BiggerPockets

I've been focused and trying to find a deal for about 3 weeks now. I've put up bandit signs and stickers which got surprisingly few calls I put an add on the internet and got 10 times more responses. I have probably made around 10-15 offers and no one wants to accept. I really don't know what the problem is I'm following the advice on the wholesale articles and the advice of other investors on this site. I thought for sure I would have a deal by now. I live in an area where the average home price is around 500k and when I offer 30% less it's taking around 150k off of the market value so I don't know if this just seems like too much of a discount to sellers or what. If anyone can point out what I'm doing wrong or give me some advice I would like that very much.

In addition to what Richard stated, RE investing is an emotional rollercoaster, especially when you first start out! You need to be determined and percevere.

That could be where the best deals are found. Use short sale techniques, particularly when there are multiple liens against the property (1st, 2nd, 3rd's, etc)

Since I am a wholesaler I have not had a problem with getting the money to do a double closing but finding the investor who is ready to take the property at 70% below ARV and run with is my problem.

JD, if that is your problem, switch your exit startegy to retailing. Locate end user buyers who are more than willing to grab a property at 80% of value and in many markets 90%. Increase your profits and add to your buyers list.

Sherlock,

10-15 sellers are not enough. You shouldn't be worried until you get 50-100 offers rejected, especially when you are just learning. It is a numbers game. Stick with it and you will be rewarded.

Also 30% off is not enough unless you are retailing it (any that is borderline these days). The person you sell it to as a wholesale deal will pay 65-70% ARV -repair costs -your fee. In this market, they may not even pay that much. People are just more conservative. I bet someone like MikeOH who actually is doing deals wouldn't pay over 50% ARV in this market. I would shoot to buy at 50-55% ARV minus repairs to be safe.

Leave room for the person you are selling it too to make money. So decide what you want to make give or take, and find a deal that will deliver what you want and what the next user wants. As others have said, if was really easy and it only took a few signs and 10-15 phone calls to make 5-10k on a wholesale deal, many more would do it. There are not any shortcuts, especially in the beginning.

Good luck

Mike C

Sherlock,

You are missing the point and excluding some costs. If you wholesale a home to a rehabber in your market and they pay 70% ARV from you they still have to pay holding costs (which are probably high where you are), they have a 5-10% fudge factor built in, closing costs, property taxes, utilities, permits, debt payments, not to mention taxes, which are taxed at very high rates depending on how they have their business set up. So that 30% potential profit is really 15-25% BEFORE taxes. This also assumes they can sell it for what they thought was the ARV. In Cali and other high dollar areas, values are still dropping it appears to me and were so over inflated to begin with they have farther to fall than many areas, such as compared to mine in the Midwest. So in the course of the rehab, the ARV has probably dropped some in that time. Plus so many people have a harder time selling retail now due to harder financing requirements, bigger down payments, etc. You are burning a lot of cash holding a property if it takes longer to sell than you thought it would. I am not an expert on Cali or other high dollar areas but if I was doing a rehab there, I think you can see why it pays to be conservative in all your estimates to make sure you are not upside down on a rehab when finished.

I guess my point is that I would be buying as cheap as possible. I would be more comfortable with lower than 70% if I was buying and rehabbing there. Again, I don't live there so I am hesitant to answer at all but the above is how I would look at it. Talk to someone who knows your market better than I. The easy rehabbing days seem over. I would be pretty conservative in my estimates of value, costs, etc. Can you still make money? Of course. But things are much tougher than a few years ago.

If I was a rehabber in that environment, I think I would give the wholesaler, less money up front in return for a cut of my profits in the end, just to keep my costs as low as possible. Not sure they would go for it but you have to get creative in this business.

I hope that helps some.

Mike C