Wholesaling

36 Replies

I am new to real estate wholesale investing and have read some of the wholesale feeds here. Can someone tell me what information investors want. I would like to put together an information packet with all of the information and pictures for my future investors. I just want to make sure when doing my due diligent for each property I get all the correct information as well as being able to properly assess the property value and rehab costs. Any advise is very much appreciated. 

Thank you

Thank you Curt. I wanted to put together a comprehensive package of information with the price, value, neighborhood info (schools, crime etc) and tax info. If there is any other information I should include to help my investors please let me know.

Thank you for your advise.

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I have never put together an information packet before, but this is a great idea.  I just always let a deal speak for itself when it came to what the investor wanted.  If the deal is good it doesn't matter what your packet or presentation is like.  Get out there and start finding some deals and  hungry buyers will find them attractive.  For any more advice go to my blog for free info.

[Link removed by Mod - J Scott]

I have never put together an information packet before, but this is a great idea.  I just always let a deal speak for itself when it came to what the investor wanted.  If the deal is good it doesn't matter what your packet or presentation is like.  Get out there and start finding some deals and  hungry buyers will find them attractive.  For any more advice go to my blog for free info.

[Link removed by Mod - J Scott]

If you truly have a good deal, you shouldn't need to put together a fancy brochure. But some buyers like to see the numbers all laid out.

However, putting together a professional looking folder may help you to establish your credibility. It's a matter of personal preference but I like to always put my best foot forward when speaking with anyone. Good luck!

Here are some things I want and don't want from wholesalers:

-  Don't bring me a deal unless you know it's good.  If you are going to rely on me to do your analysis for you, I'm not going to look at your deals in the future.  All it takes is one time for you to bring me a horrible deal and I'm unlikely to want to see anything from you in the future.

-  Corollary to the above -- if you can bring me even one good deal, you'll get my attention and support forever more.  Case in point, I went six years without ever seeing a good wholesale deal, but at the beginning of 2014, I had two wholesalers bring me good deals.  In the past 12 months, I've purchased 8 properties from those 2 wholesalers.  And I've partnered with each of them on deals as well, so they're now doing more than just wholesaling. 

-  Don't tell me that you have a property coming up until you have it under contract.  I don't care about what you might have coming...and I'm not going to waste time evaluating a fictitious deal.

-  Don't tell me you have a property, and then when I express interest, tell me that you're not sure if/when you can arrange a showing.  I don't understand how wholesalers can get a property under contract but then not be able to arrange a showing -- this should be part of your discussion with the owner when the contract is signed.

- Don't give me an ARV that is a wide range. I'd rather you not give me any estimate on resale value than tell me the ARV is between $150-250K.

-  I don't need a million pictures.  Bring me one or two pics that indicate what the exterior looks like (style, condition and curb appeal) and then one or two pics to indicate the condition of the interior.  

- The information I need: Year built, # of beds/baths and square footage. That basic info plus the couple pictures is all I need to determine a true ARV. From there, I can work backwards to determine about how much rehab I could put into the project to make the numbers work, and using the pictures, I could determine if that amount of rehab seems feasible for that project. If so, I'm interested in seeing the property.

-  Don't show me a property and tell the owner that I'm your contractor or your appraiser.  You should be upfront with the owner about the fact that you're looking for another buyer, and then you can either tell him that I'm your other buyer, or if you'd prefer, I'm even okay with being your "partner."

-  Don't ask me my criteria for deals and then send me deals that don't meet my criteria.

-  In a perfect world, you are marking up your deals to me by a reasonable amount (not too much), and I won't feel the need to negotiate with you on every deal -- basically, I'd love to be able to trust the fact that you're not trying to strip all the equity and you'd be able to trust that I won't negotiate away most of your profit.  That makes doing lots of deals together much easier.  Of course, you have every right to mark up a deal as much as you'd like, but if I see you trying to make more than I will on a deal, you can expect me to start negotiating a good bit harder.  Personally, I'd much rather there be a partnership where we do lots of deals without lots of negotiation, but that's up to you...if you'd rather every deal be a tough negotiation, I'm okay with that too (I dislike negotiation, but I tend to be pretty good at it)...

-  You obviously don't need to bring me your deals before you distribute them to other people, but if you bring them to me first, there's a MUCH greater chance I'd be interested.  If I know that 100 other people have already seen a deal (or even one other serious investor), I'll be less likely to put effort into it, as I realize there is much less chance I'll end up getting the deal if I want it.

-  After reading the above point, you're probably wondering, "Why would I bring it to you first when I might get more money by shopping it around?"  If you ask the two wholesalers that I work closely with this question, they'll tell you that I'm VERY easy to work with, I can close VERY quickly, and you never have to worry about me backing out or not having the money.  In other words, you might make a little bit less money, but if you very your time and stress level, you'll probably find that it's worth it.  Not to mention the potential for repeat business.  So, if you can build relationships with investors like me, I highly recommend it.  (Though, of course, you have every right to just focus on getting top dollar instead, if that's your goal).

- If you're going to give me preferential treatment on your deals (bring them to me first), then I'm happy to help you with deals -- determining a reasonable ARV, determining a reasonable offer price, helping with creative solutions, etc. But, don't ask me for advice on a deal and then not give me first dibs -- you treat me well, I'll treat you well.

Originally posted by @J Scott:

Here are some things I want and don't want from wholesalers:

-  Don't bring me a deal unless you know it's good.  If you are going to rely on me to do your analysis for you, I'm not going to look at your deals in the future.  All it takes is one time for you to bring me a horrible deal and I'm unlikely to want to see anything from you in the future.

-  Corollary to the above -- if you can bring me even one good deal, you'll get my attention and support forever more.  Case in point, I went six years without ever seeing a good wholesale deal, but at the beginning of 2014, I had two wholesalers bring me good deals.  In the past 12 months, I've purchased 8 properties from those 2 wholesalers.  And I've partnered with each of them on deals as well, so they're now doing more than just wholesaling. 

-  Don't tell me that you have a property coming up until you have it under contract.  I don't care about what you might have coming...and I'm not going to waste time evaluating a fictitious deal.

-  Don't tell me you have a property, and then when I express interest, tell me that you're not sure if/when you can arrange a showing.  I don't understand how wholesalers can get a property under contract but then not be able to arrange a showing -- this should be part of your discussion with the owner when the contract is signed.

- Don't give me an ARV that is a wide range. I'd rather you not give me any estimate on resale value than tell me the ARV is between $150-250K.

-  I don't need a million pictures.  Bring me one or two pics that indicate what the exterior looks like (style, condition and curb appeal) and then one or two pics to indicate the condition of the interior.  

- The information I need: Year built, # of beds/baths and square footage. That basic info plus the couple pictures is all I need to determine a true ARV. From there, I can work backwards to determine about how much rehab I could put into the project to make the numbers work, and using the pictures, I could determine if that amount of rehab seems feasible for that project. If so, I'm interested in seeing the property.

-  Don't show me a property and tell the owner that I'm your contractor or your appraiser.  You should be upfront with the owner about the fact that you're looking for another buyer, and then you can either tell him that I'm your other buyer, or if you'd prefer, I'm even okay with being your "partner."

-  Don't ask me my criteria for deals and then send me deals that don't meet my criteria.

-  In a perfect world, you are marking up your deals to me by a reasonable amount (not too much), and I won't feel the need to negotiate with you on every deal -- basically, I'd love to be able to trust the fact that you're not trying to strip all the equity and you'd be able to trust that I won't negotiate away most of your profit.  That makes doing lots of deals together much easier.  Of course, you have every right to mark up a deal as much as you'd like, but if I see you trying to make more than I will on a deal, you can expect me to start negotiating a good bit harder.  Personally, I'd much rather there be a partnership where we do lots of deals without lots of negotiation, but that's up to you...if you'd rather every deal be a tough negotiation, I'm okay with that too (I dislike negotiation, but I tend to be pretty good at it)...

-  You obviously don't need to bring me your deals before you distribute them to other people, but if you bring them to me first, there's a MUCH greater chance I'd be interested.  If I know that 100 other people have already seen a deal (or even one other serious investor), I'll be less likely to put effort into it, as I realize there is much less chance I'll end up getting the deal if I want it.

-  After reading the above point, you're probably wondering, "Why would I bring it to you first when I might get more money by shopping it around?"  If you ask the two wholesalers that I work closely with this question, they'll tell you that I'm VERY easy to work with, I can close VERY quickly, and you never have to worry about me backing out or not having the money.  In other words, you might make a little bit less money, but if you very your time and stress level, you'll probably find that it's worth it.  Not to mention the potential for repeat business.  So, if you can build relationships with investors like me, I highly recommend it.  (Though, of course, you have every right to just focus on getting top dollar instead, if that's your goal).

- If you're going to give me preferential treatment on your deals (bring them to me first), then I'm happy to help you with deals -- determining a reasonable ARV, determining a reasonable offer price, helping with creative solutions, etc. But, don't ask me for advice on a deal and then not give me first dibs -- you treat me well, I'll treat you well.

I wish i read this when i still lived in maryland. However this is excellent advice, i actually copied this for when I'm sending deals to my future buyers.

Hi  @J Scott ! I just came from a different post where we both commented and came across this one. I know I'm not the only thinking this but as a BRAND NEW wholesaler working on your first deal, if you have never done a rehab analysis and based everything on estimates or the type of rehab x sqft method, it's pretty safe to say there will be error. If you take a contractor to the house to analyze it for you what's in it for the contractor knowing that in the end they are not going to be the one rehabbing the house if you wholesale it and how do you get over that? Also, if I have a deal analyzed based on the 70% rule with rehab based on standard remodel x sqft, and it still pans out to be a good deal, is it still not safe to say, " Hey @J Scott . This is my first deal and I have analyzed it as such...Are you interested in checking it out?" Or, I guess another question is can there be a contingency placed in the contract that allows you to renegotiate or walk away after further inspection? It just seems like a tail chasing experience if you have never analyzed a rehab line by line and either you're going to be THAT guy for having a contractor come out to work for the possibility of getting future work, or you are going to bug your seller twice with negotiations, or you are going to become THAT guy that brought the investor the bad deal. I know those are a lot of loaded questions, it just seems like regardless of what direction it comes from the wholesaler does a lot of work, investing money for leads, chasing deals, and negotiating deals with sellers to get to the most important part and fail or look like they've done something wrong.

My recommendation is either to:

1.  Learn to estimate rehab costs before you start wholesaling.  Spend a couple months walking through houses, putting together scopes of work, looking at material prices in Home Depot, calling contractors to get general pricing for various things (roofing, painting, sheetrock, installing fixtures, cabinets, etc).  That way, when you start wholesaling, you'll at least be in the ballpark with your estimate.  You may say $30K when it's $35K or you may say $25K when it's $20K, but you won't say $10K when it's $40K.  

2.  Pay a contractor $50-75 to walk the house with you and give you a ballpark estimate.

If you send me a deal and you tell me that you're new at this, and then I see that you're at least in the ballpark on rehab costs and ARV, I won't be bothered at all. I understand it takes time to learn, and I'll appreciate that you've put in some effort already. But, if you want to learn by not putting in the upfront effort and then just sending me deals with numbers that are ridiculous, I'm not going to be very motivated to continue looking at deals from you.

Basically, you need to prove to me that you're willing to put in time and effort, so that you can TRY to avoid wasting my time and effort (even if you aren't successful on the first couple attempts :-).

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I will add: 

"Don't send me a deal that when I look on the MLS it shows still ACT, and when I call the RE Agent, they have no offers, and I can get a contract without your mark up."

It happened to me a year ago. Got a email from a WS for a duplex at 192K, called the WS and he did not call back for a few hours. Doing my research saw the listing still active at 185K, so I schedule a visit, saw the place and put an offer for 182K. Got it at that price without the WS, and got the commission check!

Originally posted by @Gabriel Perez :

I can recommend a site if you're interested.

 Please feel free to post it here for everyone to take advantage of...

for does who want to be wholesalers check

Flip2freedom.com

Sean don't hold anything back.

I have learned step by step the process and with bigger pockets learning the little deatils is a Boom.

@J Scott All very good points you've made. As a wholesaler, I can appreciate exactly where you're coming from, and agree with most of them. 

I actually use some of the techniques you suggest with good success, like bouncing deals and prices off my good buyers. And I let them know that I'm giving them first crack at it. I like to keep a collaborative relationship with my buyers, making sure we both can make money off the property.

For newbie wholesalers: I have my buyers introduce themselves as one of my "funding partners". 100% true and accurate and everyone feels comfortable. I believe my buyers are in essence, my partners in my business, and I try to make a win-win all around. 

@Gabriel Perez  I want to second your recommendation. Sean Terry is a big time wholesaler out of Phoenix, and his flip2freedom course is very detailed and worth every penny---although you can get most of the info from him for free through his 100+ podcasts and youtube videos. Seriously. 

I would highly recommend newbies get some quality training, and I do privately recommend people check him out. There's also a lot of other big time wholesalers with great quality info out for free. Just google them. 

I don't get paid anything for saying this, it's just good advice for newbies looking for direction. 

@J Scott You have described what I would call a the perfect buyer. For anyone that thinks what @J Scott said is being picky I can assure you it's not. Wholesalers shouldn't be marking up properties so much that the end buyer earns less or the same profit. I have a "VIP Buyer's" list of people that I know will buy my deal before anyone else and I give them a 24 hour head start on deals I know meet their criteria because I know if they like it they will buy.

@Javier Marchena If you got the property from a wholesaler first then that's really a low unethical thing to do to go behind them and purchase the property. Yes, they should have had the deal locked up before sending it out but going behind their back and cutting them out because you want to save a couple of thousand is even worst. Everyone should make money in this business and had it not been for them you would have never known about that property. They did the hard work to search for it and find it, even if it's on the MLS they should be compensated. If I was him I would make sure every wholesaler in Orlando knew what you did and advise them not to do business with you.

@Christian Marin

I did not get the property directly from a Wholeseller. The investor I was working for send me the address and I did the research and found it on the MLS. Called the RE agent and he told me they did not have any contract on. We put a contract and got it.

He was getting the emails from the wholesellers. I just got him a better deal.