is wholesaling commerical property a good idea? does anyone ever do it? is it easier?
say a 50 unit apartment
I know someone wholesaling much bigger apartments than 50 units...so it is definitely doable. I don't imagine it being "easier". If you have a reliable list of investors who have the money to purchase it, all of your homework is done, and the numbers make sense, it will work. But as far as being "easier" I highly doubt it. I'm not sure what your market is like but as a wholesaler you need to find comps. How "easy" will it be to find a comp in your market that compares accurately to the 50 unit apartment you are describing? How "easy" will it be to build a buyers list that have the money to purchase these sorts of investments? How "easy" is it to estimate the repairs on a 50 unit building...It's the same process as any other wholesale property. Which will make it equally difficult, at the very minimum. The guy I know does these types of wholesales but not as often as your typical property. The profits are larger, which makes it worthwhile, but it definitely won't take LESS work, therefore, not necessarily easier. If you have the experience to understand if the numbers make sense or not, why not put in a little extra work for larger returns? Wholesale 4 smaller properties for 40k return, or just one larger property for 40k return...in a sense, making that 40k off of such a large building would be easier than making 40k off of your average sized building, but it doesn't mean the process will be easier. This is just my intake on the matter.
@Account Closed Hey man! How's it going? I'm sorry I didn't respond to you message last week... Anyways... I definitely agree with you that you should probably go after the one 40k deal as opposed to a bunch of smaller, tedious ones that are a lot of work. I do however have to make the point that deal flow is key! You need to have those wholesale deals in the pipeline to be making money now. If you can consistently find them then great! However, if you don't have great commercial wholesale deal flow then you've got to make money from the smaller ones as well. I think we can both agree a quick nickel always beats a slow dime.
I agree with you 1000%, but I just wanted to put that tiny caveat in there.
Bad part about big deals are if one falls through, you have no others to back you up. One commercial deal might be able to make you $100K and so could 10 Single family deals at $10K. If one SFR deal falls through, you are still making $90K, when your one deal falls through, you get Zero! Had it happened once on morning of closing. Deal fell apart. $30K, Gone!!! Sure wish I would have had those other SFR deals waiting.
Where most deals fall apart when a wholesaler gets greedy and wants a huge payday when there is no huge payday.
For a 341 house package, $30k is not a lot - lol. Wasn't being greedy at all, If thats what you were getting at. Pretty sad deal for a wholesaler really, making about $85 per House. - LOL
What I was saying a wholesaler will tack on a large wholesaling fee, and sometimes it will kill a deal.
The problem with commercial deals is there is a lot of due diligence and they take a long time to happen. Lots of negotiating happens after the contract is written based on the due diligence. That makes it tougher for someone to be in the middle of the deal and not get squeezed.
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