Noob with a question for those who have actually done a deal

Noob with a question for those who have actually done a deal

Schenectady, NY · Member since 2016 · 8 posts · 1 vote

I apologize if my title sounds rude. I know a lot of us are on here because we are new and want to learn (me included). However, I think this question can only be answered properly by those who have actually done a successful or unsuccessful deal:

Wholesaling seems very enticing for me, because it requires very minimal costs. Earnest money and maybe $150 for an LLC, and the most I have to invest anyway is about $3,000. However, I have heard from many people that wholsaling is one of the hardest niches in real estate to get into. I have heard that you have to have the same knowledge has a rehabber, a landlord, and a real estate agent. You not only have to be able to find deals, but you have to be able to accurately measure the rehab costs and then be able to market the property. On top of that, you have to also be able to get a better price than rehabbers and land lords. This is all learnable and definitely possible, yes, but is it actually realistic for someone just getting into real estate investing?

Do you guys think my time would be better spent saving up cash and house hacking a multi-family to get at least some kind of experience? I currently rent an apartment (as in I pay to live in it, not the other way around), I've never even purchased a home for myself, let alone made an effort to invest. This is all new to me, and so far people with experience have told me all of the above. What's your opinion? I really would like to hear from those that have done a real wholesale deal, not those who are planning on it. I hope that doesnt come off as rude at all.

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Investor · Dallas TX, United States · Member since 2014 · 1k+ posts · 1k+ votes
10y

Don't over complicate the problem.  There are a lot of people who will tell you all about building a buyers list, getting rehab estimates, etc.  That is mostly true, but also irrelevant. 

Wholesaling is the act of buying (better if you just control it with a contract but that is more advanced) a house and selling if for a higher price.  It is that simple  all you need to do is to spot and tie up the bargain.  I will give you two examples from my group this week.  

One is a piece of crap house in a not very good neighborhood. The seller wants out, copper already gone and one of the locals just filled his garage with debris. He needs $5,000 to pay the back taxes and walk away My guy Jay got it under contract and put the deal up at our REIA meeting last night at $9800. He got a buyer last night, they are signing the contract tonight. How complicated was that deal?

Also this week. Candace from my group got a house that I was too busy to look at.  The lady wants out because she has a municipal lein of 11k and credit cards of 38k that she wants to pay off.  All total she will let house with a value of 190k got for 170k, not a great deal but there is meat on the bone here.  The meat comes from the spread in the first part of the deal and there is a second lot of 1/2 acre attached to the deed.  Candace already has a buyer for the lot at 50k cash (her handyman) all she needs to do is to get a buyer for the main house. Even at her contract price of 170k she still makes money.  That deal had two parts but it still wasnt complicated, it was a wholesale. 

Now go find a bargain and sell it to someone who wants a bargain. 

To your success

Josh  

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  • Ned CareyPro Member
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    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y

    @Account Closed I did some of my most profitable deals when I didn't have as much experience as I do now. even now I would not say I am good at estimating, or know what a rehabber knows. My solution was only to do deals that were so good they were an obvious slam dunk.

    Is it hard to find deals that are that good? Yes, you bet. But when you do find that truly motivated seller is is not hard to get the deal done. The hard part is finding that seller. 

    Whether you should start with house hacking or wholesaling is a personal choice and depends in part on our goals and your resources. I would estimate that it takes people 6 months on average to do their first deal. Since that is an average many take much longer than that. Take the time to build your network and to learn you market. Go look at a hundred houses. You will become so comfortable with your market you will be confident enough to pull the trigger when you come across a real deal.

  • Schenectady, NY · Member since 2016 · 8 posts · 1 vote
    10y

    I see. I suppose I should at least give it a shot, but I still have a lot more to learn. I'm just trying to use my time as wisely as possible. It will probobably be a while until I can even afford a multi family home. I'm noticing that multi family homes in Florida are either affordable (for me) and in a terrible neighborhood, or $600k+ and right on the beach. Makes it a bit more difficult. It's hard to find a place that I can afford and is also in a nice neighborhood.

  • Investor · Dallas TX, United States · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Don't over complicate the problem.  There are a lot of people who will tell you all about building a buyers list, getting rehab estimates, etc.  That is mostly true, but also irrelevant. 

    Wholesaling is the act of buying (better if you just control it with a contract but that is more advanced) a house and selling if for a higher price.  It is that simple  all you need to do is to spot and tie up the bargain.  I will give you two examples from my group this week.  

    One is a piece of crap house in a not very good neighborhood. The seller wants out, copper already gone and one of the locals just filled his garage with debris. He needs $5,000 to pay the back taxes and walk away My guy Jay got it under contract and put the deal up at our REIA meeting last night at $9800. He got a buyer last night, they are signing the contract tonight. How complicated was that deal?

    Also this week. Candace from my group got a house that I was too busy to look at.  The lady wants out because she has a municipal lein of 11k and credit cards of 38k that she wants to pay off.  All total she will let house with a value of 190k got for 170k, not a great deal but there is meat on the bone here.  The meat comes from the spread in the first part of the deal and there is a second lot of 1/2 acre attached to the deed.  Candace already has a buyer for the lot at 50k cash (her handyman) all she needs to do is to get a buyer for the main house. Even at her contract price of 170k she still makes money.  That deal had two parts but it still wasnt complicated, it was a wholesale. 

    Now go find a bargain and sell it to someone who wants a bargain. 

    To your success

    Josh  

  • Real Estate Broker · Chicago, IL · Member since 2015 · 531 posts · 266 votes
    10y

    LLC's cost closer to $900 last time I checked.

    I've never done a wholesale deal, but I've closed well over 100 deals in my career. If you are just starting off I'd agree that it is going to be quite hard to wholesale, but as with anything I think if you immerse yourself into the subject, prepare yourself, study, research and have an I WILL DO THIS attitude, anything can be done. The reality is that most people are too lazy to follow through with things. Successful people do what most other people are unwilling to do.  

    If 2-4 flats are hard to come by or too pricey, you may want to start off by buying a cheap condo to live in, and plan on renting it out to someone else in a year or two. 

  • Investor · Tampa, FL · Member since 2011 · 2k+ posts · 3k+ votes
    10y

    Sounds like the cost of LLC's vary from state to state. Wasn't more than $150 here in Florida. But back to the OP.

    I always hear wholesaling requires minimal costs. To wholesale a house that's true. To build a business and make a full time income you're going to have to spend some money marketing. How much depends on your budget and how serious you are. 

    The process is simple. Don't get paralysis analysis and get caught up in the details, you buy a property for less than you can sell it for. Spend all your efforts on finding undervalued property. The rest will take care of itself.  

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