

Ruben just seized a great deal with such a big discount!

How Did He Close For $600,000 Under List Price?

At this time when Bay Area properties are selling for high prices, I was amazed to hear how Ruben made such an offer and that it got accepted.

But Ruben shared that they had sensed that the seller had a real need to sell. Both the seller and the agent also didn’t want to start the process again.

Looking at the situation, the properties also had some details that convinced him their offer was an acceptable offer.

First, the back of the property had some soil erosion that needed to be dealt with. The property was actually mostly still in its original condition. It looked like it was built in the 1970s. With that, they estimated needing to do between $200,000-250,000 worth of work.

Second, there were tenants who were being difficult. The first buyer was actually concerned about whether they’d be able to evict the tenants after they purchase the property.

Ruben took all of that into consideration: the work needed to be done, the timeline, and some leeway for Ruben, his partners, and any other investors to make a profit.

It Pays To Be Consistent

When Ruben was cold-calling agents, he chose the ones who sold a property in the last 3 months. Interestingly enough, he didn’t even know that the property he had just closed on was in the market.

But since he had just called the agent handling that property, he was top of mind for her. Combine that with the given situation with the first buyer and Ruben’s and his partners’ flexibility to provide a solution. And that ultimately led to Ruben finally getting an awesome deal under contract.

Ruben has this to share. During the pandemic, a lot of people took their feet off the pedal. But he saw it as a way to reinvent himself, to re-shift, and to recharge his efforts.

While the pandemic was a down period for most people, he saw it as an opportunity. Ruben believes that what he does now will shape his future.

This allowed him to wake up, put the pressure on, and focus on reaching his goals every day. Ruben would make 10 cold calls a day and kept driving for dollars. The day-to-day activities of a real estate investor might not be glamorous, but the outcome is what he was and is still striving for.

Finalizing Everything

After their offer got accepted, things weren’t final yet. First, they decided to use the title company the agent recommended. Then they discussed Ruben’s wholesale fee for finding the deal.

Through his partner Sean’s connections, they were able to increase the loan-to-value up to 90%. Their lender also offered a unique feature which was to do appraisals after closing. This works in favor of those who have difficult tenants.

What the lender does is to hold back 7% of the loan amount until they are able to go in the property once the tenants have been evicted.

But there were other legal issues that came up.

Delayed By Two Legal Issues

The escrow agent they were working with didn’t want to process the deal because they considered the wholesale fee as an unlicensed broker’s fee.

Luckily, Sean again stepped in and recommended an escrow company that was more flexible and willing to work with them. Their escrow got delayed by 2-3 weeks though because of what happened.

Then later they found out that the seller was actually selling the property on behalf of her son, who was in jail. Unfortunately, the power of attorney document she carried wasn’t accepted. So they had to get her son to sign the documents himself, further delaying their processing.

Ruben was more interested in learning and going through the process. Having all these setbacks helped him learn much more. He wasn’t so worried about the money. He already stood to earn the $50,000 as his wholesale fee and more on the back end.

What’s Next

Ruben plans to just reinvest what he earned into the project and to reinvest into more learning.

He has already created his own list. So he plans to apply to some direct mail.

Investing in rental properties is also something he is considering. This will let him build a passive income stream. Remember, as they say, you are only as good as your last deal.

Last Tips

Stay consistent. Don’t give up even if you haven’t found a deal yet. Ruben kept working for 4 years. But he never gave up.

So just stick around, and you’ll eventually find your deal.

References

Resources

Check out my first talk with Ruben on Ep. 55: How to Overcome the Struggles of Being a New Investor

More from our guest

• You can reach out to Ruben at ruben@greenelectricproperties.com
• Or connect with him on Instagram or Facebook