Lost on the wholesale road?

Question

Hello everybody, I'm new in BP. This question may be basic and simple for all of you, but here it goes. My short term goal is closing wholesale deals. This real estate strategy is new for me. I've evaluated many, many, many properties. In fact, I have gotten 3 properties under contract. When I calculated the basic ratios (e.g. CAP, CoC, etc.) I used 30%-35% from gross revenue to estimate expenses of 2-3 multi-unit residential. Reality, 100% of time expenses were under-estimated. I've been recommended using 50% to estimate expenses. If I do this none of the properties that I have evaluated or I'm evaluating pass. I've been looking in Ontario using ICX and MLS. Question: Where are the good deals? Is there a web site I don't know about? Is there a way to find good opportunities? I'm not looking for a free pass, I understand wholesaling takes a lot of work, but I feel that I'm doing something wrong. Thanks.

Simon Lloyd · Answer

Welcome to BP @Juan Rodriguez !!

If you're looking to wholesale here in Ontario, I hate to be the bearer of bad news but right now you'll have a very, very tough row to hoe. The inventory in most larger towns/cities in Ontario is low which means that sellers have no motivation to sell below market value. Even properties that require repair are going for higher values. I just completed a flip and I'm looking for another project but even that is a tough task---to find a property with enough margin that would allow for an extra set of fingers in the cookie jar would be an extremely rare find!  And to do it with any consistency where you're actually able to scale it as a business would be darn near impossible, I'd say.

I think a good strategy here in Ontario is either small flip projects that have just enough margin to make a few bucks (check out REOs or powers of sale as they're called in Ontario for some of the better deals), or long term buy & holds, or if you want to get more creative, 'long-term flips' where you buy a property slightly under market value, fix it up, refinance then rent it out.

Hope that helps!

Juan Rodriguez · Answer

Hi Simon, thanks for your feedback. Your opinion has just confirmed my findings that this time is tough to find good deals, certainly it is not impossible, it just take more effort and resources.

Also, thanks Russell for your answer. You are right! being in the right time in the right moment is key and makes a difference. I have a question for you, please keep in mind that I'm new in wholesaling. If you were asked to describe the best 3 ways/strategies to take your marketing in front of clients, what will your answer be?

Russell Ponce · Answer

First of all you have to market for motivated sellers, plenty of info here on that subject.

There will always be circumstances that create motivation, you have to get your marketing in front of the right person on the right day, and then you can help their situation.