Use a wholesaler?

Question

Would you guys recommend using a wholesaler to find your first deals?

I've searched for this answer, but after searching through a pile of results, it seemed like a needle in a haystack, despite how basic it was.

Leland Barrow · Answer

The answer to your question is it depends. That is a very broad question. I can share my personal challenges. Successful wholesalers have a buyers list. Their consistent buyers are going to be at the top of the list and have access to deals before anyone else. Generally any properties that make it onto craigslist or drop down the buyers list are not good deals for various reasons amount of work that is needed, wrong neighborhood, bad curb appeal etc.

If you are going to be buying consistently and in volume then ranking higher on buyers lists will probably not be an issue. In my situation I do not need an income, I am just looking to cherry pick what I can. I am working off of very specific mailing lists and drive for dollars. I can afford to spend the time doing my own research and avoid paying wholesaler markups/fees. That being said I wouldn't pass up a good wholesaler deal if I found one but they are not usually in my sweet spot. A little too distressed for what I am looking for. If I find a good deal that is not my sweet spot then I will bird-dog it for a fee.

My suggestion would be to know what your end goal is and then work backwards to get to the actionable steps to get there. If buying five properties a month is your goal then going through a wholesaler is going to have advantages. Your first actionable step is to pour through craigslist and put together a wholesaler list. Then let the wholesaler know you are a volume buyer. If you are looking to start with your first deal, driving for dollars and doing the research is a good first actionable step. Make a list of properties by address that look distressed. You can learn your area, learn how to research a property, and cut the middleman out.

Brandon Smeltzer · Answer

Fantastic.

@Leland Barrowundefined

@Leland Barrowundefined Thanks for these next steps. Great advice. I never considered being low on the wholesalers list. I guess 5 properties a month seems like a lot more work than driving for dollars?

Brandon Smeltzer · Answer

Thanks, Logan! I work in medicine and don't plan to quit my job anytime soon. My goal is a little too big to admit at this stage as an aspiring investors. My 10 year goal is to purchase multi family complexes by using something like Brandon Turners "7 years to 7 figures" model, multiplying that x 4, and using the equity to purchase the multi family units and then rely on the cash flow as passive income.

I know it's in theory, but how many investors can truly find a four plex for 80% of market value and produce a 10% increase in the ARV?

If I'm learning how to find and manage the right contractors and prop managers, does it make sense to also spend the time to learn how to pursue motivated sellers if they're few and far between or the wholesalers have already found them?

Thanks!