info about wholesaling in Virginia Beach

10 Replies

hello, I'm a beginner real estate investor who is looking to get into wholesaling until I've made enough money to move up into investing in flipping properties.  My wife and I have been researching wholesaling and have a few questions such as,,,

....Once we've found a property in a money making situation and intend to market it to an investor, how do we ensure the investor doesn't go around us to buy the property themselves?

.....what rates are normal for wholesalers to charge investors?

.....should we find the investors first, get their property criteria, and then look for the property that fits that criteria, or do our own evaluations and then find investors that like our selections, or a combination of both?

.....do we need a license?

Any help you can provide would be appreciated.  I'm excited and standing by for your answers!

You might be confusing wholesaling with bird dogging.  A wholesaler contracts the property and assigns it to the buyer/investor.  A Bird Dog finds a property for an investor and for a flat fee (depending upon the neighborhood inventory), gives the investor the property info, having contacted and determined the homeowner will take a call, email or visit.  From that point on the investor/buyer takes over, negotiates and closes the deal.  Once the deal closes, if it closes, only then do you get your fee.  Could be as little as $250 and up depending upon the value of the property etc.  Hope that helps

I have found it easier to build a buyers list of ppl who can pay cash then find properties. In wholesaling you get the property under contract once you and the seller agreed to the price then you assign the contract to the buyer for a higher price and you get paid the difference. 

Example: I find a property for $65,000 in interested in. I make an offer and get the property under contract for that amount (then the seller can't sell it to anyone else because it's under contract) then I turn around and assign the contract to a cash burr for $70,000. 65,000 goes to the seller and I get $5,000 for my service. Everyone wins :) hope this helped. 

Two formulas:  

If the comps for a property tell you chances are the house will sell for $150,000.  

But you determine you need $35,000 in renovations.  

And you want to make $15,000 on the deal as a wholesaler 

And you want to factor in 3% for closing costs on your side. 

ARV x .80 – minus rehab costs – minus my wholesale fee x .97 = MAO

150000  ARV based on comps 
( 30000)  @ 80% or 20% Equity 
( 35,000) renovations 
( 15000) wholesaler fee
(   4500) closing
6
5,500  MOA  Max Offer to the Homeowner/seller   
15000  Wholesaler fee
80,500 is what you want to sell it to your buyer (hopefully more but possibly less)

This leaves the investor/buyer with 20% equity in the property, money to cover repairs and closing costs if needed.  If the wholesaler contracts directly from the homeowner who does not have or want an agent, then you are saving money off that $4500 closing.

If the investor negotiates you might find yourself walking away with less than 15,000. That's why it is so important to have good numbers on your repairs estimate sheet.   It's worth getting into a relationship with a contractor who is willing to come along and do some detailed work about kitchen bathroom, plumbing electrical, foundation, roof, etc, and a number to go along with each in exchange for hopefully getting the job or if not, a fee for the work done from you.   An investor who knows what he or she is doing will know if what needs to be done can be done with the number you are suggesting which is why the GC can be key for your negotiations.  

Cameron, That's the irony of the business of distressed properties.  If you want to build that equity in to insure a quick turnover, finding the property is easier than finding a willing buyer.  

George,

Great advice from people out of the area, I guess.  However,  I live in Chesapeake and am a rehabber and new home builder in Tidewater.  I'm always looking for for opportunities in Norfolk, Chesapeake & VBch.  The formula given above doesn't work here.  As you your protection, I'll provide you with a written fee agreement on a bird dog deal or give you direction on how to negotiate a wholesale deal.  Your success is my success.  It's not in either of our interests for me to stab you in the back.  Feel free to call me or email. 

Mark

[email protected], 757-739-8706

Wow, those suggestions are great!  And I think I understand now more about what I need to do .  Thank you for correcting me, Thomas Fucci, I didn't realize I was really talking about bird dogging. Cameron, I liked what you said about maintaining a buyer's list and as I meet investors i will definetely take note of their contact information going forward so I can get back in touch with them when other deals come around. I like the suggestion you put forth Mark Guy,  and value your experience as a local investor. I will be calling/emailing you.  

Coming into this site I didn't think I'd get the support I needed and I was afraid the site would prove to be more about finding customers to push real estate products on than helping people like myself.  But you guys proved me wrong. 

Thank you very much for your inputs. 

if I may, mark guy and George, I am a local in Virginia beach and I, too, am looking into wholesaling, so I would love to communicate with you both as well. I have invested in a list of "NOD "leads, as well as a "find motivated sellers" lead list that I mail at least 100 letters every 2 weeks to. I am working with one "motivated seller" lead right now and have discovered that she has 4 other properties that she is looking to "unload". Now, is where I stumble my feet. Once in able to get an agreed sales price for her single property, I hope it will be easy to find the buyer.

finding buyers in our mkt is easy.  Key is to get the property under contract at the right price.  Knowing what your buyers want is most important.  Build your buyers list and their MO so you know how to negotiate with distressed sellers. 

@George K Hughes

Welcome to Bigger Pockets community. Be sure to check out “Learn” for all kinds of useful resources and free how to guides.

@GK Hughes

Hey there and welcome to the world of real estate investing!

Wholesaling is a great was to get started in the Real Estate Industry. I began this way as well, but eventually progressed into land transactions rather than flipping properties. Let me know if there is any way I can help you get started.

Good luck to you in your real estate ambitions!

-Kyle

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.