Buying From Wholesalers

[Stacy Schlicht]

Hi – I am looking for tips and advice for working with wholesalers. I have some capital set aside, but I not local and have limited time to find deals.

A few questions for seasoned investors who buy from wholesalers:

1. What does the wholesale process look like from a buyer’s perspective? I know you usually must close quickly with cash. Do you typically have time for a home inspection and can you make your offers contingent on this? How is a wholesaler fee calculated?

• Any watch outs to consider? I’ve heard it’s important to check title. Anything else you ALWAYS do when buying from a wholesaler?
• Do you ever buy from a wholesaler without seeing the property yourself? If so, who is best to use as your “boots on the ground”? A property manager?
• How do you determine if a wholesaler is good – honest, reliable, someone you want to work with?

Thanks for your help!

[Daniel Haberkost]

@Stacy Schlicht having bought our last deal from a wholesaler and having looked at quite a few deals from other wholesalers I have a couple of thoughts....

1.) Verify everything! I've looked at enough wholesale deals at this point that I just assume they're exaggerating the ARV and using unrealistic comps.

I wouldn’t even read the proforma they’ve provided. Run all your numbers yourself, check the title (as you said), etc. Pretend you have no information other than the address and do your due diligence from there.

Also, if the house is occupied just assume the tenants are terrible and you will need to evict.

2.) The closing/inspection process will vary. For example, we bought from a newer wholesaler so we were able to negotiate a clause that allowed us to get our earnest money back if our inspector found certain issues with the bones of the house.

With more established wholesalers you’re likely going to have to go hard with the earnest money immediately. Your time to close depends entirely on what the wholesaler negotiated with the current owner.

Those are the main items I wanted to comment on, someone else with more experience can address your other questions