As a real estate investor, I have never encountered a Wholesale deal until now. So.....I know this is a broad spectrum question but what do I need to consider when working a deal with a real estate deal? Ins and outs? Thanks in advance for answering.
Hi @Patrick Hall . We've been engaged in many wholesale transactions. Here are my best three bullets worth of advice:
- Get and review client references - Talk to the last couple of investors they sold a deal. If the entire process was a nightmare, run in the opposite direction. Ditto if the deal was misrepresented or basics were overlooked. Only deal with reputable, experienced wholesalers. Success leaves clues, but so does incompetence.
- Ensure your wholesaler is direct to the seller - Refuse to deal with anyone who is not party to an actual, valid purchase agreement with the seller. No daisy-chains, no exceptions. Just ask, and if you have to, check with the closing attorney.
- Don't rely on their ARV, market rent or repair estimates - Smart wholesalers are in it for the long haul and understand that their success is tied to yours. Sadly, all wholesalers are not so evolved and many will dump crappy non-deals on you if you let them. Do your due diligence and work your numbers using your best data, not theirs.
Hope this helps. Good luck!
That's a great question man @Patrick Hall . I wouldn't be too scared or hesitant, because wholesalers like myself put all their effort into marketing and finding great deals which is a lot harder than it seems. When going through a wholesaler or even an agent with a off market deal you can usually find great properties. Especially now that the market is so hot, off market deals are really only the place to find good deals anymore. @Mitch Messer made some very great points and I would agree 100%. It is like any other deal, you need to do your due diligence on the property and the person who sent the deal or has it. TRUST BUT VERIFY. Yes there are some shady wholesalers out there just like there are dishonest people in any field or profession. Building a strong relationship with a wholesaler can make you a lot of money trust me, so stay in touch with the top ones in your market. Another thing to in mind is wholesale deals are cash deals so you typically can't get bank financing to close them.
Mitch and Michael......so great to get what sounds like solid advice coming from the real world. Appreciate it greatly.