Does anyone here typically buy from wholesalers? What are the pros and cons?
Rarely but yes. The pros are you can find a deal every once in a while, the cons are you have to look at a loooooot of bad deals to find one that works. You need to analyze each one, the rehabs are almost always too low and the arv's are almost always too high.
@Wave Taylor if the numbers work then it doesn't necessarily matter who the source of the property is. You do have to be wary of the numbers wholesalers are giving you because they're usually inaccurate and make the deal look better than it is.
A definite pro of a wholesaler is they do the searching for you. You'll pay a slightly higher price because of it, but it can be a big time saver.
Are you dealing with multifamily wholesalers?
I'm networking with local wholesalers to search for motivated sellers of multi-family properties and will have no issue purchasing one from a wholesale lead if the numbers check out.
@Wave Taylor ALWAYS double check the numbers that wholesalers give you. Unfortunately there are more wholesalers out there that are either uneducated or not nice people who fudge the numbers so they can make their money, than their are educated, morally sound wholesalers.
Pro's are obvious, good deals, typically straight forward process unless some unknowns come up during title search but hopefully that is taken care of before you're brought into the deal.
Cons: See above!
My group tries to buy deals from wholesalers, but it often becomes more work on our end unfortunately...
Someone is bringing you a deal and if done correctly, much of the upfront heavy lifting has been done (research, analysis, etc.)
It's challenging to find a true wholesaler that:
1) Actually has a solid deal under contract
2) Is not just passing along an email from a broker
3) Is not working with other people along the way- ultimately forming the mysterious "daisy chain"
4) Is not greedy and not asking for an outrageous fee
@Wave Taylor I haven’t run the numbers but I’d say roughly 1/3 of my deals come from wholesalers, 1/3 from word of mouth and a 1/3 from realtor/broker pocket listings.
That is becoming the new norm. I personally dislike it in the multifamily space. Buyers are forced to pay a commission to purchase a property. On the other hand, if the deal is good, then it is worth it.
The problem is that most of the times there are multiple individuals involved in a transaction. It's hard enough when dealing directly with the seller. Imagine trying to insert three people.
The other disadvantage is are you dealing with someone who is legitimate? I've seen "wholesalers" pull stuff off Loopnet and claim to be off market.
The brokers have a tight market and this will continue until the market eases. Either get used to it or go into another occupation.
Agreed! If I could find one great wholesaler, everything would improve. As it is I am scouring every "regular" source and not finding what I need. Two years ago I could find deals on MLS or auction sites. Not the case now.
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