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!

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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.

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Sean Hill
Specialist · Cincinnati, OH · Member since 2017 · 4 posts · 4 votes
6y
@Adam Higginbotham The best thing you can do is start with a firm budget. If the deal doesn't fit, if the numbers dont fit your profit margin ( generally using the 70% arv rule), Then move on....The profit is made on the Buy, Not the Sell...Buy smart in the begining..Know your own numbers, not rely on others, its your risk, not theirs.
0 Reply
Jerry Lucker
Flipper/Rehabber · Seattle, WA · Member since 2015 · 333 posts · 459 votes
6y
@Adam Higginbotham I went through exactly what you describe.
I stumbled across flipping mobile homes in parks.
Takes little money, very little competition, great profit margins.
1 Reply
David McDaniel
Oak Park, IL · Member since 2017 · 2 posts · 2 votes
6y
@Armani Emon what’s the accurate way to analyze deals?
1 Reply
Account Closed
Member since 2018 · 214 posts · 175 votes
6y
@Adam Higginbotham
Some cities have shifted from a seller market to a balance market. Buyers begin to have more bargaining power. I saw many buyers made very low balls offer. I’m currently a seller in Las Vegas, and have received many lowballs offer, that’s where I got the information from. It doesn’t work on most of my listed properties, but worked on 3 of my particular properties. The buyers got good deal from my those 3 particular properties because I was very motivated to sell those 3 particular properties...
(I’m not going to disclose the reasons why those 3 particular properties is a must to be sold.)
Lowballs offer may work on some motivate sellers and become good deals. Never knows. You can try to find deal by making very lowballs offer in your market.
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Martin White
Enfield, CT · Member since 2019 · 11 posts · 2 votes
6y
@Adam Higginbotham there are some good wholesalers and some bad ones out there. It's up to each and every investor to analyze each and every deal presented. It's never a wise thing to do taking someone else's word about either ARV or the rehab costs.
As an investor you have to do your research and have your contractors look at the properties before signing any contracts with wholesalers who have no idea what they're doing, looking for a bail out. Don't let them or anyone rush you into making a decision that can cost you a lot of money or time.
I wholesale, but not the way that I'm hearing in these descriptions. I have a due diligence period with investors that have time to look at the property and figure out values and costs before making any deals. If I don't have a buyer lined up, I don't put the house under contract.
It's sad that wholesalers have such a bad name. I can understand this sentiment from investors who have seen it all.... Step your game up crummy wholesalers! Step your game up new investors, don't get caught with a wholesaler who makes up bad deals, with high fees trying to hit a home run with no spread left for you!
1 Reply
Kenneth Mooney
Rental Property Investor · Augusta, GA · Member since 2016 · 348 posts · 171 votes
6y
@Adam Higginbotham what kind of marketing are you doing personally?
0 Reply
Remington LymanBusiness Member
Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
6y
@Adam Higginbotham I find properties on market and submit offers that work for me. If they do not accept them then thats that. I move onto the next one. I also cold call property owners here in Columbus to see if they are looking to sell. The more work you are willing to put in the better deal you will find.
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Bob Prisco
Specialist · Cleveland, OH · Member since 2018 · 1k+ posts · 666 votes
6y
@Adam Higginbotham go to your local REIA meeting, talk with title co's, heck look on your local FB pages. I do zero marketing and get 20 deals a month sent my way. Also maybe look in another market. I am in the Cleveland markets and can buy as many as I want, SF, MF getting much more difficult,,,,,,,
Good Luck
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Bob Okenwa
Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
6y
@Adam Higginbotham
Deals are no longer found, deals are created. You'll need to market to get your own deals and not rely on others to bring them to you. In this current market, there is no DoorDash for deal delivery while you sit back and watch TV. It takes more work, but in the end the deals will be more profitable if you can make them on your own.
1 Reply
Jacob Michal
Flipper/Rehabber · Member since 2019 · 78 posts · 31 votes
6y
@Adam Higginbotham at 130 your buying at 75% of arv how is that very off.? Seasoned investors buy at 75-80% all the time
0 Reply
Jessica Gettle
Flipper/Rehabber · San Antonio, TX · Member since 2014 · 76 posts · 13 votes
6y
@Adam Higginbotham

Hey Adam!

I understand your frustration. I just bought and sold a flip from a wholesaler and lost money.

Since I'm a wholesaler and investor I don't get anything under contract unless I would buy it and I get written bids on the rehab. Now I know as wholesalers we do have to be careful and tell our buyers to do their own due diligence HOWEVER if a wholesaler is pitching the wrong #'s and putting buyers off they are killing their business and reputation. Let alone the blow back from pissed off investors.

Reach out to me anytime if you have questions. I certainly dont know much but happy to share what I do know!

1 Reply
Louis D.
Rental Property Investor · 95660 · Member since 2018 · 46 posts · 17 votes
6y
I'm new to real estate investing. I have put in a lot of hours without finding a deal at this point. Well I Just read finding and funding GREAT DEALS by Anson Young. Good read and good information cover to cover. Great info on how to find your own deals. As for wholesalers with bad number? Don't give up looking for good people to work with, just give up working with the "wholesaler" with the bad numbers. The other book I read was by David Green "LONG DISTANCE REAL ESTATE INVESTING. Davids book, just like Ansons is full of real world useful information. There is a world of information, like "how to find agents to work with". These two books have been worlds apart from other books I have read books that just had a little data here and a little data there. I felt like I was fishing for information. These two books I read in the last 10 days and now I am making a new game plan. I am going to find good wholesaler and agents that work with investors. Next I am going to figure out what areas I want to go find deals in and start marketing using GREAT DEALS as my manual. These two books are game changers. Try these two books and let me know what you think.
1 Reply
Bob Anthes
Rental Property Investor · Port St Lucie, FL · Member since 2019 · 150 posts · 79 votes
6y
@Adam Higginbotham definitely join a local Real Estate Investment Club you should be able to get a referral to a good wholesaler. Seems like there are ALLOT of newbie wholesalers out there lately. Many don't know where to begin, I had a wholesaler send me a deal that was on the MLS, was listed with a licensed realtor. Also several whose numbers where way off. I do see the value of a legit wholesaler provides but as I said seems like allot of newbie wholesalers everywhere.
0 Reply
Pete Osceola
Member since 2019 · 7 posts · 2 votes
6y
Adam it is the same here in Florida I was talking to a wholesaler about a property he had for sale his ARV was 215 and ARV in the area is closer to 175 needless to say he hung up on me pretty upset and didn't want to hear what I had to say he was trying to sell me a property at 120K turns out he purchased it just under 70K
1 Reply
Deangelo McKinley Malone
Rental Property Investor · Detroit, MI · Member since 2019 · 2 posts · 0 votes
6y
@Adam Higginbotham Hey Adam, it sounds like the wholesalers you were working with more than likely didn’t have a contractor walk through to calculate the right repair amount. I’m in wholesaling as well. The only reason wholesaling works is because everyone is supposed to win. Shoot me a direct message so we can talk or maybe I point you to home owners or deals in the areas you’re looking for. Looking forward to hearing from you.
0 Reply
Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
Originally posted by @Javier D.:
@Adam Higginbotham
90k for a rehab? How big are these houses?
1200 sqft 1960's ranch style houses. Most of the ones that have been brought my way have been in very bad shape.

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Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
Originally posted by @Pete Osceola:
Adam it is the same here in Florida I was talking to a wholesaler about a property he had for sale his ARV was 215 and ARV in the area is closer to 175 needless to say he hung up on me pretty upset and didn't want to hear what I had to say he was trying to sell me a property at 120K turns out he purchased it just under 70K

Yeah. Its a suckers game. I feel sorry for people who have fell for it. The same thing happened to me once I had several bids from conservative contractors. I sent the bid into the wholeseller and told them what I would pay. They had no interest.

1 Reply
Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
I would like to thank all of you for the responses. Thanks for the good insight and direction!
0 Reply
Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 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

I would love any insight you have. I have 50k of my own funds to bring into a deal. I am open to any enlightenment you are willing to share.
0 Reply
Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
Originally posted by @Jerry Lucker:
@Adam Higginbotham I went through exactly what you describe.
I stumbled across flipping mobile homes in parks.
Takes little money, very little competition, great profit margins.

Thats interesting Jerry. I will have to look into that.
0 Reply
Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
Originally posted by @Kenneth Mooney:
@Adam Higginbotham what kind of marketing are you doing personally?

Hey Kenneth. I am new to this so not much. I am trying to meet as many people as I can and honestly thought that wholesellers would be honest. I know now that was mistake #1. It seems like I should start cold calling,driving for dollars and doing direct mail.
0 Reply
Diego La Rotta
Member since 2019 · 24 posts · 0 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.

are you also trying to find deals in south florida area? I live in the miami area and its been hard to find deals for the past year.

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Adam Higginbotham
OP
atlanta · Member since 2018 · 22 posts · 24 votes
6y
Originally posted by @Jacob Michal:
@Adam Higginbotham at 130 your buying at 75% of arv how is that very off.? Seasoned investors buy at 75-80% all the time

130 + 90k of rehab = 220k . With an arv of 240, there is no money in that deal, unless your the lender, the contractor and the agent.
0 Reply
Armani Emon
Baltimore, MD · Member since 2019 · 85 posts · 37 votes
6y
Originally posted by @David McDaniel:
@Armani Emon what’s the accurate way to analyze deals?
Have a contractor come by and ask him firstly if the home has any structural/mechanical repairs needed to it.
Then take a look at your comps and determine what features comps have (granite, stainless steel appliances,
finished basement,new carpet ,new flooring , ect) then ask your contractor how much it would cost to make
your prospective property look like your comparable only slightly better.

Once you get the cost of structural/mechanical repairs you then have to ask your contractor how much it would take to put everything in your prospect home , that your comparable have. The mechanical/structural repairs+ upgrade cost (what is needed to get it to look like the comparable) is the correct repair value.

Structural/mechanical repair cost+upgrade cost=repairs needed for the home

There is a way you can determine by just looking at the pictures, but I'll message that to you later because I don't know if off hand.

hope that makes sense..
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David McDaniel
Oak Park, IL · Member since 2017 · 2 posts · 2 votes
6y
@Armani Emon
Thank you! I really appreciate it.
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