Deals to contract on MLS

5 Replies

I've been looking through the MLS recently (off of a website, this is a public one) and am searching through by building. I'd like to start wholesaling apartment units because I am familiar in that market. By looking at the recent sold property I can figure out how much they would go for.

I want to offer 60-70% FMV value for these properties. Do I just talk to the realtor and say I want it for a discount? If the deal is good I can surely get funding, and close quickly. I know I'll get laughed out and booted out the door, but it's a numbers game right? Somebody must want to get rid of their place ASAP.

Trying to cover all the bases. It seems like getting the deal would be the hardest part. If you can get these deals then it sounds like you can "flip" it for FMV, or a bit below, and earn the equity spread.

Thank you for any answers.

(I'm located in Honolulu, HI)

Do you need a personal mentor for a couple months? Hawaii is calling me. :D

Realize that just making low ball offers on listed property will require you to make a TON of offers to find the motivated seller. I would recommend finding a newbie realtor that is hungry (literally) and have them make 50 offers a week with Letters Of Intent. A LOI is a one page summary of your offer. It states that if the seller is open to the terms then you will move foward with a contract. Some residential realtors don't like them, but they are very common in commercial deals. They can save a tremendous amount of time in a situation like this.

I would also start looking for your financing now. Getting preapproved or developing hard money relationships is always a good thing to do before you're in a time crunch.

Wholesaling is what you described, and when you do get a property under contract, your asking price will determine how long it will take to sell. The cheaper you offer it for, the faster it will sell. If you ask FMV, you will be holding it for a while and will need to probably use a realtor to sell it. If you sell it at a discount, 80-90% of FMV, you will be cutting down the sell time drastically and can probably sell it yourself. If you get a good enough deal on it and could even make a decent profit selling it at 70-75% of FMV, then you could probably sell it before you even close on your contract.

Originally posted by "Ryan Webber":
Do you need a personal mentor for a couple months? Hawaii is calling me. :D

Realize that just making low ball offers on listed property will require you to make a TON of offers to find the motivated seller. I would recommend finding a newbie realtor that is hungry (literally) and have them make 50 offers a week with Letters Of Intent. A LOI is a one page summary of your offer. It states that if the seller is open to the terms then you will move foward with a contract. Some residential realtors don't like them, but they are very common in commercial deals. They can save a tremendous amount of time in a situation like this.

I would also start looking for your financing now. Getting preapproved or developing hard money relationships is always a good thing to do before you're in a time crunch.

Wholesaling is what you described, and when you do get a property under contract, your asking price will determine how long it will take to sell. The cheaper you offer it for, the faster it will sell. If you ask FMV, you will be holding it for a while and will need to probably use a realtor to sell it. If you sell it at a discount, 80-90% of FMV, you will be cutting down the sell time drastically and can probably sell it yourself. If you get a good enough deal on it and could even make a decent profit selling it at 70-75% of FMV, then you could probably sell it before you even close on your contract.

If you could mentor me that would be the greatest way for me to start! I always thought that working with other people would cut profits out of myself, but I can't do everything by myself! I'm heading out to a real estate investors meeting this week, just to network.

I can do many offers, all day if it takes me that much. If I get one ok out of 100 properties for 70% LTV then I'd be happy to do it. I just need to find the realtors. I know what you mean about "hungry" realtors, I just started out as a loan officer a couple of months ago. I'm blessed to have my mom put me up while I'm becoming full-fledged... I thought I was thrifty before, now I know the true meaning of that word working without pay.

I've looked for financing before, but since I can't show an income of some sort I wouldn't be able to get conventional. I went to a couple conventional, so hard money would be my choice. So your saying before I even submit offers I should see how much I can qualify for?

Wholesaling would be after I get a few contracts in. I don't have the capital for weathering that storm yet right now. By finding deals and assigning them to investors I can make some money, also build a relationship with investors for future projects.

Ryan, I'll be sending you a PM soon about Hawaii, if your interested. Thanks again.

Ohhhhh, Hawaii is tempting, but I'm going to have to pass. I am expanding my business into some different areas right now and the next year or so is going to be crucial to its success. I appreciate the thought, though. I might have to take you up on that down the road.

On a business note, I would start looking for hard money lenders AND start making offers. If you get an offer accepted before you have your financing set up, you can look at wholesaling it to another investor before you close. Just make sure you provide yourself an out in any contract you get accepted. That will allow you to walk away if things don't work out for you.

Ryan thank you for the tips.

Being as I work at a mortgage company as a loan officer I should learn a bit more as I go along. Right now this is important so I'll keep my eyes on properties on the side.