First time wholesaler: How many properties to look at?

How many properties do you recommend usually looking at before deciding your first property to wholesale? I've heard of the 100-10-3-1 rule by Kiyosaki but is that just for buy and holds?

Also, besides using the 70% rule for offer numbers, once you see a property how will you know if it's one that an investor will want if you're new and don't have a developed buyers list? I ask b/c I'm having a realtor show me properties that have been on the market for 3 or more months looking for a motivated seller. If it's been on the market that long, how do I know every investor in town hasn't already been through it and passed on the property?

Thanks!

Edited: 06/26/2010 at 05:46AM

Robin Vidovich

Real Estate Investor · Reading, Pennsylvania

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Aug 26 '08, 04:18 AM

The number of properties are not the issue. The correct "type" of property is what is important. One that will have equity in it, a distressed seller, a run down property, a vacant property, etc.

Robin

Edited: 06/26/2010 at 05:46AM

Paul Duke

Real Estate Investor · Central, PA

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Aug 26 '08, 06:42 AM

Thanks, but what about the second part of my question? I have a realtor firing off listings to me but how do I know if I should take it on or not. Example is, she just sent me a property just listed described as needing a complete renovation. L/P $49K comps are approx $179K.

Edited: 06/26/2010 at 05:46AM

Jeff Something

· Portland , OR

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Aug 27 '08, 02:36 AM

You should take it on if it's a good deal. It should be all about the numbers. You can't look at your desk, with 100 possible deals, and say to yourself "Where is that ONE in here?"

Maybe you have 100 out of 100 great deals. Maybe you have zero. If you have a property with a list price of $49k and a comp of $179k, you're going to need to figure out an amount for the rehab work. Is a total renovation for it $50k? Or is it $90k? Have you been in touch with a contractor? Have you researched the comps? Are they from 18 months ago? Are they from houses less than 10 years old compared to your property that is 100 years old?

Edited: 06/26/2010 at 05:46AM

Daniel Fenton

Real Estate Investor · Indianapolis, Indiana

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Sep 02 '08, 07:32 PM

I have found 100 or more to be fairly accurate -- you really do have to look at a lot of dogs to find a really good deal.

Edited: 06/26/2010 at 05:49AM

Paul Duke

Real Estate Investor · Central, PA

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Sep 02 '08, 08:04 PM

Originally posted by Jeff Something

You should take it on if it's a good deal. It should be all about the numbers.

You see, that's where my problem comes in. I'm so new I don't know what a good deal looks like. Is it purely numbers, no matter what the property looks like? If so and the property has been on the market for months should that be an indicator to me that the property is no good and no one wants it and or its not worth the investment to repair/rehab it?

Edited: 06/26/2010 at 05:49AM

Tony Tomasek

Real Estate Investor · Las Vegas, NV - LAS, Nevada

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Sep 11 '08, 12:56 AM

Look at sold comps. If there are comparable houses in bedrooms bathrooms and square footage that have closed in the last 6 months take a range of prices (150k-210K) and figure that the project will sell at the low end. If this still works numbers wise, schedule to see it. MOST IMPORTANTLY, take a reputable, liscensed bonded and insured contractor with you to get a bid on the fix up. Then add at least 15% to that because total remodels can be basket cases. But as far as looking, you will need to look at a lot to get a good feeling for what the market will bear. For example I have just looked at a duplex, that has the room in it to ake it a deal based on ARV, but when I look at comparable properties in the same shape they are 10K less.

Edited: 06/26/2010 at 05:53AM

Eric Medemar

Real Estate Coach · Grand Rapids, Michigan

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Sep 11 '08, 01:13 AM

Uhhhh...

I would say you need to get your start in the wholesaling game a little smarter.

Don't waste your time making a million offers if you don't already have buyers lined up to take the offers if you get them.

Many "guru's" have somehow forgot that the best deal in the world on a house won't do you any good if you don't have a buyer.

You need to find buyers
Find what buyers are looking for
Find homes that meet those buyers needs
Put home under contract with escape clause
Get buyer through the home
If buyer like then assign, or double close
If buyer doesn't like then use your escape clause and move on.

That's wholesaling in a nutshell.

You could waste your entire investment life chasing deals if you don't know what your looking for...do you follow?

Good luck, it sounds like your eager to get going.

Edited: 06/26/2010 at 05:53AM

Paul Duke

Real Estate Investor · Central, PA

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Sep 11 '08, 07:27 AM

Originally posted by Free Wholesaling Report

You could waste your entire investment life chasing deals if you don't know what your looking for...do you follow?

Good luck, it sounds like your eager to get going.

Makes a lot of sense to me to at least know what it is their looking for. It helps out on some of the questions and I'm sure many others will also come up. What kinds of clauses are people putting in their contracts to cover themselves in case they don't find a buyer? Or is moving to a different exit strategy more ethical? Thanks for your responses.

Edited: 06/26/2010 at 05:54AM

James Olson

Real Estate Investor · Wyoming, Delaware

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Sep 11 '08, 08:04 AM

If a Realtor is showing you the property it isn't a deal. Two reasons, the Realtor would by it and if the Realtor is showing you then everyone knows about it and it's not a deal. 95% of the biz is finding the deal no one knows about.
If it was that easy everyone would be a wholesaler.
Only the smart and strong survive in this game.

Edited: 06/26/2010 at 05:54AM

Paul Duke

Real Estate Investor · Central, PA

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Sep 11 '08, 05:16 PM

Originally posted by James Olson

If a Realtor is showing you the property it isn't a deal.

I don't know if this is always the case because I've seen a lot of people post here and I've talked with others that get a lot of their properties through realtors.

Originally posted by James Olson

Two reasons, the Realtor would by it and if the Realtor is showing you then everyone knows about it and it's not a deal. 95% of the biz is finding the deal no one knows about.
If it was that easy everyone would be a wholesaler.
Only the smart and strong survive in this game.

I get your point with this one.

Edited: 06/26/2010 at 05:54AM

Charles Whitaker

Real Estate Investor · Amarillo, Texas

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Sep 11 '08, 10:37 PM

Originally posted by James Olson

If a Realtor is showing you the property it isn't a deal.

I watch the local MLS daily and I can assure you that their are listed deals, however, they are not usually worthy of wholesaling but make good rehabs.

To the point,

Paul, the first and most important step in REI is knowing when you have found a deal. If you don't know how to spot opportunities then how can you find one or sell one to someone else. I highly recommend studying comparables(someone else stated that) along with construction costs.
If you know these two then you have stepped in the door and are then ready for the next step.

When wholesaling I would not look at something that didn't have a minimum 25% reduction, or built in equity. This should dwindle down those realtor deals pretty quick and allow you to get closer to actual deals.
The general 30% reduction from market value minus repairs minus wholesale fee is a great rule of thumb for a fast analysis of any deal.

For buyers, you need a list NOW, start building. A great place to find these is listed homes. Many of which have headings such as "completely remodeled, all new everything, etc, etc", between rehabbers and landlords you will build quite the list.

Best of luck to you, the road is long

Edited: 06/26/2010 at 05:54AM

Ram Chandrasekaran

Real Estate Investor · Milpitas, California

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Sep 11 '08, 11:36 PM

Hi Paul
I am beginner WholeSaler too and I get listings from one of the RE agent that I know of. Recently, I got a listing that is Duplex in Fremont, CA - $295,000. That price in CA is pretty good for a Duplex. However, I guess you are unable to identify which is a GOOD deal... For starters, do the following:

1. Go to Trulia.com, enter the address of the house and it will list comparable house. How the house you are looking at is priced - High, Avg. Low, etc.

2. Go to Zillow.com, find the comparables there too. They will list other things like last sold, what is the property tax on the property, etc. Property tax on the house will help you find the approximate valuation from the County (1.2% of the property price - at least in CA)

3. Find a RE Agent friend who also is a savvy with INVESTING. I have one like that... he is VERY GOOD. RE agent friends like that will help you a LOT. And the deals they bring to you are DEALS indeed... Yes, there are lot of realtors who do not know the RE business well, but lets not generalize! :)

4. Go to Bestplaces.net and find out how good the area is in terms of employment rate, unemployment rate, population growth over the years, expected pop. growth, crime rate, air pollution,traffic, etc.

5. Go to OFHEO and find out how well the city has been appreciating in the past - You can download a PDF report

6. Go to huduser.org and find out the Fair Market rents - you can download an Excel sheet report

Hope that helps you to get started. Good Luck. IM me so we both can learn more

Cheers
Ram

Edited: 06/26/2010 at 05:54AM

Robert Burns

Real Estate Investor · Baton Rouge, Louisiana

254 posts
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Sep 14 '08, 08:34 AM

Paul,
I agree with most of the replies in that you need more knowledge.

I use 2 website that provide excellent information regarding details of cities and properties. Check them out.
[link removed]
http://www.city-data.com
Much Success

Edited: 06/26/2010 at 05:54AM by Moderator