Struggling to find deals

atlanta · Member since 2018 · 22 posts · 24 votes

New investor here. I have been walking through a lot of houses and trying to find a winner. I am getting some houses from wholesalers and their numbers seem to be very off. Ex: 130 purchase/50 rehab/240 ARV. I get my contractor to look at the property and the rehab is more like 90. I am using hard money, and after paying them back and paying the realtor fees etc..... I am not seeing the money in it for me. This has happened multiple times with this wholesaler so I will not be using them. Where do I need to look to find deals? Do I have to buy foreclosures? Any incite and help is appreciated. Thank you!

16 Reply

155 views

Most Popular Reply

Nick C.

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

This is the problem with flipping houses HGTV doesn't talk about. If you're paying someone to find the deal (wholesaler), paying someone to buy the deal (lender), and paying someone to do the repairs (contractor), it is extremely unlikely there will be any money left for the investor when it's all said and done.

Successful houses flippers need to perform one or preferably more of those 3 core functions. That's the value they bring in to the deal and it allows for a profit.

47 Reply

See this reply in the discussion

79 Replies

Jump to latestLatest

Sort by

John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
6y
Foreclosures is one avenue. Another option is to start marketing for deals. As far as "wholesalers" what I have found is that ARV stands for ABSURD RESALE VALUE. We have licensed wholesalers in the area as well as unlicensed brokers. We have one local outfit that pays to have their "deals" sent out by our local REIA. These "wholesalers" have the worst numbers I have ever seen. I don't know if they actually close on the deals or scam their way out of the contracts but I suspect that latter. They suffer from MYTHOMANIA!
10 Reply
Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
Thanks for the reply John. I see its the same in Florida. I get the feeling that these wholesalers are just preying on newbies that dont do their due diligence. Its sad. It looks like I will be looking for foreclosures.
3 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
6y
Originally posted by @Adam Higginbotham:
Thanks for the reply John. I see its the same in Florida. I get the feeling that these wholesalers are just preying on newbies that dont do their due diligence. Its sad. It looks like I will be looking for foreclosures.

The worst part is they prey on unsuspecting sellers. They represent themselves as buyers when they are NOT and then weasel out of the contract if they cannot assign the deal.

3 Reply
Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
6y
You sound serious about finding a deal. I agree with you and see it in emails all the time.

Why not dump the wholesalers and find the deal on your own? Do you have other means to find properties? Have you tried a direct mail campaign? Called any landlords looking for tenants? Sometimes they want to sell instead of placing another tenant. How well do you know your neighbor? Maybe they want to sell soon. Keep up the good work!
10 Reply
Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
Thanks Jaron. I can definitely step up my game in those areas.
1 Reply
Ola Dantis
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
6y
@Adam Higginbotham
Welcome to BP, Adam.
Also, remember to give yourself time to get a "good" deal. Yes, some wholesalers may send deals that are absolutely ridiculous, but with patience and go to MeetUp in your area, you might be able to partner with some other people and start finding deals.
Patience is KEY.
4 Reply
Nick C.
Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
6y
This is the problem with flipping houses HGTV doesn't talk about. If you're paying someone to find the deal (wholesaler), paying someone to buy the deal (lender), and paying someone to do the repairs (contractor), it is extremely unlikely there will be any money left for the investor when it's all said and done.
Successful houses flippers need to perform one or preferably more of those 3 core functions. That's the value they bring in to the deal and it allows for a profit.
47 Reply
Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
Thank you Olda!
0 Reply
Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
Originally posted by @Nick C.:
This is the problem with flipping houses HGTV doesn't talk about. If you're paying someone to find the deal (wholesaler), paying someone to buy the deal (lender), and paying someone to do the repairs (contractor), it is extremely unlikely there will be any money left for the investor when it's all said and done.
Successful houses flippers need to perform one or preferably more of those 3 core functions. That's the value they bring in to the deal and it allows for a profit.

Thank you Nick. This is something I have been thinking about more and more. I grew up doing basic construction but lack the finishing skills required to complete a property. I am thinking about increasing these skills so I can increase my profit margin.

2 Reply
Armani Emon
Baltimore, MD · Member since 2019 · 85 posts · 37 votes
6y
Originally posted by @Adam Higginbotham:
New investor here. I have been walking through a lot of houses and trying to find a winner. I am getting some houses from wholesalers and their numbers seem to be very off. Ex: 130 purchase/50 rehab/240 ARV. I get my contractor to look at the property and the rehab is more like 90. I am using hard money, and after paying them back and paying the realtor fees etc..... I am not seeing the money in it for me. This has happened multiple times with this wholesaler so I will not be using them. Where do I need to look to find deals? Do I have to buy foreclosures? Any incite and help is appreciated. Thank you!

For anyone having trouble with inaccurate numbers from wholesalers.

A lot of wholesalers are not taught how to accurately analyze the ARV/Repairs of a deal.

If you find that you are continuously getting inaccurate numbers from one of your wholesalers,

you should drop some wisdom on them about the proper way to analyze the ARV/Repairs and

everything else you deem wrong. At the end of the day we are all a team, think of how much

money you could make if you vet your wholesaler on how to accurately analyze deals rather

than shutting down every wholesaler that gives you inaccurate numbers.

When I first started my journey I was poorly an inaccurately taught how to analyze these things

as a result my numbers were crazy. One of my buyers educated me on the proper way to do it ,

then I started making her money!

22 Reply
Aseel YerunkarPro Member
Investor · CA · Member since 2019 · 63 posts · 51 votes
6y
@Adam Higginbotham As a fellow investor that's fairly new to the game I definitely feel your pain! You're correct in thinking that deals are not just laying around waiting to be picked up. I've noticed it really is a numbers game. 95% of deals you will look at will be garbage. But as someone else said patience is definitely the key. You're not looking for those 95% you want the 5% even if it takes a bit more time and work. You can definitely get creative with your search for better results (Foreclosures, direct mail, door knocking, etc.).
When it comes to wholesalers -- I've found that if a property that I find from a wholesaler is appealing, I always cross reference the ARV and actual rehab needed with 3 separate realtors to confirm if what the wholesaler claims is true or not. I have analyzed countless deals in the last 2 months of my search and only now have I found one that seems to be suitable. The more you network with realtors the more you will find that some of these realtors have off market properties and deals better than a lot of wholesalers. As a newer investor you WILL have to work harder to find these since you do not already have relationships that will give you a nice deal funnel. But as time goes on those will be built and things will get a bit easier as you gain more experience and time in the game.
0 Reply
Henry Lazerow
Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
6y
The vast majority of wholesalers scam newbies. I have even had a BP known wholesaler send me a "great deal" that expired unsold in MLS a few months earlier with bogus ARV and Repair numbers.
The markets hot if you need hard money to buy it's likely not going to work well for you. Maybe you can do a house hack conventional loan? Don't get stuck on big rehab projects often times a buy and hold can be a great first investment.
1 Reply
Chris MillerPro Member
Flipper/Rehabber · Hampton, VA · Member since 2013 · 18 posts · 8 votes
6y
Hey Adam, as was mentioned its a numbers a game that requires effort and hard work. You may have to go through 100's of potentials just to find 1 decent to good deal. But Marketing and patience and persistence is key. Try different avenues to get deals as was mention direct mail, signs, cold calling, door knocking, referrals, drive for dollars, Get different lists and attack them such as code violations, absentee owners, evictions, probate, fsbo, pre-foreclosure and so forth. Then once you have those leads set up a system where you can keep in touch with the leads even if they say no or not now it can change later. Thinking back of how I got my last recent 4 flip deals, one was from a lead in 2014 where she called me off a sign, timing was not right at the time kept in contact with her over the years and she called me finally ready. The other was from a list of absentee owners where the landlord was tired and the house needed work, I called her off the list, cold called and became a good deal. The other was a referral from someone I had known for years knew someone was looking to sell told me about it and made it happen. The 4th recent one was a direct mail letter then finally they called off my post card. Adam just wanted to show you it make take a variety of ways and persistence to find deals but there are out there. Marketing, sales, negotiating is essential to getting the leads and then you need the ability of converting those leads into deals. The 4 recent flips I mentioned the homeowners started out wanting more but we worked it out so it was a win win.
As Henry Lazerow mentioned, you can find a great deal that may not be a good rehab project and better suited for buy and hold. So you may have to look at what is the best exit strategy for that particular lead or deal. Hard Money has its place but look at other avenues as well on financing the property. I had a deal earlier in the year where the homeowner agreed to carry the note until I sold the house. His only concern was he wanted to get enough for his daughter schooling. So he didn't mind carrying the note with no interest.
Keep at it Adam deals will come.
1 Reply
Anthony Rosa
Rental Property Investor · New York City · Member since 2019 · 703 posts · 538 votes
6y
When a dishonest wholesaler doesn't have to go in their pocket they have nothing to lose and will find inexperienced buyers that overpay and end up in a mess.
Kudos to the honest wholesaler whose intentions are that All parties involved are getting a fair deal.
8 Reply
Syed H.
Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
6y
There is a lot of stupid money out there right now and everyone is looking at comps from 18 months ago. Everyone watching HGTV, new “flippers”, and wholesalers have driven up pricing.

Of course it’s hard to find a good deal right now. You are competing against a lot of people with cheaper sources of capital, cheaper cost of materials/labor, and more or much less experience. They also might have much lower return expectations.

All that being said, it’s still possible to find deals, you just have to source more. I probably only win 2-3 houses out of every 100 I get across my desk. That’s the shooting percentage you should expect.
5 Reply
Will King
Investor · Dallas/Ft Worth · Member since 2018 · 51 posts · 13 votes
6y
This issue with some wholesalers seem to be pretty common. We're finding telling people everywhere what you do and offer to pay a handsome referral for any house you buy works well, add this your other ways of marketing. Many great comments given here. Thanks everyone.
0 Reply
Dennis M.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y
Why are you wasting time with middle men and loan shark lenders ? There’s better less costly ways to do business in RE
1 Reply
Canesha Edwards
Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
6y
@Adam Higginbotham
Half the problem is that “wholesalers” in Atlanta come a dime a dozen. Most of these so called wholesalers are just people who got into real estate once Atlanta started to boom. There is very little knowledge about what it actually takes to rehab a property. Also, these people are probably looking to make big fees. I would try working with the wholesaler and see if the fee can be lowered. Some of these people are just plain greedy. If that doesn’t work, wait until the wholesaler’s contract runs out and go to the owner direct. When you’re direct to the owner there aren’t any fees included to inflate the price.
The other half is that Atlanta is over priced. It is what it is.
However, just like everyone else has said , it takes time to find a good deal, and the best deals are created. If real estate is really something you want to do, just hang in there. Real estate has been around for a while, and I’ll bet my life it will continue to be around. Stay ready, but stay patient!
Just my 2 cents!
Happy Investing!
Canesha
4 Reply
Javier D.
Investor · FL · Member since 2017 · 266 posts · 220 votes
6y
@Adam Higginbotham
90k for a rehab? How big are these houses?
3 Reply
Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
6y
Analyze 100, buy 1...or something similar. REI is all about deal flow...lots of it.
2 Reply
Steve Sparks
Flipper/Rehabber · cincinnati, OH · Member since 2009 · 211 posts · 59 votes
6y
Just don't pay attention to a wholesalers numbers. Address and price are all you need.Evaluate yourself and make an offer or dont.
2 Reply
Syed H.
Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
6y
Originally posted by @Dennis M.:
Why are you wasting time with middle men and loan shark lenders ? There’s better less costly ways to do business in RE

Necessarily evil to grow.
1 Reply
Dustin Mathenia
Flipper/Rehabber · Dallas, TX · Member since 2017 · 174 posts · 157 votes
6y
@Adam Higginbotham
Getting your hands dirty is not the way to make profit. Trust me, it will only cost money and time. Instead, spend your time finding the deals. Don't trust wholeseller’s numbers—always offer what the property is worth to you. You never know what they have it locked up at—people are greedy and might be trying to get a 50k wholesell fee. Drive for dollars is an easy one to do. It’s free to knock on doors even though it’s something no one wants to do—but you might get lucky. Direct mail could work too but mailing the same list as everyone else would mean you would still have to get lucky. There are deals out there—just get creative and find them!
1 Reply
Omar Diaz
Fort Polk, LA · Member since 2019 · 29 posts · 14 votes
6y
@Adam Higginbotham
One thing that I've seen that resonates in BP is that you have to make the deal more often than finding the deal. Also, since you've used HMLs and have some deals under your belt, have you considered finding a private money lender? I've known HML to be far more detrimental to your bottom line as opposed to Private money lenders. For finding deals have you considered:
Sending letters to owners found on pre-foreclosure and eviction lists
Networking with local RE agents, mortgage lenders, CPAs, attorneys, etc.
Direct mail marketing
Driving/walking for dollars and getting to know the people in the community you want to invest in
2 Reply
Kiera Underwood
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@Adam Diedrich it's a tough market for flips. Interested at all in buy and hold stuff? You of course wouldn't want to use hard money at that point, but it might be a good place to start. I see around 2-4 out of state investors a week grab deals in Oklahoma City. What market are you in?
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.