Getting into wholesale

Looking to get into wholesale. I'm trying to break my way into the pre-foreclosure / foreclosure market and need some start up capital. I figure if I wholesale a few deals I should have some cash to play with. I had a few questions regarding wholesales.

From what I can tell, a wholesale plays out like this:

I have a list of investors, who know I am a wholesaler.
I find a house for sale for $25k
I get this house under contract for sale to me for $25k
I let my investors know I have a house for $35k
Dual escrow with a title company
Close deal for $35k
Profit $10k

Just wondering now how someone would feel knowing I put $10k in my pocket for doing nothing. How does that usually go with the dual escrow?

Do you have to disclose what you got the property for? When you plan to put a house under contract, do you let the owner know you will be wholesaling their house?

What kind of cost is associated with a transaction like this

Thank you for your time

Danny

Tyler H.

Real Estate Investor · Fort Worth, Texas

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Icon_minipost Jul 03 '10, 08:55 AM

I tell sellers that we "hold some and sell some." By the way, you wouldn't be making 10K for doing nothing, you're solving a seller's problem and also offering an investor a solid deal (provided it meets there criteria)--it takes more work than most "guru's" admit, but is profitable when worked like a true business.

Jon Holdman

Real Estate Investor · Denver, Colorado

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Icon_minipost Jul 03 '10, 11:15 AM

You're going to be a long way from "doing nothing". As far as I can tell, wholesaling is a LOT of work. You'll earn that $10K.

Plus, its not going to be $10K on a deal like you describe. That assumes you have no costs, and you will have some costs associated with the transaction. How much will depend on exactly how your structure the house.

Pulling $10K out of a $35K deal would be, frankly, extraordinary. Wholesales who I see having some success around here take $5K out of an $80K deal.

And then there are taxes on whatever profit you make.

Jon Holdman, Flying Phoenix LLC

Alex Craig

Real Estate Investor · Memphis, Tennessee

76 posts
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Icon_minipost Jul 03 '10, 01:16 PM

The transaction must be better for the end investor then it is for you. If the investors you sell to make the cash flow they desire and the property meets their expectations, then you will more then likely retain that investor. If the deal ends up being a disaster for the investor, you will not get their business again. Wholesaling is a lot harder then what some individual make it out to be. Most of the time the houses you sell will need renovations, property management, tenant placement, etc. If you can provide all of those services and do it well, you will be more attractive to would be buyers. You have to remember, the reason they are buying from you is that they lack the experience to do it themselves and may not be familiar with the good areas to invest.

Alex Craig, Memphis Turnkey Properties
E-Mail: alex@lainerei.com
Telephone: 901-848-9028
Website: http://www.memphisturnkey.com
Better Properties. Better Areas. Better Investments.

Dale Osborn

Mobile Home Investor · Spanaway, Washington

1285 posts
14057 Influence
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Icon_minipost Jul 03 '10, 02:52 PM

If you watch the late night gurus - it is a very easy process that anyone can do. It is better to buy wholesale and sell retail - found in the mobile home area.