BiggerPockets

Not too long ago, I was involved in a discussion where another BP member - Jason Scott, who is a rehabber in Atlanta, mentioned he would not purchase a wholesale deal from me for certain reasons. Thos reasons were based on the fact that I was a rehab flipper myself and his thoughts were that the only deals I would wholesale, would perhaps have something I didn't like and wouldn't keep for myself, or that something could be wrong with it, otherwise, why would I not keep it for myself and make the full profits!

This of course was all stated without offense to me. After contemnplating on this discussion, and due to the fact that I have recently offered several wholesale deals to BP Nation, I wanted to generate some discussion about this.

Here is my argument(for lack of a better term): I have noted that I am switching gears and trying to free up more of my time for a new venture I am involved in (non RE related), as such, I can not continue to take on all the deals I get, hence, they are being wholesaled. Secondly, I have also stated that I have too many deals going and am out of liquidity (that of my own cash and of my private investors). I currently have well over $2M into deals right now and have very little liquidity left.

That said, I have heard of other people stating similar things like, I have too many deals right now and can't take this next one or I am too busy with my current projects, or etc. These reasonjs or excuses are often ploys of others to hide the real facts. Perhaps the facts are that the seller does not have any money to do deals themselves and must wholesale, or perhaps teh deal is too tight and they have exagerated the exit price, underestimated the rehab costs, etc.

The truth is, these things can easily be uncovered through proper due diligence. I may be bias, but I persoanlly believe that wholesale buyers are better served doing business with my on my deals than someone else because I have the knowledge and experience to provide proper and accurate numbers and provide deals with good spreads so that the wholesale buyer is profitable.

What are your thoughts on buying a wholesale deal from a rehabber?
- Will Barnard

My first property that I purchased as a flip was from a rehabber. I bought it for $138k, and sold it $219 after putting in maybe $10k of improvements. He and I became good friends and he often stopped by to check on progress. After it sold he told me he didn't think it would go for anything over $179k. This was a part of town that I knew better than he did. So ultimately I profited due to better knowledge of the area,

I have no problems buying from a rehabber as long as my own due diligence tells me its a good deal. Of course I am going to take the rehabber's information with a grain of salt since it is my belief that they are probably going to embellish the deal to make it look sweeter than it actually is.

Will, just like you've had problems with "buyers", my partners have had problems with so-called "wholesalers."

One bad offering gets you crossed off of our list. Same thing with lenders, note brokers, note sellers, etc.

Scott, if you ever have any questions about the phoenix metro area, gimme a shout. I'm always willing to give my honest opinion of my beloved city. Its good and bad parts. I do this without expectation of anything from you.

I can understand the concern and doubt. But if I analyze it like I would any other deal, possibly even more so, and it checks out, why not!

A lot of times I wholesale the ones that need quite a bit of work. I'm lazy and don't want to do huge rehabs all the time. :)

@motiv8td - thanks for the offer! I expect to be in Phoenix within the next month and will be looking at some deals. Don't be surprised if I shoot you an email.

I don't remember the thread, though I'm certainly not doubting that I said something *along those lines* (do you have a link so I can re-read what I said?)...

Given that I don't remember what I said, I'll take the chance of contradicting myself here... :D

While I would never rule out every deal that a rehabber offered, I am certainly going to be more skeptical than I otherwise would be when purchasing a deal. There are certainly legitimate reasons why a rehabber wouldn't be interested in a deal, and you stated some of them.

But, I also believe that many rehabbers will try to get rid of their marginal (or not even marginal) deals to unsuspecting beginners, and because they are rehabbers themselves, they would know what to say and how to say it to convince the less experienced investor to buy a less-than-great deal.

Of course this isn't always the case. In fact, I've wholesaled several deals, and have even mentored the new investors I've sold to through the process from purchase to sale -- I wouldn't do this if I thought I was selling them a dud.

Anyway, if I made a blanket statement like, "I would never buy a deal from a rehabber," I don't know what I was thinking or in what context I said it. But, I certainly don't believe that to be a blanket rule, for me or for others.