So I want to throw something out there to see if it's just me or if anyone else notices the same thing. I see posts all the time where people are hating on wholesalers that tie up a property and then never close because they can't find an end buyer. I also notice that there are TONS of supposed cash buyers looking for deals that can't find them. How many of you have been contacted either by phone, email, or even on BP from someone that says they want you to send them your list that never buy anything? Maybe they do buy 1 or 2 but then all of a sudden the funds dry up and they can't actually buy the volume that they said they could? This gives wholesalers and especially Newbie's a lot of false hope and perpetuates the problem. So the question is who is really to blame? How many times have you experienced this? I understand that it goes both ways... many times the wholesaler DOES contract a bad deal that doesn't deserve to be bought. Many times however the wholesaler is given a list of criteria that the "Buyer" wants so he puts it under contract and then can't move it to no fault of his/her own. What about the other side? Have you given your criteria to a wholesaler that says "sure I can get you lots of those" and then can't fill the order? I'm an investor and a wholesaler so I've seen both sides. I work in Dayton, Cincinnati, and Cleveland Ohio markets which get plenty of publicity on BP and has plenty of deals to be had and plenty of investors that operate in these markets. I think there is more to the problem than the deal.... I think it is more of an integrity issue and people doing what they say they will. OPEN FOR DISCUSSION - WHAT'S YOUR THOUGHTS OR EXPERIENCE WITH THIS?

Who actually buys and sells what they say

Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes

9y

Anytime I get a call or email from someone who mentions their "team" or that they're going to rehab any more than 3 houses in a year, experience tells me that I'll never sell them a house. Most of the volume folks that I work with never talk about how many they do in a year or how many they have going on at 1 time.

I don't blame anyone for it - it's just the way that it is. My business is a numbers game, so if a house isn't right for 1 person, I'll call the 30 other people that it probably is right for.

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Jeff B.

Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes

9y

IMO, too many get too excited and bite off more than they can chew. The assume they CAN find the end-buyer AND Close. When reality comes calling, they're left holding the bag and wonder "What Happened?"

Take a licensed RE agent; they sit on listing, the DOM climbs and soon the seller is asking "Where's my buyer - - should we reduce the price?"

In some areas the DOM can easily exceed 100 days. How is it that the wholesalers thinks they can out market the agent?

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David Dachtera

Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes

9y

Conventional wisdom is that step 1 for a wholesaler is to build their buyers list. It's amazingly simple, really.

1. Collect eager buyers.

2. Collect information on the properties they are looking to buy.

3. Go out into the marketplace and fill their "orders".

Become an order taker, then fill those orders.

Same steps as for bird dogs, really.

Too many would-be wholesalers skip those steps completely. They just go out, find a property they can get under contract where the seller will agree to allow them to assign the contract to a 3rd party end buyer, THEN they post on BP: "Got a SFR under contract - NOW what?"

There was a thread here on BP recently, "Is Bigger Pockets Creating Unrealistic Expectations For Investors?". Perhaps this yet another example of BP actually doing a disservice by letting newbies think that all they have to do is scan some fora and some posts and they can gather all they need to be successful.

There's a reason why, in the REI education to which I'm connected, "Wholesaling" is NOT in the beginning classes! There's too much one needs to know FIRST!

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Andrew Johnson

Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes

9y

Ozzy Smith It goes both ways but ultimately only one person is entering into a contract with the current owner. From what I observe the "eager cash buyers" grow frustrated with unrealistic ARV values and underestimated rehab expenses. Wholesalers hear from a guru "If you have a good deal, the money will follow!" In short, there's massive disconnect on what is considered a "good deal". You can also take a look at how many threads there are from wholesalers looking for information on how to write an offer, how to double-close, how to keep an owner from knowing their a wholesaler, owners pulling out when they find out they were working with a wholesaler, etc. If you're a *new* cash buyer here on BP I'm sure you're going to read that. Can you blame them for getting cold feet? Since (in many states) there is ZERO barrier to entry it's just the nature of the business. Not to mention it's not uncommon to see the same property on multiple wholesaler lists. If you're a rookie buyer, how do you know who you should deal with? Experienced cash buyers might be comfortable with it, new ones, less so.

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Ozzy SmithPro Member

OP

Specialist · Dayton, OH · Member since 2014 · 352 posts · 265 votes

9y

I agree with all of you so far. I do believe there is plenty of misconception being taught by the gurus that wholesaling is easy. I know what I've put into it and the struggles I've faced as a seasoned investor. I really like what @Jeff B. wrote about out marketing the agent. I never thought about it that way before, but I do know that IMO most realtors are lazy (probably not going to make friends with that comment). That is the sole reason why I got my RE license to begin with. In the past I was actively searching for properties to buy personally and half the time can't get a response for days when I'm trying to write an offer or see a house. The common marketing strategy is price and a few still pictures that don't tell much of the story, not to mention the homeowner and agent have NO IDEA what rehab costs are in many cases. That's where the whole philosophy of "boots on the ground" comes from. It's necessary because price and pics don't tell the whole story most times. Pics only show what you want to show and can hide everything else not to mention photo shop. For this reason I do believe you can sometimes out market the agent if you truly do the homework and hustle.

Just for the record I don't blame the buyer in many cases because there is plenty naive newbie's trying to wholesale the wrong way. I also agree with @David Dachtera about filling orders and building a buyers list. It is relatively easy if your willing to put in a little bit of work. I think as @Andrew Johnson stated about rookie buyers backing out was where I was going with this from the start. I believe just like newbie wholesalers being told it's easy to do it, newbie buyers are being told the same thing. They think they just need to call a wholesaler and never consider all of the extra costs and steps that are necessary to purchase a property. They are told about owner financing and then bank on that when making their offer. A lot of "cash buyers" pay cash only if the owner carries back the rest usually for long period of time. I know it happens because I've done that also, but I've never tried to do that to a wholesaler because I know the answer. Just playing a little bit of Devil's Advocate here... I enjoy the responses and look forward to more

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Pratik P.

Flipper/Rehabber · Sacramento, CA · Member since 2016 · 807 posts · 815 votes

9y

I had one buyer who would offer to buy my deals at ridiculously low prices to make 100k profit on each flip while all of my other buyers were making more realistic offers. I knew I wouldn't ever sell him a deal when he told me a 60k profit "didn't make sense".

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Bryan Reid

Real Estate Agent · Lexington, KY · Member since 2017 · 68 posts · 44 votes

9y

The answer to this question is usually:

Investors can find better deals on their own.

I can only do so many. So I'm going to target the ones that give me the best return. Usually, those are the ones I find myself.

Wholesalers are notoriously bad at estimating repair costs and ARV. And of course they're going to want their 'cut' too. Frankly, I can generally do better searching on my own than I could get from a wholesaler.

If you're having trouble finding buyers, I can almost guarantee you have been overly optimistic on the analysis of your 'deals', and your buyers are finding better options on their own.

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Ozzy SmithPro Member

OP

Specialist · Dayton, OH · Member since 2014 · 352 posts · 265 votes

9y

I didn't say I have trouble finding buyers. I have a few good ones that I know exactly what they want, I fill their orders, and everything is beautiful. The point to this discussion is the other guys that pretend to be buyers but when it's time for them to put money where their mouth is they all of a sudden can't come through. That's fine I'll simply send it on down the line. I'm always looking to grow my business and willing to help the new guy get started. If you're new just say so. If you really are a big fish like you say than back it up.... I just don't like going on a wild goose chase for anyone. I put in a lot of work and marketing dollars into providing good deals for my clients and when you ask me to find you something specific I expect you to buy when I find it.

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Christopher Blanco

Real Estate Consultant · Cleveland, OH · Member since 2016 · 511 posts · 345 votes

9y

I will echo a lot of what others have been saying. I have been taken down the river by so many "wholesalers" who have a completely unrealistic idea of what a deal is and what profit they should make. On the deal side, everytime the ARV is high by 20% and the rehab costs are 3/4 what the real world rehab is. This does not make a deal. Also, if I can negotiate you down from $80K to $55K, then I know you are padding your numbers way to much. At this point, these are the wholesalers I have been dealing with. That makes them useless to me as I can do better on my own.

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Ozzy SmithPro Member

OP

Specialist · Dayton, OH · Member since 2014 · 352 posts · 265 votes

9y

I do agree that many wholesalers don't understand rehab and have a very unrealistic view of what a GOOD DEAL looks like. For those of us who do (My background is construction and an investor) I'm finding that a lot of investors have now clue as to what they TRULY want either. Particularly when it comes to realistic expectations of returns and even more so when it comes to how to grade neighborhoods. I wish there was a standard on how to judge the class of neighborhood and from that we could all be on the same playing field when talking about the numbers and expectations. Just yesterday I was with someone who wanted solid C neighborhoods and they had a list of properties that THEY identified as such and I would no way have referred to them as C. Earlier this week someone referred to C neighborhoods as being the ghetto. Many investors when asked what do you want the answer simply comes back as cash flow or X$ per deal. That's not nearly enough info to work off of. IMO many times a wholesaler does (in his/her) mind produce what fits and then gets a bad rap because the investor wasn't clear.

All of this being said I am an INVESTOR and have a portfolio of my own and have dealt with "BAD" wholesalers. I also do wholesaling however and have experienced the other side and have drawn many of my own conclusions when dealing with the buyer because I wear his hat also on other deals. I'm just saying as a collective group I believe that we (investors/buyers) are not faultless when it comes to what the wholesaler is claiming to be a good deal

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

9y

@Ozzy Smith nice discussion.

let me give you my perception.. being a RE broker for 43 years now and owning 3 different RE brokerages.. and being a fairly active HML over the course of 30 years as well. ran both shops out of the same office.

I have seen the buyers all cranked up on the lastest guru class's come through the office wanting to start their power teams... I have dealt with the no money no experience wholesalers throwing what ever will stick up on the wall... burning Sellers and walking away because they can't close.

So I look at it like all things real estate.... Maybe in the Wholesaling realm you have huge swath of folks reading bp and other articles that have no money and this is how they are going to realize their dream of buy and hold.. IE I am going to wholesale so I can buy and hold.. Instead of I am going to get a great paying JOB so I can buy and hold and keep my credit pure etc etc.. they think wholesaling is some easy task.. So as was mentioned bar of entry is pathetically low.

you have folks that jump into wholesaling that frankly would be great business folks in any business they choose.. they just have the right stuff.. education ability to communicate sales skills etc etc.

So its really a combination of those watching late night TV or reading BP success stories of one guy talking about how he just made 50k on a flip.. that thinks he or she can do that.. then the other side of the coin is the person reading BP or Guru stuff about wholesaling and you marry the two and you have a cluster LOL.

But suffice it to say wholesaling or flipping props you don't rehab is different in most markets.. and inventory is an issue in many... for instance the big wholesaling shops in Orlando have closed.

Altura which I funded at least 150 deals that they wholesaled back 3 to 5 years ago is no more.

your blessed working in OHIO and there is pretty much never ending inventory there.

One of these days a hedge fund is going to get the idea of making a run at all this low value assets.. Like they came into Atlanta and booted all the little guys out.

And they will make a run to corner the low end market.. HEY that's a good Idea maybe I should pursue that LOL.. give you guys a little run for the money... just being totally faticous

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Chris T.

Investor · Downers Grove, IL · Member since 2015 · 1k+ posts · 955 votes

9y

Just like everything else in sales - regardless of industry, it's a numbers game.

80/20 rule. When you find those 20% serious buyers / investors, it clicks. But you have to go through a number of not-so-serious people to get there. That's where @Ozzy Smith you mentioned integrity.

It's great that you wear multiple hats, so you can see through the bs, and weed out the people that are not serious enough to form a partnership. The key thing is to weed them out early in the process before you spin your wheels too much.

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Jeremie Rykner

Real Estate Investor · Miami, FL · Member since 2014 · 8 posts · 0 votes

9y

Hi @Ozzy Smith

I sent you an email, I'm actively looking for good deals in Dayton,OH specifically at the moment I have 4-6 buyers ready to buy (we close on deals every month).

Looking forward to hearing from you soon!

best regards,

Jeremie Rykner

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David Grabiner

Investor · Chattanooga, TN · Member since 2016 · 146 posts · 108 votes

9y

For sure there are Wholesalers who don't bring good properties and then there are investors who don't ever close on a deal. However one comment I never understand is when people criticize wholesalers who over estimate ARV and under estimate repairs. That is for the investor to figure out, if any investor depends on someone else's numbers they won't be successful for long.

I invest in a small market and there aren't many professional wholesalers in the area but the one property that I did buy from a wholesaler all that was listed was the sale price, the address, and lots of pictures. Really what else do I need from a wholesaler? ARV and repairs are for me to determine and I would never trust anyone else to give me those numbers, especially the person selling me the property.

1 Reply

Adam Curry

Real Estate Agent · Cincinnati, OH · Member since 2015 · 156 posts · 42 votes

9y

I hear what you're saying, a lot of tire kickers out there for sure. Not sure about everyone else, but I can tell what I can get sold for you. If you have a 4-24 unit on the Central to East Side of Cincinnati I can get it sold for you in a heart beat! No inventory on the market at all, buyers would pay a premium up to a certain point. Just saying...

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JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

9y

Originally posted by @Jay Hinrichs:

@Ozzy Smith nice discussion.

So I look at it like all things real estate.... Maybe in the Wholesaling realm you have huge swath of folks reading bp and other articles that have no money and this is how they are going to realize their dream of buy and hold.. IE I am going to wholesale so I can buy and hold.. Instead of I am going to get a great paying JOB so I can buy and hold and keep my credit pure etc etc.. they think wholesaling is some easy task.. So as was mentioned bar of entry is pathetically low.

Quoted for truth! 95% of people miss the JOB portion of these things. I didn't get to be an investor by being an investor. I went to the military, got a job, got an education, got another job, got more education, got a better job, piled up my money, and got started. In between I made some screw-ups, lost and made some money. Just throwing it out there, but if I had to make a bet I would estimate that 90% of "wholesalers" are either living in their parent's basement or have a spouse that actually makes the money, while they spend it "wholesaling". I don't live in an area with lots of wholesalers, but the "deals" I have seen haven't been deals at all. Half of them are either MLS retreads that were crazy overpriced to begin with or have so many physical or title problems that no one is going to own the property for profit.

This isn't to exempt "investors", 75% of which have no money to actually invest. Those are the guys that the OP is talking about. Nothing you can do about that - just like in most fields, 90% of everything is achieved by 10% of the people. Winnow your buyer list down to people who actually buy properties. Have relationships with these people. If you and I have done business on a regular basis, it shouldn't be any mystery to you where I am on the growth/retreat cycle.

Lastly, all of this is a lot of damn hard work. I bought 4 units last year. Even with my narrowing the scale pretty hard to a fairly narrow demographic that I aim for, I still physically looked at maybe 80 units. That's a 5% success rate from open to close. That's also a boatload of hours spent on digging up and consumating these deals. This year so far I am batting 0, as the market has gone so crazy that I have been the low offer on multiple houses that a year ago would have been high offers. Anyone who thinks this is easy is crazy or inexperienced.

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Kate Stephens

Rental Property Investor · Ventura, CA · Member since 2016 · 62 posts · 34 votes

9y

Ozzy Smith love this thread! I can provide my perspective on someone who is fairly new to BP, is trying to invest out of state and has money to invest. My biggest challenge is knowing who you can trust. The more I learn and the more people I connect with the more twists and turns this investment journey takes!

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Ozzy SmithPro Member

OP

Specialist · Dayton, OH · Member since 2014 · 352 posts · 265 votes

9y

I appreciate all of the feedback. In the last week I think I have found a couple of serious buyers. There are still plenty of "wannabe's" calling or emailing everyday but it's getting better. I try and provide a better product than my competition and I believe it's being noticed. The leg work that I put in and the level of experience I have from being on both sides of the table is putting me ahead of the game. I love real estate investing and won't ever do anything else.

@Kate Stephens I'm always open to helping someone get started so feel free to pass my contact info along to them. I have no problem helping to educate as long as I know that's what it is going in and not just someone blowing smoke up my tailpipe. Have them get in touch with me and I'd be happy to give them my advise on how I got started and how many do it from a distance that I work with... and just maybe we can teach them the right way to be an investor instead of a topic of discussion on BP

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Who actually buys and sells what they say

Who actually buys and sells what they say

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