Whats the point of wholesaleing?
Interior Decorator · brooklyn, NY · Member since 2008 · 121 posts · 0 votes
Whats the point of wholesaleing?
Most Popular Reply
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
16yOriginally posted by Mark Claire:
Am I walking around with a blank contract, filling it out, having them sign it and sending it over to my attorney?
Yes, I ALWAYS keep a blank contract on me, but we close with title agents here. Next step when you find a deal is to get it under contract.
Originally posted by Financeexaminer:
Well, Ryan, come on up!
Bill, maybe someday but not yet. I have enough of myself spread out right now. I appreciate the invite, though, and the offer of BBQ.
My point is that if people are still buying and selling houses in your town then I guarantee you that wholesaling could be done profitably in your town.
Deals are slim pick'ns in every town . . . until you figure out a system to find them. Deals don't fall into your lap. Being a successful wholesaler in any town requires consistent and persistent effort. Its not easy. Its work, and most people don't apply themselves consistently and persistently enough in the proper ways to find smoking deals on a consistent basis. That's not just a Springfield, Missouri issue, it's an issue with most wholesalers across the nation. It's an issue with wholesalers in my own town.
Every time I talk to one of the old time investors they always complain that they don't find deals anymore like they used to. Its because the game has changed and there are investors, like myself, that aggressively go and find the deals. There is no low lying fruit anymore, but the old timers still expect it to fall in their laps like it did decades ago. The game HAS changed, but for the investor that is willing to aggressively market and go and find deals there are STILL HUNDREDS of opportunities out there.
Even in MY town, and even in YOUR town.
24 Replies
- Member since 2008 · 4 posts · 0 votes19y
Wholesalers may have their money tied up in properties. It may take themmonths to get their money out. So, as they continue to come across deals, it's best to wholesale the properties for an assignment fee thereby making additional money. I can only purchase 2-3 properties at a time. The rest I wholesale.
- Member since 2008 · 664 posts · 18 votes19y
It is possible to handle multiple deals simultaneously,
but usually you need hard money to do it.Hard money works because the lender looks just at
that property, and not at the fact that you have
5 others in progress at the same time.If you find yourself turning down deals, or doing
quick flips because you don't have working capital,
working closely with a hard money lender can be
the solution...or not, it depends.Sorry to sound like a commercial. But the original
question brings up a good point: why would someone
who stumbles upon a perfectly good deal turn around
and flip it off to someone else?Why indeed.
- Member since 2008 · 10 posts · 0 votes19y
Speaking as a lowly wholesaler :lol: I really like the frequent dealings with wholesaling properties. When I get tired of it, I might focus on other things, but for me, it's more fun and I get to work with more people.
- Real Estate Investor · Grand Rapids, MI · Member since 2008 · 6 posts · 2 votes19y
:D I used to have wholesale guys that I would deal with, but I would never trust them. "Why would someone leave $10k or $20k on the table, are they crazy?" I didnt understand why till I started doing it myself. Most of the properties that I wholesale now are ones that dont quite fit into my investement portfolio, or if i'm too busy on other projects then I will wholesale some.
One example of a wholesale I did this year was a home I picked up for $52k 5 bed 1.5 bath, Well I was waiting to close it I called around to a few investors, I ended up selling it the day I closed without lifting a finger for $64k on a 6 month lease option with a $2000 extension fee. I financed the house but used the buyers 10% down to cover my 10% down and still ended up ahead about $500 then in 6 months I will make a net profit of about $12k. So I used none of my money, did no work, and spent 2 hours looking at the home and then selling it. Thats $6,000 an hour. Thats why I wholesaled. (Oh im a realtor so I also made 3.5% of the 52,000 purchase price) Moveing me up to a profit of about $13k or $6500 and hour. :shock:
I have wholesaled properties without using my financing when I had no money and no time. I bought one home for $57k and took a 3% commission on that, then sold it for $65k 5 minutes later. For a profit of around $8,000. plus my $1710 commission. I used a simultanious closing so that I bought the house using my buyers money, then sold him back the house that I bought with his money. So roughly $10,000 for 3 hours worth of work, :shock: and it could have been done with no money and no credit.
Basically it could have been done by anybody.I have countless other ways to make money with no money or no credit that I have used, but if I told you I would have to kill you!!!
If I can do this anyone can, Im a complete dummy. :goofy:
Heck 4 years ago I had to borrow money for groceries, now thats broke!!!!
- Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes19y
$5,000 now with no headaches and hassles, or $10,000-$20,000 in 6-12 months with a ton of headaches and hassles? Hmmmm.
I have one full time crew that rehabs so I can't bash it too much but I definitely prefer wholesaling anything I have.
First off, I can't efficiently rehab all the houses I come across. Originally I was planning on having three full time crews to rehab, but it became an efficiency nightmare. Good help was scarce, and good contractors were non-existent for a reasonable price. I found myself hovering around my rehab projects and not finding more deals.
Second, if I were to rehab 5 or 6 houses at once and then wait for them to sell while I am fixing others up, I would be looking at having $100K-$200K in cash out at anytime. Not only does that not let me get a good night's sleep :shock:, but that will be really bad when my local market slows down. :cry:
Third, I wouldn't want half the houses I buy if I didn't resell them to someone else. I buy in certain areas just because I know I can flip it to certain investors that like rentals or owc's in that area. If I wasn't wholesaling, I would just be passing up those deals.
And the main reason I wholesale is . . . I HATE retail buyers.:protest: They want this fixed, and that replaced, and the inspection said that was wrong, and the appraisal is going to take 2 weeks, and the closing is going to take 30-45 days, and blah, blah, blah.
With an investor its as-is, where-is, how-is with less than two weeks to close with $1000 upfront, no refundable. I love it.:woohoo:
I got a contract on a house on Wednesday with a closing scheduled on that Friday, I made two phone calls to investors, told them they couldn't see the inside, and ended up double closing on Friday with a check for $5,000. The investor took months and probably $15,000 to fix it up, listed it with a realtor, waited months and finally sold it and made $15,000. In the meantime I bought and sold 50 other houses.
I spend my time, effort, and energy focused on finding deals. That's my speciality, and that allows me to be extremely efficient at it. I offer deals that rehabbers can't beat in months of looking, because it is all I do.
- Member since 2008 · 22 posts · 2 votes19y
Greenhorizons, it looks like the experts have sum up your question
to piggyback on what they have said.. wholesaling is quicker and easier money, less effort.. its a good way to start out.. once you build a little cash doing that.. then yes rehabbing will bring more profit per house..but it will take longer to see the fruits of that labor. then theirs renting, sub2, etc.. you can mix it up once you get going..all of the investing methods have their strong points and weak points.. however wholesaling by far is less risk then the others.. - Tucson, AZ · Member since 2008 · 945 posts · 45 votes19y
Originally posted by "GreenHorizons":
I bought some good properties from wholesalers, my question is this why do they sell them why dont they make full profit on them?
Do you use a real estate agent to buy them through? Or use your RE agent to get the info, then go on your own to the wholesaler? - Member since 2008 · 4 posts · 0 votes19y
Do you use a real estate agent to buy them through? Or use your RE agent to get the info, then go on your own to the wholesaler?
No. A wholesaler has a house under contract with the seller. The wholesaler has about 30 days to sell the property to a cash buyer. Wholesalers can be found at RE Investment Clubs, Craigslist, Mortgage Brokers, and RE Agents may know wholesalers. You don't want to get a RE Agent involved with the purchase. Why pay the commish! However, get the real estate agent to pull comps and have a rehabber provide you with a quote before purchasing.
- Contractor · gastonia, NC · Member since 2009 · 42 posts · 2 votes16y
When wholesaling real estate, do you have to use your own money and credit? If so what do you use it for?
- Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes16y
HOLY COW!!!! This is one of the very first threads I ever posted in. Teddy, you're a rock star!!!
To answer your question, no, you don't need your own money or credit as a wholesaler except for the cash that you will spend in marketing and the cash you may need for earnest money to make offers on listed properties.
- Contractor · gastonia, NC · Member since 2009 · 42 posts · 2 votes16y
So when I find a distressed property in my area, I simply find the owner do an analysis of the the deal to determine whether its a deal or not, put it under contract with a deposit, then flip the contract to a end buyer.........
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes16y
Hi, Ryan...very good points and besides the fact that most in that strategy have no money, those that do are in it for the reasons you pointed out.
My 2 cents, it depends on the market you are in. Amarillo, is no small cow town. There are obviously enough properties to feed your strategy Ryan and it makes sence.
In my area, wholesaling really would not be that profitable, there are a ton of rehab investors but the inventory of distressed properties is low. The market and the opportunity at hand dictates the strategy that will be most profitable. When one of these properties does surface, rehabbers snap them up at a premium and then must go to the retail market to profit.
But wholesaling? Not when homeowners will do lipstick with seller financing. Bill
- Contractor · gastonia, NC · Member since 2009 · 42 posts · 2 votes16y
What is the best way to find these wholesale deals? Realtors..... Or on your own, driving for dollars?
- 16yMark UpdegraffBusiness MemberReal Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 698 votes
How do you get around Proof of Funds?
When I'm making an offer in Cash, they want to see it. And when going conventional, they want the pre-approval & with pre-approval, you need to show the down deposit + 6 months reserves (taxes / insurance etc).So, what is the magic formula that lets you get a house under contract with 1,000 earnest money in your bank and not a penny more???
Updegraff Group Realty4.746 Reviews - Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes16y
Originally posted by Financexaminer:
My 2 cents, it depends on the market you are in. Amarillo, is no small cow town. There are obviously enough properties to feed your strategy Ryan and it makes sence.
Amarillo has about 180,000 people. About the same as Springfield, MO.
Originally posted by Financexaminer:
In my area, wholesaling really would not be that profitable, there are a ton of rehab investors but the inventory of distressed properties is low. The market and the opportunity at hand dictates the strategy that will be most profitable. When one of these properties does surface, rehabbers snap them up at a premium and then must go to the retail market to profit.
Your market sounds like a PERFECT market for wholesaling. It sounds like I would make a killing wholesaling in your market. I think your issue is less about the market and more about perception. Lots of rehabbers that will pay premium prices is exactly what I like to see. You see competition and I see customers to sell to.
Acres of Diamonds by Conwell. Buy it for $5 at Amazon. I highly recommend you read it.
Originally posted by Mark Claire:
How do you get around Proof of Funds?
When I'm making an offer in Cash, they want to see it. And when going conventional, they want the pre-approval & with pre-approval, you need to show the down deposit + 6 months reserves (taxes / insurance etc).
So, what is the magic formula that lets you get a house under contract with 1,000 earnest money in your bank and not a penny more???
You don't need Proof of Funds, and you don't need earnest money. You don't need to have financing lined up. Go for motivated sellers directly to start with. Forget listed properties (which is where you need POF's and earnest money). Stop looking at listed properties. Homeowners don't care about POF's and they don't want to see the cash.
Originally posted by Teddy Patrick, Jr:
So when I find a distressed property in my area, I simply find the owner do an analysis of the the deal to determine whether its a deal or not, put it under contract with a deposit, then flip the contract to a end buyer.........
Yes, but no deposit is required.
Originally posted by Teddy Patrick, Jr:
What is the best way to find these wholesale deals? Realtors..... Or on your own, driving for dollars?
There are hundreds of ways to find deals. Which ones are best for you depends on your budget, your time availability, and your market. Pick a couple strategies that fit your budget, time, and market and do them consistently and persistently. Once you are doing those 2 or 3 methods consistently and persistently add 2 or 3 more strategies to do consistently and persistently. Then do a couple more and so on and so on until you are doing 10-15 different things consistently and persistently to find deals. Analyze them every 6 months or so to assess effectiveness and change them up if they aren't working. - 16yMark UpdegraffBusiness MemberReal Estate Broker · Rochester, NY · Member since 2010 · 1k+ posts · 698 votes
OK, I'm not sure what all the strategies are, but lets say for example I find a FSBO that is motivated and they're OK with my price. What is the next step? Am I walking around with a blank contract, filling it out, having them sign it and sending it over to my attorney?
Thanks!
MarkUpdegraff Group Realty4.746 Reviews - Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes16y
Well, Ryan, come on up! I'll introduce you, show you the town, buy you dinner. The next day I'll show you some rehabs and properties in areas where profits were had. I'll introduce you to the courthouse folks and a few bankers too.
I was born here and know darn near every house built in the 80s, mid 90s or before, good possibilities. I'll help you anyway I can here.To be fair, my point was that there are slim pick'ns, that translates into higher prices for potential fix n flips, higher material and rehab costs for small buyers, higher costs for labor if you can't give a few guys steady work and I failed to mention the 2,000+ agents crawling all over town trying to get a listing from the 100 people they know.
You're welcome to try.... do you eat BBQ? I know a great BBQ joint. I'll look for that book too. Bill
- Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes16y
Originally posted by Mark Claire:
Am I walking around with a blank contract, filling it out, having them sign it and sending it over to my attorney?Yes, I ALWAYS keep a blank contract on me, but we close with title agents here. Next step when you find a deal is to get it under contract.
Originally posted by Financeexaminer:
Well, Ryan, come on up!Bill, maybe someday but not yet. I have enough of myself spread out right now. I appreciate the invite, though, and the offer of BBQ.
My point is that if people are still buying and selling houses in your town then I guarantee you that wholesaling could be done profitably in your town.
Deals are slim pick'ns in every town . . . until you figure out a system to find them. Deals don't fall into your lap. Being a successful wholesaler in any town requires consistent and persistent effort. Its not easy. Its work, and most people don't apply themselves consistently and persistently enough in the proper ways to find smoking deals on a consistent basis. That's not just a Springfield, Missouri issue, it's an issue with most wholesalers across the nation. It's an issue with wholesalers in my own town.
Every time I talk to one of the old time investors they always complain that they don't find deals anymore like they used to. Its because the game has changed and there are investors, like myself, that aggressively go and find the deals. There is no low lying fruit anymore, but the old timers still expect it to fall in their laps like it did decades ago. The game HAS changed, but for the investor that is willing to aggressively market and go and find deals there are STILL HUNDREDS of opportunities out there.
Even in MY town, and even in YOUR town.
- Real Estate Investor · 30906, GA · Member since 2010 · 161 posts · 36 votes16y
We are in it for that quick in and out money. That goodie, goodie. We never had to do a darn thing but sign a few papers, but the person we sold it to deals with the contractors, dirt, grime, paint, mold etc..... Sure you are going to make more money, but we are ok with that.
We we gone before the dust settled. Smiling all the way Mexico for the weekend.
- Real Estate Investor · Southfield, MI · Member since 2010 · 47 posts · 43 votes16y
Originally posted by Ryan Webber:
Originally posted by Mark Claire:
Am I walking around with a blank contract, filling it out, having them sign it and sending it over to my attorney?
Yes, I ALWAYS keep a blank contract on me, but we close with title agents here. Next step when you find a deal is to get it under contract.
Originally posted by Financeexaminer:
Well, Ryan, come on up!
Bill, maybe someday but not yet. I have enough of myself spread out right now. I appreciate the invite, though, and the offer of BBQ.
My point is that if people are still buying and selling houses in your town then I guarantee you that wholesaling could be done profitably in your town.
Deals are slim pick'ns in every town . . . until you figure out a system to find them. Deals don't fall into your lap. Being a successful wholesaler in any town requires consistent and persistent effort. Its not easy. Its work, and most people don't apply themselves consistently and persistently enough in the proper ways to find smoking deals on a consistent basis. That's not just a Springfield, Missouri issue, it's an issue with most wholesalers across the nation. It's an issue with wholesalers in my own town.
Every time I talk to one of the old time investors they always complain that they don't find deals anymore like they used to. Its because the game has changed and there are investors, like myself, that aggressively go and find the deals. There is no low lying fruit anymore, but the old timers still expect it to fall in their laps like it did decades ago. The game HAS changed, but for the investor that is willing to aggressively market and go and find deals there are STILL HUNDREDS of opportunities out there.
Even in MY town, and even in YOUR town.
- Real Estate Investor · Southfield, MI · Member since 2010 · 47 posts · 43 votes16y
Originally posted by Ryan Webber:
Originally posted by Mark Claire:
Am I walking around with a blank contract, filling it out, having them sign it and sending it over to my attorney?
Yes, I ALWAYS keep a blank contract on me, but we close with title agents here. Next step when you find a deal is to get it under contract.
Originally posted by Financeexaminer:
Well, Ryan, come on up!
Bill, maybe someday but not yet. I have enough of myself spread out right now. I appreciate the invite, though, and the offer of BBQ.
My point is that if people are still buying and selling houses in your town then I guarantee you that wholesaling could be done profitably in your town.
That's not just a Springfield, Missouri issue, it's an issue with most wholesalers across the nation. It's an issue with wholesalers in my own town.
Every time I talk to one of the old time investors they always complain that they don't find deals anymore like they used to. Its because the game has changed and there are investors, like myself, that aggressively go and find the deals. There is no low lying fruit anymore, but the old timers still expect it to fall in their laps like it did decades ago. The game HAS changed, but for the investor that is willing to aggressively market and go and find deals there are STILL HUNDREDS of opportunities out there.
Even in MY town, and even in YOUR town.
- Real Estate Investor · Southfield, MI · Member since 2010 · 47 posts · 43 votes16y
Wow Ryan Webber...I have to say I love your outlook. I wholesale in the Metro Detroit area and feel the same way you do. Anything is possible, its just a question of how hard you are willing to work to find the solution to the problem. I enjoyed the back and forth with you & Bill. Wholesaling is definitely effected by local market conditions, how could it not be, but that is just another obstacle to overcome. Every market has them and the most successful people are the ones who find a way to overcome them.
I have a T-shirt that says "Detroit Hustles Harder" I love it because that is what wholesaling is all about. Consistency, persistence, aggressive relentless pursuit. I'm sure Amarillo & Springfield each have their challenges but come to the D and do it dodging bullets!! LOL, just kidding. Great topic.
- Real Estate Investor · Southfield, MI · Member since 2010 · 47 posts · 43 votes16y
Originally posted by Delondon Dear:
We are in it for that quick in and out money. That goodie, goodie. We never had to do a darn thing but sign a few papers, but the person we sold it to deals with the contractors, dirt, grime, paint, mold etc..... Sure you are going to make more money, but we are ok with that.
We we gone before the dust settled. Smiling all the way Mexico for the weekend.
YES....all the way to Mexico....haha thats great! Not to mention the exciting, dynamic people you deal with all the time.
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