I've only been in BP 4 days, browsing the forum soaking up what I can.
My investment strategy starting out will be wholesaling. Would it be wise to build relationships with buyers before you go out looking for property?
I feel if you know what cash buyers are looking for, you can better target your marketing.
Ultimately, you can be great at finding deals but if you have no cash buyers, it's pointless.
Welcome to BP Charles Rivers
That is a question much like "what came first, the chicken or the egg?"
I have always been taught that you first find the deal and the money will follow. I think this is the correct way to approach it because the deals are harder to find than buyers. However, you could make the case that once you have buyers you could find the deals and get rid of them faster. Either way you look at it is right.
Just for fun, place a "For Sale" sign in the font yard of a vacant house. You will get some buyers. LOL
worst case keep the deal for yourself and rent it out
Welcome to BP. Definitely take the time to read and listen to the podcast and yes... soak it all up.
It can get overwhelming with so much information, but I too am new and have found that the more I read and interact on BP, the more at ease I am becoming.
Continue to network on here, but you should also consider attending some REIA meetings in your area. I attended my first one last month that focused on Wholesales and Analysis and I meet several buyers there that were ready to look at any deals that anyone had. Its a great place to start networking with people (besides here of course) and get your name out there.
@Rene Martinez that is true either way you look at it. I don't think either or would be any better, it's a matter of strategy and what works at the moment.
@Mark Brogan I guess my question was based out of fear because as a wholesaler that would seem to be my biggest hurdle. What if I don't sell a property? Long term, when I get more involved, working real estate full time and I have the capital to hold a property I'm all game. However, my financial situation right won't allow me to take a chance on not selling a property and have to end up making those payments until I get it rented.
@Samantha Lotti Thanks for that little tidbit. I looked up local meetings in my area and will be attending a couple over the next several months
Hi @Charles Rivers ,
In the case of not being able to wholesale a deal, that's where you should have an exit strategy subject to finding a buyer or financing. This you would have to add to the PC as well as the "assignment" clause.
Originally posted by @Joseph Ball :
Just for fun, place a "For Sale" sign in the font yard of a vacant house. You will get some buyers. LOL
Joseph - as a licensed agent, you should know better - that sort of thing can give the appearance of representation; and if the OP is not licensed then representation without a license can lead to trouble; and if licensed, then representation without a listing agreement can also lead to trouble.
Looking for buyers first is just a way to put off doing the real work involved in wholesaling. Finding buyers is easy...doing that doesn't get you any closer to actually doing a wholesale deal.
If you're looking for a way to procrastinate, look for buyers first. If you're looking to get closer to your first deal, go find a deal...
I agree with J. Scott, to a great degree. But I'd suggest that the real answer is:
(d) All of the above.
I don't think you need to spend days or weeks compiling an exhaustive buyers list. But I do think you should know a couple of REAL cash buyers (their names and contact info, and what their general criteria are). You'll get that as you network and research the business locally.
But yes, job #1 of a wholesaler is marketing, or more specifically, the search for motivated sellers. Put 80% of your time on that.
Really, I think someone can do both and make the most out of their searches for deals. If you know someone is looking specifically for this or that, as soon as you find it, you jump on it. In the meantime, you're still looking for deals that will attract other investors, in general.
The key is to get ALL the criteria from your buy up front. That way there is no back and forth with the buyer and wasted time and effort. It's always good to have buyers in the wings IMO.
@Account Closed , welcome to BP!
Like a few others on this forum have stated, if you get a true deal under contract, you shouldn’t have any problem finding a buyer quickly. I’ll caveat that statement by saying that I wholesale in the Phoenix market so there is no shortage of buyers here. I’m not familiar with your market so your strategy may be different than mine. Either way, if you have a deal, most likely the buyer should be relatively easy to find.
I havent even completed my first deal yet, have a list of 20+ in three weeks!
Charles, you are correct.
I have no idea why others don't use some common sense, especially those perceived as popular successful investors on here who know better, but give thoughtless advice at times.
The other wholesalers who were guru taught, you're totally excused because you don't know any better yet, but you're about to.
Empty houses carry much less risk for a wholesaler. No one is living in the property, if it goes under contract, no one is packing the bags, calling furniture movers, setting up storage arrangements, they aren't out with another agent looking for a place to rent, taking off from work, they probably won't put a contract on another house, with a down payment and earnest money subject to the closing on their empty house. The most likely won't spend money and pay for an appraisal and loan costs to be ready to close right after their empty house sells.
That owner of an empty house probably is under no time constraint, the place sat there for how long empty????
Someone who lives in a property is under a totally different set of circumstances, they have to live someplace!!!!!!!
The owner living in a house will or can be doing all the things I mentioned above, and much more, because the sale contract of their house begins the chain of events for them to begin acting on those aspects they must take care of, otherwise they will be living in a MOTEL!
That is why you treat people living in a home differently than the owner of an empty house.
Let's continue with the guru ploys.
You got no money, you got no credit, you don't have the ABILITY to buy a nice front door, much less a house. But, being the crackerjack sales guy you are, you follow gurus on here executing contracts as if you are buying the place with only two thoughts in your mind, how much you might make and how to save you lying azz with a bunch of mickey mouse exit clauses and there is a total disregard for the owner and the position you put them in.
So, you contract then you go beat the bushes trying to sell the place, besides your approaches of advertising the property as if you owned it and putting your sign in the yard which is flat out illegal, you just ignore the inconvenient truth and keep marketing the property, bring in your "partners" to approve your scammy little deal.
Okay, now, you failed to locate a buyer, your contract time ran out, you bail out and walk away.
Where is that homeowner now? If you did your contract a month ago and the contract is up now or say in two weeks, not only can they not perform on their side of things by relying on you to purchase, but now they have to put the place back on the market at the beginning of winter! How good is your market in the winter? They decide not to do this again as a FSBO, they talk to a Realtor. They tell the Realtor about your deal.
They also have to tell their buyer's agent if they can't perform on the next purchase. Did it ever dawn on some of you that their buyer's agent will be extremely ticked off?
YOU are responsible for misleading the seller that you had the ability to buy, that you would perform and YOUR actions have caused FINANCIAL DAMAGES to that homeowner, putting that property is a less favorable marketing position can be shown and is shown in court to cause a reasonable loss.
Tortious Conduct, look that up, study what grounds this gives a homeowner and a Realtor to clean your clock!
This is the underlying legal reason brokers make their agents pre qualify a buyer, most say pre qualify before they get in your car! Not only does a buyer's agent not want to fool with a no money buyer, they don't want to get nailed for putting a homeowner in contract, having them get involved in costly activities that buyers customarily do and take a property off the market for weeks, ending up getting sued and/or paying damages.
Called a "China Egg" crack it open and nothing is there!
Now, how can you operate safely?
First, get the balls to tell the truth up front, that your are a wholesaler and that you know buyers who you will introduce to the property. You ask for an OPTION, not a sale contract. a good option has everything a sale contract has, it just doesn't hold you to the obligation of buying.
As to the question which came first, the chicken or the China Egg, the answer is a buyer when you have an owner occupied home, you need some idea of who buys that size, style home and for what reason. You move quickly, since the seller has agreed they know not to go out and do things that could cause them any loss, if they do, then it's not on you!
As mentioned, you don't waste your time either, if you all ready have buyers you know what the market demand is.
What does it cost you, time, effort, gas, vehicle wear and tear to chase the bushes for just any buyer? Listing on CL, don't forget, you're offering the opportunity to buy, not advertising the house, you sell your contract, not the property because you don't own the property!
If it's an empty house, it doesn't really matter how long it takes you to get a deal, no harm, no foul. You can get that house first and spend months beating the bushes if you want to.
Your market will determine if you need buyers, if you have a hot buyer's market, then it might not take long to beat those bushes, but in a balanced market or seller's market, you better understand that time is of the essence.
Lastly, how do sellers find out you're a China Egg, mainly from Realtors they will come in contact with but it could be anyone in RE. You run around with bandit signs, send out letters, advertise properties without a license and you think you're under the radar? Really? They are totally aware of these scams and what bad wholesalers do and most, like me, would run a bad wholesaler out of town into a jail if the opportunity arises. Because they have no clue as to the public good or domain being effected by what they do.The bad ones have laid out that reputation for you to combat. Don't be a bad one, don't lie about your ability to purchase, be up front, the truth is always easier. You will get caught eventually if you mess over a seller.
I have had these matters come up before in direct dealings and through real estate offices, it happens about every 3 or 4 months where some China Egg screws up a contract and it comes out of their pocket one way or another. In some areas, where a few of our gurus or wanabe gurus deal their local area may be different, OTH, it probably isn't and they are coaching from the back room putting your tail on the line. I'm sure they won't admit having gotten in trouble either, a liar is a liar.
So again, that's why beginners need to begin RE with basics or real estate, not systems or niches or podcasts or forum chat or guru books and systems. You need to understand what other people are expected to do, what they might do, what is customary for them to do so that you can operate in full light, stay out of trouble, act legally and act in good faith.
No, I don't hate wholesaling, I'm involved right now with a 450K home, which means I have better things to do than type long posts trying to put the newbies on the right path. I'm taking an option this afternoon at 4:00 and the owner knows exactly what is going on and I have 6 people to call. 4 of the 6 have been known to me for years, I've had almost a week learning about the property and the seller, the other 2 potential buyers I've already spoken to and are new to me. After the option, they will get appointments to see the property with the owner, I'm not advertising anything, so, there you go! I don't spin my wheels for nothing. We will see. :)
Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com
Real Cash Buyers that can close quickly, is not as easy to find, as everybody says.
A lot of people my wasting time out there.
And in Los Angeles, deals with 20%+ ROI are hard to find.
Not many Buyers are willing to take 10% ROI.
Still building a real list of fast Buyers.......
@Account Closed I'm a cash buyer that can close quick. There are tons of cash buyers, especially here in california--probably on this forum.
If it's a legit deal that is actually your own deal, then the cash buyers will line up.
Sounds good, @Will F.
I'll be sending you some deals.
And please, check my website for Active Properties.
Thank You, BP's!
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!