Wholesaling in Hawaii

27 Replies

Hello all, I have been pondering something regarding wholesaling in HI. Has anyone on here done a wholesale deal on a SFH/condo in Hawaii ( Oahu preferrably ) in the last 12 months? Would love to hear your thoughts and details on it. Given the large exposure BP now has, this will influence whether I would continue to pursue wholesaling in this market or look to use my time/efforts elsewhere.

Sounds like crickets so far.

Has anyone done a successful wholesale deal in the last 12 months in Hawaii? Thanks for your input, it is immensely helpful.

Originally posted by @Bob Bowling:
Originally posted by @Andrey Y.:

Sounds like crickets so far.

Has anyone done a successful wholesale deal in the last 12 months in Hawaii? Thanks for your input, it is immensely helpful.

 Andry, you should @ some of these guys.  http://www.biggerpockets.com/forums/86/topics/1370...

I am pretty sure @Michael Borgerhas not been wholesaling here recently.

@Michael Mazzella We have spoke recently, I think you are enjoying flipping your deals recently rather than wholesaling, I could be wrong though :) The rest in that thread seem to be new at it or are just trying to get into it.

Thanks for the direction, @Bob Bowling. Andrey and I have spoken on the phone before (the power of networking on BP!). While not in the past 12 months as I now flip what comes my way, I have certainly wholesaled deals before. And further to that point, any one of the deals that I have done in the past 12 months would have been a paycheck for a wholesaler if that was the source of the deal itself.

I think Hawaii is a GREAT market for wholesaling because if you're using the assignment method, then you're still not coming out of pocket except for temporarily putting down the EMD. So if you're not going to come out of pocket anyway, you might as well do it in a higher priced market with higher margins.

Originally posted by @Michael Borger:

Thanks for the direction, @Bob Bowling. Andrey and I have spoken on the phone before (the power of networking on BP!). While not in the past 12 months as I now flip what comes my way, I have certainly wholesaled deals before. And further to that point, any one of the deals that I have done in the past 12 months would have been a paycheck for a wholesaler if that was the source of the deal itself.

I think Hawaii is a GREAT market for wholesaling because if you're using the assignment method, then you're still not coming out of pocket except for temporarily putting down the EMD. So if you're not going to come out of pocket anyway, you might as well do it in a higher priced market with higher margins.

I almost think word of mouth or driving for dollars for dilapidated-looking properties may be just as or more effective than direct mail.  After sending out yellow letters, I almost universally get "this condo cash flows already, why would I sell it", calls from realtors listing the property, or "no thank you"s. After spending ~30 hours stuffing mailers, data collection, and on the phone, even if I were to net $10,000 on a wholesale deal, if I put $5000 into a marketing campaign, it just doesn't seem like a good use of time. 50 hours of grinding for $5000 taxable profit, even $10,000 taxable profit. What do you guys think?

50 hours is about a work week for most people. How would you feel about a job that pays $5000/week? :)

To your other points, driving for dollars can be effective. I did a nice prehab deal in Aliamanu a couple years ago doing that - I was in the neighborhood speaking to people about a short sale and figured I'd drive the neighborhood while there. I sent out about 30 letters and got the deal which resulted in a very nice paycheck.

Regarding direct mail, you shouldn't be stuffing your own envelopes. That's time that can be spent on higher level business activities. You also might want to try different lists if the one you're using is not being productive.

The key to marketing is consistency, and I firmly believe 90% of this business is marketing. It's not easy, that's for sure, but I'd keep at it.

Originally posted by @Andrey Y. :
Originally posted by @Michael Borger:

Thanks for the direction, @Bob Bowling. Andrey and I have spoken on the phone before (the power of networking on BP!). While not in the past 12 months as I now flip what comes my way, I have certainly wholesaled deals before. And further to that point, any one of the deals that I have done in the past 12 months would have been a paycheck for a wholesaler if that was the source of the deal itself.

I think Hawaii is a GREAT market for wholesaling because if you're using the assignment method, then you're still not coming out of pocket except for temporarily putting down the EMD. So if you're not going to come out of pocket anyway, you might as well do it in a higher priced market with higher margins.

I almost think word of mouth or driving for dollars for dilapidated-looking properties may be just as or more effective than direct mail.  After sending out yellow letters, I almost universally get "this condo cash flows already, why would I sell it", calls from realtors listing the property, or "no thank you"s. After spending ~30 hours stuffing mailers, data collection, and on the phone, even if I were to net $10,000 on a wholesale deal, if I put $5000 into a marketing campaign, it just doesn't seem like a good use of time. 50 hours of grinding for $5000 taxable profit, even $10,000 taxable profit. What do you guys think?

 Andrey, only quitters quit.  It takes 99 no's to get one yes.  A 1,000 mile journey starts with one step.  You know what I think about this based on your situation but I thought you were going to contract this out to the minions,  They too busy now that they have their own movie?  https://search.yahoo.com/search?fr=mcafee&type=C21...

I really am not up on the wholesale deal but have given you my response as a boomer out of state owner.  I do know pre GFC that the out of state owners were worked pretty heavily by the local Realtors/property managers to take their gains to 1031 onto the mainland.  Yeah, big mistake.  Maybe your target is owners that have too much appreciation equity.  Maybe your target should be more recent owners that have just enough equity that they don't see the property as the cash cow most of of us boomers have.  Just  a thought.

Isn't there another Hawaii guy that is in Oregon now that might have some advice?

Aloha @Andrey Y. !

I've done quite a few wholesales here (40+), both as assignor and assignee. If I like the deal and the wholesaler, I may give the assignor the option of an equity partnership so they can learn from me and get some great experience on the deal, as we go thru a buy-fix-sell. Or they can simply take their assignment fee upfront and move on, their choice. I've done a few of these in recent months.

If you're going to be an assignor, I think its best to be backed by your assignee in advance. Choose a solid rehabber who you know can fund if s/he likes the deal. They're not hard to find, they're the ones doing the deals. When I'm the assignee, working with an assignor, I'm able to help them take down the deal, negotiate a deal that's acceptable for me, provide the proof of funds, close fast, and lend the credibility that the wholesaler may not have established yet. Just yesterday, i travelled out to Ewa Beach with a prospective assignor whom I've trained and worked with in the past, to meet with a home owner who responded to one of her letters.

What I see too much of here, is guys who are not backed, who then try to urgently pitch deals that are often marginal, they've agreed to terms that are not acceptable to me (and probably not to other rehabbers either) under pressure to close asap or they risk losing the deal. I can't tell you how many times I'm contacted by a wholesaler who says something like "we need a $150,000 deposit in escrow by tomorrow." As recently as last week, in fact. That tells me I'm likely dealing with an amateur. 

Oahu is a good market for wholesaling. If I can find deals here every month, so can a good wholesaler.

Carpe Diem!
~Michael

@Andrey Y.   You'll find the market in most areas of Oahu takes a lot of time, effort, and patience but you can find anything you want.  Cashflow, flips, etc.

I've tried to wholesale (and flip) but haven't been able to get anything in contract.  I've found that most sellers know the value of their house (or at least the land) pretty well, or have other reasons to hold onto it (like lots of family members living in the house).  I've mostly focused on Kailua and Kaneohe because I know the areas very well - if I were to do it over again, I'd expand out to other areas.

Best of luck!

Hey @Johnny Aloha , How you been? I read that you work the Kailua area - I'm buying a lot on Akipola Street, closing this Friday, & building a house to flip. We start construction next week. Feel free to drop by when you're in the area and check it out.

See ya,

~Michael

Originally posted by @Michael Mazzella :

Hey @Johnny Aloha , How you been? I read that you work the Kailua area - I'm buying a lot on Akipola Street, closing this Friday, & building a house to flip. We start construction next week. Feel free to drop by when you're in the area and check it out.

See ya,

~Michael

 Awesome knowledge here in this thread. 

Michael, I live in Honolulu as well and looking into jumping into the realms of Wholesaling. It'd be awesome to gain some knowledge from you. I will PM you.

@Travis Washington   Saw in your profile you are looking for buy and hold in Indy.  I was at one time, also.  I'd recommend you do some very thorough research, and start by reading threads here.  Lots of turnkey threads, both good and bad.  The keyword alerts might even bring out some of the people onto this one.

Originally posted by @Johnny Aloha :

@Andrey Y.  You'll find the market in most areas of Oahu takes a lot of time, effort, and patience but you can find anything you want.  Cashflow, flips, etc.

I've tried to wholesale (and flip) but haven't been able to get anything in contract.  I've found that most sellers know the value of their house (or at least the land) pretty well, or have other reasons to hold onto it (like lots of family members living in the house).  I've mostly focused on Kailua and Kaneohe because I know the areas very well - if I were to do it over again, I'd expand out to other areas.

Best of luck!

Most sellers know the value and the recent growth in sales, I find. Does anyone have any tips on dealing with this?

Originally posted by @Michael Borger:

50 hours is about a work week for most people. How would you feel about a job that pays $5000/week? :)

To your other points, driving for dollars can be effective. I did a nice prehab deal in Aliamanu a couple years ago doing that - I was in the neighborhood speaking to people about a short sale and figured I'd drive the neighborhood while there. I sent out about 30 letters and got the deal which resulted in a very nice paycheck.

Regarding direct mail, you shouldn't be stuffing your own envelopes. That's time that can be spent on higher level business activities. You also might want to try different lists if the one you're using is not being productive.

The key to marketing is consistency, and I firmly believe 90% of this business is marketing. It's not easy, that's for sure, but I'd keep at it.

I think switching to a different list might be a good idea in the near future, thanks! If you found that you haven't really even made an offer (no motivated buyers) on a campaign, how many times would you mail to the same list until you'd switch?

I was thinking to stuff on my own until getting first wholesale deal on this campaign, in order to get the raw experience and feel the pain I guess, haha. Also, to protect (at least a bit) the financial loss of not getting a deal, just in case.

Originally posted by @Michael Mazzella :

Aloha @Andrey Y.!

I've done quite a few wholesales here (40+), both as assignor and assignee. If I like the deal and the wholesaler, I may give the assignor the option of an equity partnership so they can learn from me and get some great experience on the deal, as we go thru a buy-fix-sell. Or they can simply take their assignment fee upfront and move on, their choice. I've done a few of these in recent months.

If you're going to be an assignor, I think its best to be backed by your assignee in advance. Choose a solid rehabber who you know can fund if s/he likes the deal. They're not hard to find, they're the ones doing the deals. When I'm the assignee, working with an assignor, I'm able to help them take down the deal, negotiate a deal that's acceptable for me, provide the proof of funds, close fast, and lend the credibility that the wholesaler may not have established yet. Just yesterday, i travelled out to Ewa Beach with a prospective assignor whom I've trained and worked with in the past, to meet with a home owner who responded to one of her letters.

What I see too much of here, is guys who are not backed, who then try to urgently pitch deals that are often marginal, they've agreed to terms that are not acceptable to me (and probably not to other rehabbers either) under pressure to close asap or they risk losing the deal. I can't tell you how many times I'm contacted by a wholesaler who says something like "we need a $150,000 deposit in escrow by tomorrow." As recently as last week, in fact. That tells me I'm likely dealing with an amateur. 

Oahu is a good market for wholesaling. If I can find deals here every month, so can a good wholesaler.

Carpe Diem!
~Michael

:) What's up Michael? I am wondering if a good portion of these deals aren't found the traditional wholesaling approach. The most active wholesaler at the Mastermind REI meetings, just told me he spent $10,000 per month! on direct mail for 6 months, to net "1-2 deals". That just seems, a bit crazy.

Basic direct mail guidelines are to hit a list 3 to 5 times, about 3-4 weeks between each touch. If by then you still don't have any bites, then by all means retire it (although still mail about 6 months later) and start a new list.

For stuffing, do it once so you realize how miserable it is, then hire a local college student to do it for a cheap rate. You can get your supplies at Fisher on Cooke St. Think like a businessman -- yes, you may save some money doing it yourself, but that's time you could spend driving for dollars, online marketing, door knocking, networking with others, etc.

I highly suggest reading "The E-Myth Revisited" by Michael Gerber. Be the entrepreneur or at least the manager -- NOT the technician.

very interesting post. I was wondering if any of the Hawaii wholesalers specialize in the central -west side of the island? 

Aloha @Andrey Y. !! 

Most of my deals originate from letters, driving for dollars, door-knocking, Craigslist and even the MLS. I get deals from wholesalers, bird dogs, realtors, and rehabbers seeking funding partners.

Hopefully the guy who just spent $10k is investing in a good system and not just burning it up on lists, supplies and postage. Feel free to call me if you want to grab a coffee and talk story. I'm running a mentor class this coming week but the following week should be do-able.

Create an Awesome day!
~Michael

@Michael Mazzella aloha! I'm still absorbing all this RE information but if I'm reading your response right and I  happen to come across an abandoned looking house in a nice neighborhood should I contact someone like you right away, instead of trying to go about the wholesale process alone looking like the rookie still learning? That would be awesome to learn and see the process in action. 

@Jasmine C. - I don't see a need to specialize in one area, per se, especially when wholesaling since you really want to cast a large net. Remember - it's a numbers game. However, the west side can definitely be lucrative. I'm picking up a townhouse in Ewa later this month that will be a very easy turnaround. Townhouses are nice because it's much easier to run apples to applies comparisons to get your ARV, and there are many townhouses in the Ewa-Kapolei-Makakilo area.

@Michael Mazzella mahalo for the timely response! Just went out and drove the neighborhood with my wife. Found some properties that look promising. A couple that looked abandoned/vacant, couple empty lots, no FSBO signs though. Let me know if we can meet up this week for a quick lunch. I work for a large pest control company, always on the road, service couple hundred homes/customers a month and will be on the lookout for properties every day. Thanks Again!