Don't Fold Your Cards Too Soon

15 Replies

I just wanted to share a quick tidbit about two wholesale leads I received today. 

I sent  1200+ yellow letters throughout Dec and most of Jan. After I sent my last round of letters to my initial list a few weeks ago, I noticed a lull in the calls. They stopped coming in.

Well, lo and behold, I received two calls today, nearly back-to-back, from two folks who are actively looking to sell their property. One of them most likely wants retail so I referred it out. But for the other, I will be making an offer on it this weekend!

As I ramp up my next round of mailings, I just wanted to remind other newbie wholesalers that you're best leads may not come until well after you've sent out your final letters. People will hang on to them and call when they feel they're in a position to sell, and that may be long after they received the initial letter.

I'm also finding that with all of the weather that has been inundating Cleveland, sellers are feeling the need to "wait until the weather clears" before making any moves. To me, that means that now is a great time to start planting seeds that you'll be able to harvest in the spring / summer months right around the corner.

Hang in there and keep at it!

@Joshua McGinnis  could you explain.how you are able to wholesale properties in Cleveland from California.   Thanks

I too would like to know the answer to Deborah Hill's question. Thank you.

i should add that it's better not to send any mailers in December.  with holidays and New Year's, along with kids being home or relatives dropping in and out, selling property isn't on the top of most peoples' minds.

as for wholesaling in distant parts of the county, that is easily done if you have a trusted source on the ground.  that's how i've done it and im certain others do it too.  there's also co-wholesaling with a local.  i.e. you get the seller and market the property to other wholesalers in the area who know the buyers.  i believe truly that if you can get a property for 70 cents on the dollar or lower, there will be someone willing to buy.  no matter the location or condition.   

@Rene Martinez  @Deborah Hill  @Vincent Orobor  

As @Patrick Britton  said, wholesaling "virtually" can be done, but it takes work and a few key components. 

Here's a quick summary of what you need based on my approach (others may do it differently):

  • Identify a market that you want to wholesale in
  • Find and/or buy a list of high-equity homeowners
  • Send out yellow letters to the list with a phone number that goes to voicemail
  • Wait for calls to come into your voicemail
  • Return the calls, identify motivation, gather intelligence (address, motivation, asking price, etc)
  • For properties that meet your criteria, make an offer using this formula (ARV * 70% - Rehab Costs - Wholesale Fee)
  • Get a signed accepted offer
  • Having someone on the ground visually inspect the property, negotiate price again if the rehab is greater than you expect
  • Either open escrow and buy the house and then dispose of it a number of ways or find a cash buyer and assign it to them.

That's essentially what I'm doing in a nutshell. I hope this helps!

@Joshua McGinnis  who do you have visually inspect the property?  I'm guessing a real estate. If you have a real estate agent, what do you tell them?

How do you research an area to market out of state?  Is that with a real estate agent also?

Thanks for the info. Much appreciated. 

@Deborah Hill  Great question. You could pick up the phone in your area and find someone  (like a local agent or property manager or someone on BP) within an hour or two to go inspect the property, take pics, etc for $50-$150 once you have it under contract or close to it.

In my case, I'm wholesaling in a market far-far away so I wanted to network and have people on the ground that I could trust and would help me not only inspect the property, but guide me on determining values, coming up with offer amounts, and helping find cash buyers. 

So, when I first started doing this, I spent a solid two weeks googling every wholesaler, investor, and non-agent RE person in the are and calling them. I told them I was new and that I just wanted to connect in case I have a deal.

From there, I whittled down my contacts to two solid guys who have a good reputations and were interested in helping me. I've been keeping in touch with them (trying not to bug them or waste a lot of their time) and show them that I'm serious.

@Joshua McGinnis  who do you have visually inspect the property?  I'm guessing a real estate. If you have a real estate agent, what do you tell them?

How do you research an area to market out of state?  Is that with a real estate agent also?

Thanks for the info. Much appreciated. 

@Joshua McGinnis  re: virtual wholesaling.  perfectly said and outlined.  you should become a "guru" and charge $10,000 for that info :)

Originally posted by @Joshua McGinnis:
  • For properties that meet your criteria, make an offer using this formula (ARV * 70% - Rehab Costs - Wholesale Fee)

For areas you're not familiar with and a house you've never seen, how do you determine ARV and repair costs to make your initial offer?


As I ramp up my next round of mailings, I just wanted to remind other newbie wholesalers that you're best leads may not come until well after you've sent out your final letters. People will hang on to them and call when they feel they're in a position to sell, and that may be long after they received the initial letter.

Very true! Lets get out there and plant as many seeds as possible... sooner or later it will be time for them to harvest!

For areas you're not familiar with and a house you've never seen, how do you determine ARV and repair costs to make your initial offer?

Great question @J Scott  

This part is a bit of an art. I try and get as much information as I can from the seller about the condition of the home and bake into my offer the need for at least $5K (though, I usually bake in more) for repairs into my offer. 

I try to get my seller to be in the same ballpark as me on price, but I make sure to tell them that the offer is contingent upon my partner on the ground (an active/experienced investor/agent) inspecting the property. I also disclose upfront that if we find upon inspection that the house needs more work than what we budgeted for, we may have to renegotiate the price. I am also prepared to go the other direction. If I baked in $10K for repairs in my offer and the house only needs $3K-$5K of work, I have no issues coming up on price if I think it will help the deal go smoother in one way or the other.

It's not an exact science and is indeed the most difficult part of this whole venture, but with a little planning, being transparent to the seller, and someone to be your eyes/ears on the ground, it can be done.

If your repairs estimate is way off - because sometimes sellers say their property doesn't need any work - how do you reconcile your offer to that adjustment?  I.E., how many offers have fallen out because your offer just isn't doable anymore after your boots-on-the-ground inspects the property?  

@Christina R.  I've yet to have this problem since I've just started and no one has accepted any of my offers so far. But first and foremost, I always communicate to the seller that any offer I make is contingent upon an inspection and that if either me or my partner finds it needs more work than what our offer price has reflected or we find a lien or anything else that might impact value, we will need to renegotiate the price. Most seem amenable to that.

I did recently lose out on a deal because another wholesaler beat me to it just days before I could call the seller back. When I was talking to the seller, he was complaining about how the other guy (wholesaler) had initially offered him $13K, but after he saw it, he told him he would only pay $11K. I guess the seller wasn't thrilled that the offer was lower, but he took it and they closed escrow this week. 

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