Why You Might be Failing at Wholesaling pt2

In the most recent blog we chatted about the art of using 3rd party email services to create personal looking emails. You can find that blog HERE.

There are so many blogs, articles, videos, e-books and 'gurus' that will tell you how to 'wholesale' and they are all pretty much the same. Find buyers, find sellers and put two and two together and collect a check. Simple right? sure it is, NOT! I'm not going to waste more of your time going over the same old routine mumbo jumbo that you've heard already and I'm certainly not going to pretend like I'm going to reveal some secret here but I seriously wonder why you may be failing at 'wholesaling'.

To me 'wholesaling' is an exit strategy, NOT an entry strategy. You've got to acquire the property or interest in the property before you can implement a 'wholesale' strategy. To wholesale it means to me that you are selling it at a significant discount.

What determines a 'significant' discount? Well the obvious and politically correct answer would be 'That depends'. I'm going to give you an example of a deal that is NOT a wholesale deal. This stems from the previous post you can find by clicking the link in the first section.

This same 'wholesaler' who is doing a great job at sprucing up his emails and is starting to figure out the little things like the CC and the BCC still has a lot to figure out when it comes to what a good deal is.

This particular wholesaler sent me a 'wholesale' deal and I'm going to layout the numbers for you and let you decide.

 

$95,000 wholesale price

$110,000 ARV

$3,500 assignment fee

 

Now the wholesaler goes on to mention that the buyer pays all closing costs etc, etc which is fine and dandy and pretty much standard.

Lets take a quick look at the numbers though. Once the buyer buys at 95k and pays you $3500 and then pays closing costs of say 2% the buyer is already just over 100k give or take a buck or two. I will say this, from the pictures it did seem to be move in ready but for now we're not even going to consider if any repairs are needed.

Now, this buyer still has to account for getting utilities turned on, marketing for a renter, a month or two holding costs etc.... We could go on and on about this or that but the point I'm trying to make if you think you are going to be successful at wholesaling then you MUST BUY RIGHT in order to sell it at 'wholesale' prices!

With so many cash investors swooping up Short Sales and REO's at really deep prices you can't expect anyone to want to buy a property in the 90% ARV range.

Now to counter this slightly I do go into some great detail on how to create equity and 'wholesale' Subject2 deals to retail buyers in my new e-book located at Subject2.com. The point of have to buy right is still very true however deals like this can allow yourself a different avenue for 'wholesaling' your deals that are not deals an investor would take.