Wholesale buying strategy for buy-and-hold use?

Question

I'm working to define my business plan, and the more I learn and think about it, the more it appears to me that leveraging the practices of wholesalers (direct-mail, flyers, email) to strengthen the numbers of a buy-and-hold strategy makes sense.  I recognize this wouldn't work if one were trying to buy one or two places, but if you're trying to buy a (relatively) larger number of units, does this not make sense?  For those far more experienced than me: is it worth the time and effort this involves to make the savings, or are the deals wholesalers offer strong enough that it's worth it to just pay the premium?

Blair Halver · Answer

I heard Rob Swanson (http://reieducationproducts.com/) speak one time regarding his business model.  He has 4 separate businesses - wholesaling, rehabbing, rental management, retailing - because he wants to be paid for each part of the investing process.  (I'm going to try to remember the details as best I can here.)

His wholesaling business finds the deals and sells them to his rehabbing business.

His rehabbing business sells the finished houses to either the rental mgt business or the retailing business.

I thought it was pretty ingenious - create different companies who all sell to each other.  Large corporations do this all the time.

I was most impressed with his talk that day, moreso than any other speaker's content.  He seemed like the real deal.

BTW, I'm not affiliated with Rob at all.  I think I purchased one of his info products one time, but that was about it.

Heidi Rogers · Answer

I've been wrestling with the same question. In my rural area, investors are scarce and wholesalers are nonexistent. If you targeted a neighborhood or two you were interested in and followed @Jerry Puckett's advice for direct mail procedures, maybe you'd get some good leads for a small investment (stamps and paper).

Renee Carter · Answer

It depends on what you are trying to buy but you can definitely use private sellers to leverage your buy and hold strategy. Can you be more specific as to what your trying to accomplish. For example are you trying to buy Sfh with rehab or no rehab and hold for long term or do you plan to refinance your cash out in to a loan? There are a lot of different strategies to do you just have to narrow it down. Wholesaling is very time consuming I would say if you have the time to negotiate the deals your self then do it! But if you want to just get the deal from a wholesaler because you don't have time then pay the premium. Time=money no matter what.