Be wary of Networth Realty flip deals

Be wary of Networth Realty flip deals

Flipper/Rehabber · Tampa, FL · Member since 2017 · 47 posts · 19 votes

I bought 2 homes from NetWorth Realty, one in Brandon & Plant City and rehab budgets for both went thousands and thousands more on a medium sized block home. The contractor that used to do THEIR estimates and the one they recommend to my wife and I didn’t complete the job and the homes could not pass inspection. Both homes came out to be about 18-20% over their "estimate" with the licensed general contractor.

Obviously they market to the novice investors with calculated ARV's and estimated rehabs built in. But because they require you to use 212 loans within the first 48 hours you typically have to move fast.

**Recently was enticed to a view a South Tampa pool property that had an estimated 55K rehab cost. After personally reviewing the property and noticing an issue with the foundation of the pool and pointing it out to them, (I am not even a contractor or an architect and noticed this) they came back two days later with an estimated rehab of 95K!!! Not even off by a couple grand but nearly double the cost! HA! This goes to their lack of professionalism and other entities involved with them (the contractors coming to draft the estimates). After this newly discovered problem and knowing no investor would waste their time on the property, Networth realty decided not to purchase the property from the owner and dump it back to him. 

This is not some fly by night wholesaler. They have built a national reputation. Here's the thing- Don’t trust their non-stop marketing emails. Your rehab budgets will almost certainly go over, sometimes by the thousands and sometimes by the TENS of thousands. Feel free to PM for additional details. Be very very careful when dealing with this company.

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Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes
7y
Originally posted by @Frank Wong:

I think when you are dealing with any wholesaler you have to run your own numbers. You can't just trust what they give you. Everything I looked at from NetWorth didn't work for me. The ARV and rehab costs were all wrong.

That's a big problem!

Almost all wholesalers 'tune' the numbers a tad. ARV is usually a sliver lower and rehab costs are also a little lower (most decent wholesalers will not vary more than maybe 20%). We accept that and understand that due-diligence is needed. If you're saying the costs are "all wrong", that's not a tad off. And a $95k rehab advertised as $55k is not a tad off either. That's unacceptable.

Yes, due-diligence is a must; however I look at it in yet another manner: you wasted my time. 

Time is the most valuable thing in all of our lives and I'd rather spend mine working on worthwhile deals. I've run into similar companies and after running numbers on a few properties, I tend not to give more that a cursory glance when their emails arrive (then delete).

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  • Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y

    @Ryan Saldanha I've spoken with Networth realty and know an out of state investor that used them with some success. His rehab came over budget by a few thousand dollars as well, but that's easy to do. Like any wholesaler, you have to do your own due diligence. They're trying to market a product so they're going to try to make it look as good as possible.

  • Flipper/Rehabber · Tampa, FL · Member since 2017 · 47 posts · 19 votes
    7y

    @Jason DiClemente

    There is a difference between a wholesaler “trying” to make a property look good and a wholesale putting in details that are deceiving in their marketing.

    In my experience, NetWorth used a general contractor to provide inaccurate detailed estimates in their marketing emails for a full rehab. Most wholesalers leave this information out, but NetWorth Realty wants to brand itself as a one-stop solution.

    Recently, as I mentioned, there was a SFR with a major foundation issue that they marketed with as a 55k rehab budget and in their marketing materials they said the estimate was done by a licensed general contractor. A proper licensed general contractor doesn't miss foundation issues and the rehab doesn't magically double.

  • Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    I think when you are dealing with any wholesaler you have to run your own numbers. You can't just trust what they give you. Everything I looked at from NetWorth didn't work for me. The ARV and rehab costs were all wrong.

  • Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
    7y

    @Ryan Saldanha I understand.... its frustrating to see a potential property only to realize that it's not what you expected.

    If you're not doing your own evaluations, and relying on the sellers advertising to vet a deal, the likelyhood of success is very small.

    I've seen some good looking deals from them, and deals that dont make sense for me, but no matter how good the deal looks, at the end of the day, their numbers dont exist except to get me in the door. Once I'm there, I look at the deal with my own inspector, and base the deal on my numbers.

    The pool issue makes you think about their inspection process, but in the end, their inspection process shouldnt matter.

  • Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
    7y

    Institutional wholesalers make their living off of novice investors. Although I feel bad that you're having trouble, if you depend on any wholesaler for anything other than an address, you're setting yourself up for failure. 

  • Real Estate Agent · Merritt Island, FL · Member since 2017 · 986 posts · 1k+ votes
    7y
    Originally posted by @Frank Wong:

    I think when you are dealing with any wholesaler you have to run your own numbers. You can't just trust what they give you. Everything I looked at from NetWorth didn't work for me. The ARV and rehab costs were all wrong.

    That's a big problem!

    Almost all wholesalers 'tune' the numbers a tad. ARV is usually a sliver lower and rehab costs are also a little lower (most decent wholesalers will not vary more than maybe 20%). We accept that and understand that due-diligence is needed. If you're saying the costs are "all wrong", that's not a tad off. And a $95k rehab advertised as $55k is not a tad off either. That's unacceptable.

    Yes, due-diligence is a must; however I look at it in yet another manner: you wasted my time. 

    Time is the most valuable thing in all of our lives and I'd rather spend mine working on worthwhile deals. I've run into similar companies and after running numbers on a few properties, I tend not to give more that a cursory glance when their emails arrive (then delete).

  • Flipper/Rehabber · Tampa, FL · Member since 2017 · 47 posts · 19 votes
    7y
    Originally posted by @Tchaka Owen:
    Originally posted by @Frank Wong:

    I think when you are dealing with any wholesaler you have to run your own numbers. You can't just trust what they give you. Everything I looked at from NetWorth didn't work for me. The ARV and rehab costs were all wrong.

    That's a big problem!

    Almost all wholesalers 'tune' the numbers a tad. ARV is usually a sliver lower and rehab costs are also a little lower (most decent wholesalers will not vary more than maybe 20%). We accept that and understand that due-diligence is needed. If you're saying the costs are "all wrong", that's not a tad off. And a $95k rehab advertised as $55k is not a tad off either. That's unacceptable.

    Yes, due-diligence is a must; however I look at it in yet another manner: you wasted my time. 

    Time is the most valuable thing in all of our lives and I'd rather spend mine working on worthwhile deals. I've run into similar companies and after running numbers on a few properties, I tend not to give more that a cursory glance when their emails arrive (then delete).

    Well said! My point in this post was to let other investors (mainly novice and beginners) know this large wholesaling company -Networth Realty -- across the country that markets in every major city-- has sent quite a few deals in recent months that are off not by a meager amount, but rather quite large amounts in their ARV & rehabs.

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