New to Real Estate · Baton Rouge · Member since 2020 · 8 posts · 3 votes
Hi All,
I'm currently pressed for time between work and trying to grow a rental portfolio and I wanted to put a question out into the wholesaler-sphere in the BR area. Because I'm limited for time how would wholesalers feel about working with a buyer, like myself, on finding and processing properties that come in through marketing channels. For example, I was thinking that I would cover the costs of marketing for properties and a wholesaler would field incoming calls, and qualify leads where I would get the "right to first refusal". Any properties that I pass on that are still deals that wholesaler could then wholesale themselves and any properties that I purchase would provide an agreed upon finder fee to the wholesaler.
How would local wholesalers feel about this arrangement? Would it be beneficial and fair to both parties? Is this something that a wholesaler would realistically be interested in?
Let me know y'all thoughts. Thanks in advance for your time and reply!
Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes
2y
You would be better off purchasing deals from an experienced wholesaler in your area. You might not be aware of the amount of money invested in marketing for a wholesaling operation. To give you an example, I currently spend $10,000 a month and average about 2.5 deals monthly. Good luck!
Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes
2y
You would be better off purchasing deals from an experienced wholesaler in your area. You might not be aware of the amount of money invested in marketing for a wholesaling operation. To give you an example, I currently spend $10,000 a month and average about 2.5 deals monthly. Good luck!
New to Real Estate · Baton Rouge · Member since 2020 · 8 posts · 3 votes
2y
Hi David,
Thank you for your insight, the investment cost does seem high but could potentially be justified. Roughly $4,000 to find a deal seems like an acceptable ROI if it delegates the task and helps another wholesaler as well. These are my thoughts, thanks again!
Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
2y
I think you're giving up too much. You're paying for marketing, then you're also paying a finders fee for deals that you keep.
You didn't mention any split between you and the wholesaler on deals that you pass on and the wholesaler sells. Do they keep 100% of the spread on those?
You'd be better off paying for marketing and training a VA to answer the calls. Then you can handle the good leads.
Thank you for your insight, the investment cost does seem high but could potentially be justified. Roughly $4,000 to find a deal seems like an acceptable ROI if it delegates the task and helps another wholesaler as well. These are my thoughts, thanks again!
Matt
You’re talking about setting up a hybrid situation where you’re marketing for properties yourself but utilizing existing personnel expertise. The few really good wholesalers don’t need to do this, i.e., give up a high percentage of profit for marketing cost coverage, they operate profitably and this would actually lower their net profit even after lower costs. The wholesalers short of capital or unable to operate profitably would be interested, but why would you want THEM?
Like anything else there is probably a limited scenario where this could work out well, but finding the “right” person and making it fit a long term relationship would be tricky. I’m biased in that I like simplicity. This seems like it might get a little complicated.
Once you start financing or bankrolling you’re in BUSINESS, and the time demands seem to increase exponentially.
I think you're giving up too much. You're paying for marketing, then you're also paying a finders fee for deals that you keep.
You didn't mention any split between you and the wholesaler on deals that you pass on and the wholesaler sells. Do they keep 100% of the spread on those?
You'd be better off paying for marketing and training a VA to answer the calls. Then you can handle the good leads.
Nick C,
Thank you for your feedback and response. I agree that I may be being to generous in the arrangement. I think it would be more 'even' to have the wholesaler provide 10%, or more, of their wholesaling fee associated with properties capitalized on with the marketing efforts.
I've also thought about the VA route as an option as well. My ultimate goal is to pursue mutually beneficial arrangement.
Thank you for your insight, the investment cost does seem high but could potentially be justified. Roughly $4,000 to find a deal seems like an acceptable ROI if it delegates the task and helps another wholesaler as well. These are my thoughts, thanks again!
Matt
You’re talking about setting up a hybrid situation where you’re marketing for properties yourself but utilizing existing personnel expertise. The few really good wholesalers don’t need to do this, i.e., give up a high percentage of profit for marketing cost coverage, they operate profitably and this would actually lower their net profit even after lower costs. The wholesalers short of capital or unable to operate profitably would be interested, but why would you want THEM?
Like anything else there is probably a limited scenario where this could work out well, but finding the “right” person and making it fit a long term relationship would be tricky. I’m biased in that I like simplicity. This seems like it might get a little complicated.
Once you start financing or bankrolling you’re in BUSINESS, and the time demands seem to increase exponentially.
Hi Don,
I agree, I think I may be overthinking my current situation and it would be better for me to try the more simple/less expensive property lead channels initially but with greater volume.
I can transition to a more complex strategy with VA's or wholesaler arrangements later on when I have more margin to work with and a greater need to buy back more time.