Buying for wholesalers?

Question

Hello BP community! (The title should say Buying FROM Wholesalers)

I am a newbie to the investment world and looking for my first BRRRR investment. I'm leaning towards several markets including the Austin and Lubbock areas. My question is whether buying from a wholesaler would be a good way to find my first BRRRR property? My impression is that wholesalers (maybe some of you fine people!) find deals and get compensated for the effort when you sell the contract, BUT I also have been warned that buying from a wholesaler can be risky for a new buyer - for example, are they honestly representing the property, rehab and ARV numbers? Knowing that I must also do my due diligence upon finding a deal, does anyone have advice or experience with buying from wholesalers they are willing to share? THANKS!

Matt Moreland · Answer

Agreeing with what others have said above, wholesalers can be an invaluable resource for investors. They are providing value by finding (sometimes) great off market deals and cutting out the time and cost of finding those properties for you. That being said, for the deals to be screaming hot for you, you've got to have strong numbers and an ability to accurately estimate your costs and what the ARV will be. No knock against wholesalers, but just like anyone else trying to move a property they will often times see the property as being worth more than what your conservative estimates show.

Wholesale deals move quickly, and you don't want to get caught up in a whirlwind deal if you are uncertain about the numbers. For your first deal or two, I would go a more traditional route or work with an agent in one of the two markets who has access to off market deals as well where you may be the only Buyer that knows about it, or have more time to dial in your numbers.

Alternatively, this could be a good opportunity to partner up with a more experienced investor in the area you're interested in and contribute from a capital position on one or two smaller deals that are purchased through wholesalers to become more comfortable with the process and decide if it's one you would want to pursue on your own as well.

Jordan Moorhead · Answer

Do your own due diligence and never rely on their ARV or rehab costs. In my experience it's not so much that they're trying to pull one over on you but they don't know and don't have the experience themselves. I wouldn't buy from a wholesaler until you had done a few deals. Those deals are too fast moving and don't leave much room for error.

Eliott Elias · Answer

Wholesalers are some of the best lead sources, they do all the leg work in terms of finding the deal. It is risky if you don't know what you're doing. No one represents you and the wholesaler will say anything to sell the deal. It is up to you to do your due diligence.

Buying for wholesalers?

Buying for wholesalers?

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