Will Wholesalers Work With Bank Financed Buyers?

Question

Hi-

I'm trying to figure out my strategy to rehab my first house. I think For my situation I could get a conventional mortgage and fund the down payment & rehab costs myself. But now I need to find a deal! I don't think my strength is in the marketing end, so I was thinking I would like to work with a wholesaler, but it seems like wholesalers work with cash buyers only. An I mistaken in thi belief?

Michael Do · Answer

Account Closed I am in your boat. I am new to all of this too. I would continue networking with people on BP and tell everyone what your doing. In the last week of my new journey I've connected with a few friends and family that will be potential investors, I am a GC so I will take care of rehab, and read as much as I can on this site. Good luck, just keep networking and looking for houses.

Account Closed · Answer

@Maurice Miller  I plan to flip the property (or, properties hopefully as time goes by). I will definitely get a contractor- while we did the work ourselves on our first house, that was before we had kids. I am not considering out of state property right now for two reasons: I know my local market very well but I don't have the experience to jump to other markets. Also, I think I will need to be on site quite a bit to ensure the rehab timeline progresses well, so that rules out out of state for me, at least for now.

Account Closed · Answer

@Shaun Reilly  I will have to keep my eyes out for those unicorns around here. ;-)

These answers are unfortunately as I suspected, but how does a person get started without a bank? I doubt a private money lender would be keen on lending a large sum of money to a newbie.

Maurice Miller · Answer

What is your reason for purchasing property?(flip,buyhold,rent,etc)

Where you planning to handle the rehab yourself?

Have you considered out of state property?

Shaun Reilly · Answer

I think they all get eaten by the rogue minotaur running around Rt30 heading towards the Natick Mall.  :)

As Jon said Hard Money is a typical place to find funding as a starting rehabber when you don't have all the cash or close friends and family that want to fund you.  If you have enough cash to have covered a down payment on a conventional loan and pay for the repairs out of pocket you should have enough for a HML.  Pretty common setup is they will fund 60-75% of purchase and 100% of the rehab.

Jon Holdman · Answer

Fix and flippers often use hard money.  You will still need a significant amount of your own cash but if you have some cash and a good deal you should be able to find a hard money lender.

Shaun Reilly · Answer

Julie as Wayne pointed out a wholesaler would generally not have the time to wait on the 30+ days someone getting a retail loan would need to have.  You might not have to have pure cash, but usually at least a private or hard money loan is needed for the speed.

The bigger point, as Wayne also said, is that more often than not the reason that someone is wholesaling a property is because it won't qualify for a conventional mortgage based on condition.  It is certainly possible to get a purely cosmetic flip property that will qualify for a mortgage but within a 45min drive of Wayland I have seen about the same number of those as I have flying unicorns in the same area...

Wayne Brooks · Answer

A couple of problems.  Wholesalers don't usually have the time to work through a buyer's financing, and they'll want a decent non refundable EM.  Also, you likely can't get conventional on something needing rehab.