I'm on the hunt for my first rental property, and I've connected with a local wholesaler who has a couple properties that fit my initial criteria. What does/should the process look like for buying a property from a wholesaler?
Should I use a Realtor or agent to assist me in the process and paperwork, or are wholesale purchases too simple and quick to warrant getting one?
If you use an agent you will need to play to pay them their 3% commission out of your pocket.
Wholesaling transactions aren't fundamentally any more complex than any other transaction. But you will have to manage your end of the transaction yourself.
Do not get a realtor. You end up cutting into you're spread. Do your due diligence on the property and if the numbers work go for it. Contact his/her title co and ask them to walk you through it. It's a very simple process.
4 great responses in less than 5 minutes...BP is amazing. Thanks everyone.
@Kurt Smith it sounds to me like you aren't comfortable with the process and you want help? If you aren't confident in the person you are dealing with, I think you should partner with another investor to help you through the process. Relationships are very important in this business and it will only help you in the long run to know and work with other investors in your market.
@Jon Holdman and others above are right, you don't need the help of an agent for a wholesale deal. But you may need the help of another investor and it may cost you more than an agent would cost, but an agent is only going to be certain that the paperwork is all correct. If they aren't an investor, they won't likely be able to help you with making the best investment decision. That's why I recommend you deal with an investor.
@Robert Leonard I definitely can't say that I'm comfortable with the process yet, but I think that is because this is my first time. The wholesaler has a good reputation locally from what I can tell (I know of at least one BP member he is mentoring), so I don't feel there is any reason to not trust the seller. Having a local investor (other than the seller) work with me during the deal would be great, but I'm still working on making those contacts. Great advice though, and thanks for asking the question.
You might want to hire an attorney. Depending on the price for the house, that may be cheaper than an agent. And they can help you with the process.
Or, try talking to the title company. They do these transactions day in and day out and manage all the details. At some point you'll have a contract and that will go to a title company for closing. As to speak with the "closer" assigned to your contract, tell them its your first deal on your own and you want to be sure you're doing everything correctly.
If the seller wants to skip the title company (or attorney, if transactions are closed by attorneys there) be wary. You really don't want to do that.
Hi @Kurt Smith I agree that you should try to find an experienced investor to work with. Do any of your local investor clubs have an internet forum? My city has a forum that we can ask questions/make announcements/post stuff to the local investor community. If there is a board/forum I would suggesting to post/ask them and offer to partner, on this. I would post the details of the deal and if it looks good to them...and you have something to offer someone might respond. If nothing else other local people maybe could analyze it and let you know if they think it's worth pursuing. If you just need process, contract help than maybe you could offer to pay your realtor a reduced commission or hourly rate to help you. I would make sure first that your realtor has the knowledge/expertise to help you with investment property.
One other thing you might do is to edit your city name to include your city name. Lots of people have BP set up to email them when anyone uses their city name in a post. You might find a local person to help you that way too. Good luck.
Thanks @Account Closed - I will try to speak with the title company and continue to look for local investors to learn from/with.