Is Colorado Just TOO Expensive For Wholesalers?

Investor · Denver, CO · Member since 2022 · 6 posts · 2 votes

Greetings all!

Looking to network with wholesalers in Denver, Aurora, Centennial and Highlands Ranch areas. However, being the market is the way it is in Denver, I rarely see "We Buy Houses" type of signs, so just wondering if wholesaling is dead in Colorado because prices are so high?

Thanks,

Brian

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Scott TrenchPro Member

Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes

Why anyone would sell their $400K+ property for a 10% discount through a wholesaler when they can list it and get full market price right away is beyond me. I think wholesaling must work in areas that are slower, sleepier, and lower price than Denver. Though I'm sure there are a few exceptions in the wholesale world that will prove the rule.

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Shiela R.
Investor · Boulder, CO · Member since 2017 · 304 posts · 347 votes
4y
Hi @Brian DeMaestri. Seems we are at a top here in Denver metro. Bandit signs are best received in a down market. But, yes, I've seen a few whole sale deals. Few and far between but I don't think wholesaling will ever die;) I think the future is bright for wholesaling.
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Brian DeMaestri
OP
Investor · Denver, CO · Member since 2022 · 6 posts · 2 votes
4y
Greetings @Shiela R.! Thanks for your response. So its probably fairly safe to say there aren't a lot of people in Colorado marketing to find wholesale deals these days?

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Shiela R.
Investor · Boulder, CO · Member since 2017 · 304 posts · 347 votes
4y
@Brian DeMaestri, IDK. Why would it matter? :) Are you looking to connect with wholesalers? Or do you want to wholesale?
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Brian DeMaestri
OP
Investor · Denver, CO · Member since 2022 · 6 posts · 2 votes
4y
Indeed, I'm looking to connect with wholesalers who come across deals in which will not work for them. Using creative financing if I can get anything done with the deal I'd of course pay a commission for the referral. Hence the reason I'm curious as to whether folks are marketing to get wholesales deals in Colorado or not.

I don't see many "We buy houses" or "We pay cash" type ads around, so I assume not many wholesalers still in Colorado.
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Mike Schorah
Rental Property Investor · Member since 2021 · 423 posts · 190 votes
4y
Quote from @Brian DeMaestri:

Greetings all!

Looking to network with wholesalers in Denver, Aurora, Centennial and Highlands Ranch areas. However, being the market is the way it is in Denver, I rarely see "We Buy Houses" type of signs, so just wondering if wholesaling is dead in Colorado because prices are so high?

Thanks,

Brian

https://www.biggerpockets.com/forums/93/topics/1052279-where-are-the-real-cash-buyers-in-denver

I’d check out this link from a post in mid-July.

And it’s not just Denver. If you go back far enough on the wholesaling forum, it seems like wholesaling has dried up in every area.

Last month, there were only 4 wholesaling deals posted on my local REIA's Facebook page. That's down from about 16 for July. And the last time a deal was posted was August 19… 16 days ago! Judging from wholesalers on that REIA page frequently asking for contractors, it seems like all the wholesalers have pivoted to rentals and flips.
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Brian DeMaestri
OP
Investor · Denver, CO · Member since 2022 · 6 posts · 2 votes
4y
Excellent! This is pretty much what I thought!

Thanks!
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Matt M.
Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
4y
I'm seeing guys more active and MORE DEALS from wholesalers with better margins than I've seen in a long time. We've closed on 3 just recently. I even bought one from one of the big boys in town, which I never thought would happen.
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Jerryll Noorden
Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
4y
Hmmmm...
"expensive for wholesalers".
As a wholesaler you don't actually buy the property (usually at least).
So the only costs really is marketing. Are you sure you understand the concept? Or did I not understand what you mean?
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Brian DeMaestri
OP
Investor · Denver, CO · Member since 2022 · 6 posts · 2 votes
4y
Quote from @Jerryll Noorden:

Hmmmm...
"expensive for wholesalers".
As a wholesaler you don't actually buy the property (usually at least).
So the only costs really is marketing. Are you sure you understand the concept? Or did I not understand what you mean?

Greetings! Sorry for the confusion. I was asking if prices being so high and appreciation moving so fast in Colorado i.e. houses being too expensive, makes it a bad place to hunt for wholesale deals. I've noticed I don't see ANY "We Buy Houses" or "We Buy Houses Cash" type bandit signs or ads anywhere.

I'm wondering if there are any wholesalers left in Colorado and if so how they are marketing to get deals.

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Kwame Darko
Rental Property Investor · Member since 2019 · 69 posts · 38 votes
4y
@Brian DeMaestri shoot if their aren’t any wholesalers left there then time to swoop in!
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David Nguyen
Member since 2022 · 4 posts · 1 vote
2y
Thanks, Brian. Great topic
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Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
2y
Why anyone would sell their $400K+ property for a 10% discount through a wholesaler when they can list it and get full market price right away is beyond me. I think wholesaling must work in areas that are slower, sleepier, and lower price than Denver. Though I'm sure there are a few exceptions in the wholesale world that will prove the rule.
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Matt M.
Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
2y
Quote from @Scott Trench:

Why anyone would sell their $400K+ property for a 10% discount through a wholesaler when they can list it and get full market price right away is beyond me. I think wholesaling must work in areas that are slower, sleepier, and lower price than Denver. Though I'm sure there are a few exceptions in the wholesale world that will prove the rule.

Wholesalers serve a function in any market, and it's still thriving in Denver. They move the bad properties. A lot of time these properties are in need of significant work and people just want quick cash. I agree that they should list, but they don't for a lot of reasons: speed, out of state, embarrassment, etc. The most mind blowing ones are where agents bring deals to sell off market. Why they would do that to their clients is beyond me...
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James Carlson
Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes
2y
@Matt M.
I agree. It feels pretty close to malpractice for a Colorado agent to not advise their client to bring the home to market. I can't see any benefit to selling off-market and see plenty of drawbacks.
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Jerryll Noorden
Flipper/Rehabber · Wilton, CT · Member since 2015 · 4k+ posts · 4k+ votes
2y
Quote from @Scott Trench:

Why anyone would sell their $400K+ property for a 10% discount through a wholesaler when they can list it and get full market price right away is beyond me. I think wholesaling must work in areas that are slower, sleepier, and lower price than Denver. Though I'm sure there are a few exceptions in the wholesale world that will prove the rule.

That is not what wholesaling is about.
Some people don't want to list. Some CAN'T list.
Others need the money in 10 days,
Others (MOST motivated sellers), don't care about the money. They care about eliminating the pain that comes with owning their house. No matter what that pain is.

You can't think" "hey it is a great market in CO, why would anyone want to wholesale when they can list their house and get above the asking price the same day".
That is not why people decide to sell for cash. Don't think money. Think what EVER the traditional method of selling can't fix.
Once you understand that, only THEN can you position yourself to be a great wholesaler.
This is the entire concept of motivated sellers. Most people just can't wrap their heads around it. When it comes to motivated sellers (no matter the market) it rarely is about the money.
If it IS about the money, per definition, you are not dealing with a motivated seller.
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Mike Schorah
Rental Property Investor · Member since 2021 · 423 posts · 190 votes
2y
Quote from @Scott Trench:

Why anyone would sell their $400K+ property for a 10% discount through a wholesaler when they can list it and get full market price right away is beyond me. I think wholesaling must work in areas that are slower, sleepier, and lower price than Denver. Though I'm sure there are a few exceptions in the wholesale world that will prove the rule.

More than a 10% discount. I almost wholesaled a property that I got for $150k. There were title problems where it had to go through the court. It ended up selling on market for $230k. The most it would pencil out for me in a wholesale deal would have been $170k. Even at that price it’s more than 25% off the on market price. And the same held true for other deals.

And wholesaling a property above $350k ARV is extremely rare in my area. Properties above $350k ARV have more sophisticated sellers and very rarely need any rehab.

There are 3 counties out of 15 total counties in my area where there is nonstop gold. In those 3 counties, the median home price is $300k. The average population is 300k. I forget the 3rd metric as I don’t wholesale anymore. But when all 3 aligned, it added up to the perfect formula for home flipping deals which is 80% of wholesaler’s client base. 80% of my leads came from 20% of my local counties
Sure Denver itself might not work out, but if you go out far enough, you’ll find a county or two where the median home value is less than $350k (to find distressed sellers) and the population is more than 100k (to find cash buyers). I’ve never analyzed Denver, but I know that with Miami, NYC, and DC… that’s a long traveling distance to find a viable county. Over an hour, if I remember correctly.
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Bob S.
Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
2y
Quote from @Brian DeMaestri:

Greetings all!

Looking to network with wholesalers in Denver, Aurora, Centennial and Highlands Ranch areas. However, being the market is the way it is in Denver, I rarely see "We Buy Houses" type of signs, so just wondering if wholesaling is dead in Colorado because prices are so high?

Thanks,

Brian
Price has nothing to do with it. A deal is a deal,
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