Should I buy my first home through a wholesaler???

Question

Hey guys new to this whole thing. Im ready and able to purchase my first property im approved for 250k and just wondering if I should buy my house through a wholesaler or with a realto

Mike D'Arrigo · Answer

Miguel Alvarez, I think one of the big questions here is what kind of property are you looking to buy? A fixer upper or rent ready? A wholesale property generally is going to need work and as others have pointed out, conventional lenders won't lend on a fixer. Do you truly mean a wholesaler or a turn key operator? The terms get used synonymously but are not the same. If you're interested in turn-keys with tenants in place, I'd be happy to answer any questions you have about the advantages of a turn-key. Feel free to contact me.

Matt Devincenzo · Answer

I don't know if you can find a wholesaler to work with.

All the wholesalers I know specifically will only accept cash or HM. Also alot of wholesale properties won't be acceptable for a financed offer due to condition, so I don't think it's a very viable option for you.

Miguel Alvarez · Answer

Ok yea your absolutely right. Around my area which is jersey city it is cheaper to own than to rent plus I ll get the tax breaks which will help me reinvest later on. I'm reading a lot and asking many questions because I am shaking in my boots lol just don't want to make mistakes well I want to at least minimize them . So im currently looking for mutli family units so I can cover my mortgage at the very least so I can keep it moving for my investing. What do you guys think maybe your words of wisdom will make me realize things??? I am currently working with a realtor who owns and invests in real estate. I wont accept anything less because in my mind how can a realtor help me if they don't invest nor own their own property so I thank kiyosaki for that one :-).

Matt Devincenzo · Answer

Yeah you will definitely not be looking to a wholesaler. You need to find a good real estate agent and look at close to move in ready properties. I say that because with 3.5% down I'm assuming you're looking at an FHA/homepath type mortgage and those have additional inspections that require almost nothing wrong with the property.

As far as wanting to know if it's a deal that is a little more complicated. Start by reading about the 50% rule here on BP. But also understand that finding a property that will fit that criteria in NJ might be tough (I'm assuming it is an expensive market compared to rent rates). That is how it is out here in CA which is why I choose to rent a duplex here even though I own 5 properties in FL, I can rent cheaper than I can buy out here.

Miguel Alvarez · Answer

thanks for the replies wow this site really help a lot. Now I apologize for not being specific I'm learning just by this conversation I need to be detailed oriented with real estate lol. thanks for opening my eyes to that. Well I'm looking for a property to for my mom dad and i to live in and also rent. My goal is to buy the property and have the mortgage covered without me putting one cent for the mortgage I understand I will have expenses. Im pre approved for 250k conventional loan that I only need to put 3.5% down. Now with that being said what should I be looking for in this situation and how would I find out if its a good deal or not ????

Marco Santarelli · Answer

Hi Miguel Alvarez,

Welcome to BiggerPockets!

Congratulations on being "ready" to start investing in your future.  I'm sure you know that investment property is the best wealth creator available to the masses.

In response to your question about who to use, you have several options:

a.) You can find a good wholesaler that you can trust to work with, although this option involves the most work.

b.) You can find a real estate agent that is an investor themselves, or at the very least specializes in working with investors full-time (they are a rare breed).

c.) Assemble a team within the market to do your legwork, such as a real estate partner (investor), or a rehabber you pay to find, acquire, and rehab properties that meet your requirements.

d.) Work directly with a local rehabber/contractor that focuses specifically on rehabbing and flipping properties to investors. Or,

e.)  Work with a full-service turnkey provider that handles virtually all of the above, including parts of your due-diligence, and walks you through the process step-by-step to help you choose the property(ies) that best fit your investment goals.

I started investing out-of-state in late 2003 and it's not difficult. There is certainly a right way to do it which can save you time while avoiding costly mistakes.

Feel free to post any other questions you have.

Continued success!

Jon Holdman · Answer

What sort of lender gave you this approval?  What sort of loan is it?  If you mean a conventional loan, especially if its a low down payment loan, then a wholesaler is not for you.  Conventional lenders will have issues with the transaction structure of wholesalers that will, at best, make the loan difficult.

If you mean a hard money lender, then, sure.  Find a good deal wherever you can.

Zaid R. · Answer

If you found a good deal, I'd recommend using both (having a realtor do the transaction with the wholesaler). I do agree with Kyle J., most wholesalers are looking for cash buyers.
Good luck

Kyle J. · Answer

Welcome to BiggerPockets Miguel.  It looks like you posted this question three times, so I'll just reply to this one and hope you read it.

Ideally, you'd buy from whomever could get you the house you want at the best price. However, realistically, I think most (maybe not all) wholesalers prefer to sell to cash buyers.  (Sounds like you plan on financing the purchase since you say you're "approved" for 250k.)  So you're options MAY be somewhat limited.

Should I buy my first home through a wholesaler???

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