Investor · Marietta, GA · Member since 2013 · 9 posts · 0 votes
Has anyone wholesaled to hedge funds? I recently went to my local REIA and the speaker mentioned going to the court house on auction day and finding the buyers of the hedge funds to market properties to.
I would think this could be a good avenue for unloading houses that we would normally pass up, that is if the rumors are correct. I've heard that hedge funds are buying properties at up to 125% of the sales price and bidding the normal investor out of the game, can someone elaborate on this?
I myself have not but worked along side a few that have. Generally you just need a contact with someone in the group of a hedge fund, manager or something other, The ones I was a around were connected to their attorney and legal side, they normally do not need extra people cause they already have everything they need, contacts and such lined up, but they are not adverse to seeing what others have. They do look for big deals depending on what their focus, they look for exclusivity and unique deals. But that is just what I seen while I was around them.
We do sometimes sell to aggregator funds, but they are very specific about what they look for. We find that they usually want at least a 3 br, 2 bath, with a 2 car garage built since 1980 or so. They usually don't like pools. They need to get a certain yield...usually at least 8.5%. Each has a similar pricing model, but each has their own twists. The Atlanta market is not a bad market for them, but you have to have the right property. The funds do pay well, but they aren't stupid. Some realtors will bring product to us for us to bring to the funds and they think they can jack up the listing because they are under the impression that they overpay. It's all about a cash flow model for them. You can do it, but the deal has to fit their box.
We supply 3 funds, it is a great way to sell more houses. The secret is to get their buying criteria and not waste their time offering houses that don't fit their rules or that you can't deliver.
The ones we work with all have different rules. The idea of funds over paying is only partly true. Some properties they pay too much for from a cash flow point of view but the funds are buying for appreciation or retail sales into home owner markets.
Don't assume you can sell all your cr*p at high prices to any fund, it is not going to happen.
But it is worth exploring as a way to make money flipping.
Thank you guys, I'm new to BP and this is my first post. I must say, this is truly awesome.
Dean, thank you for the insight and knowledge you have shared I'm truly thankful.
Doug, thank you also and yes I agree that no one should think hedge fund mangers are stupid. If you buy right you shouldn't have cr*p to begin with but seems to me that if you know their criteria you should be able to find the deals that fit them.
@Dean Letfus Who are the 3 funds you sell houses to? I know this is an old post/forum, but I operate out of Atlanta, and I was interested to know who you are selling to. Thanks