Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
Ok, so we had to close on a deal that was meant to be a contract assignment. Here are the numbers:
ARV 110k
Repairs 20-25k
Rent 950-1000
Originally asking 35k
Bought for 20k, had to repair the back extension (mechanical problem) - 3k
Here is the obstacle - I have people (marketing to investors) interested (numbers do make sense don't they?). But as soon as they found out how much we paid for it (public records), they either stop responding, or give a low-ball offer (low 20s) or say - "wow, you are trying to make so much money with this property". Yeah, but I had to find the deal and pass it to you to make money. I mean - if these numbers make sense to you, why would you not do a deal - because someone else makes money on it too? There is plenty left for everyone involved in the transaction.
Have you ever had this problem? How do you suggest we overcome it? How do we sell the property?
I suppose some might suggest "don't be greedy, sell for what you can get for it" - but the problem is, the offers that we had barely cover our holding, closing, repair costs and purchase money.
I think we might get better chances of selling it when listing on MLS as a handyman special ?
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
17y
Jorge,
I'm guessing you are referring to my comment about wholesaling not being for everybody. I didn't receive an email from you, but I have no issue with just discussing it here.
My laughter was based on your extreme negativity with wholesaling. It seems like you might be letting your lack of success sour your vision for the opportunity.
Failure will come in any endeavor, and how you deal with that failure is what will determine the level of success you achieve. You experienced failure in wholesaling, and you have become bitter and let it steal the vision you had.
I have come to similar hurdles in my business on multiple occasions and instead of letting it steal my vision, faith, and determination, I pushed harder. I strengthened my vision deeper and mustered my faith and determination to a higher level and pushed through.
Not everybody will make that choice. There is a price to pay for success in ANY endeavor, whether it be in real estate or in music or in anything. If you are not willing to pay that price, you will NEVER have any level of real or lasting success.
Flipper/Rehabber · Westchester, IL · Member since 2009 · 126 posts · 55 votes
17y
Personally, if investors aren't willing to work with you to come to an agreement because they understand what you're doing, they're only hurting themselves.
You're right, if it's a good deal an investor should just worry about the deal and not what you're making. Remember this is a competitive business and sometimes people don't see the cooperation side of it. Keep your head up and move on to someone who understands. Also, take a look at your numbers closely (I don't know your area) because you have experienced investors who advise 'if you can't sell a deal, maybe it's not that great of a deal'. It sure look like you're fine though.
Metairie, LA · Member since 2008 · 165 posts · 1 vote
17y
George, if it's any consolation, that's the main reason I've given up on wholesaling to make money...almost every investor I've dealt with did what you described..$@&&&& Wholesaling!
Real Estate Investor · pottstown, PA · Member since 2008 · 22 posts · 1 vote
17y
George,
Agreeing with Ryan, It seems to me like you have a Nice deal there, Their should be No problem Assigning that Deal! One thing you can do to prevent this kind of thing from happing again is to do a "Double Closing", Not sure if your Title Co. will do this type of a transaction, So many Title Co's are doing away with "Double Closings" But, Their still are Title Co's that will do them, You just may need to search a little, SULLY
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
17y
How much are you trying to get? Seems like if you were asking $29K you'd be able to get something acceptable. I'm guessing you're into it for about $25K. If you're asking $50K (roughly 70% of ARV less repairs), which would seem like a decent deal, I can see how investors would react negatively. A fix and flipper would be luck to make $15K at that point, and you're taking $25K.
Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
17y
Originally posted by Jon Holdman:
How much are you trying to get? Seems like if you were asking $29K you'd be able to get something acceptable. I'm guessing you're into it for about $25K. If you're asking $50K (roughly 70% of ARV less repairs), which would seem like a decent deal, I can see how investors would react negatively. A fix and flipper would be luck to make $15K at that point, and you're taking $25K.
Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
17y
Originally posted by sully:
George,
Agreeing with Ryan, It seems to me like you have a Nice deal there, Their should be No problem Assigning that Deal! One thing you can do to prevent this kind of thing from happing again is to do a "Double Closing", Not sure if your Title Co. will do this type of a transaction, So many Title Co's are doing away with "Double Closings" But, Their still are Title Co's that will do them, You just may need to search a little, SULLY
Sully, I will do it in the future, this time we had to close cause we didn't find a buyer on time.
Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
17y
Originally posted by Jorge Caicedo:
George, if it's any consolation, that's the main reason I've given up on wholesaling to make money...almost every investor I've dealt with did what you described..$@&&&& Wholesaling!
Jorge - did you start rehabbing every deal that comes your way?
Metairie, LA · Member since 2008 · 165 posts · 1 vote
17y
George-I've never done a rehab..I was referring to assigning the contract...I've had good deals that buyers passed on or had to go through a bunch of red tape to do..or if i had a contract it was like "Oh will you take x amt of $$$"? Deals where I could've made $5-10k Keep in mind these were deals where my buyers could've done great-but I've since come to realize that many buyers are greedy or give you the runaround..The wholesalers that are making $$$ only give me vague answers when I ask for advice or help...
Myself, I'm not that much of a masochist(which you have to be to wholesale apparently) so I'll stick w/ my day job until my music career takes off.
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
17y
LOL, Jorge. Wholesaling's not for everybody.
First, I would double check all your numbers. ARV and repairs are the two big factors there if you are selling to rehabbers.
Second, if all the numbers are as you originally thought, I would go back to building my buyers list. There are investors out there that will buy that. You just have to find them. That is unless of course your market is totally in the toilet. If its not in the toilet, then you just need to focus on finding more investors.
Metairie, LA · Member since 2008 · 165 posts · 1 vote
17y
actually Ryan, I'm speaking from past experience and as a result i've been concrntrating more on my musical endeavors which, even though they're not lucrative yet, it's a lot more enjoyable and fun than real estate...I don't miss talking to apathetic buyers and unmotivated sellers..i'll leave that for the masochists, it's not worth making money at the expense of my mental health..lol
Metairie, LA · Member since 2008 · 165 posts · 1 vote
17y
Ryan, true wholesaling isn't for everyone but the same statement can be made for any other endeavor, especially when pursuing a music career, so that silly statement was neither here nor there and what was so funny about the comment?
Wholesaler · Salt Lake City, UT · Member since 2009 · 1k+ posts · 401 votes
17y
George
You really never said what you where offering it at. But I'll assume in was within the rehabbers normal criteria.
I've had this happen from greedy investors testing me, and from those who have just gotten so into the habit of going for every last penny on the table.
One of my early deal-maker friends always had the philosophy of take some, leave some, and it works for me.
The first time I had this happen was a long time ago but my response was "so what your telling me is if I go back to the sellers and pay them more money then you will be interested in the deal at this price?" His response was no you got a really good deal so I should get a better deal too.
"Oh, so what your telling me is when you sell this to your end buyer your going to give them a better deal then you would have because you got a really good deal when you bought it, is that what your saying?
No matter what the answer which I'll bet is the wrong answer you say, 'I'll tell you what, if you agree to limit your profits to what I think you should make, I'll then limit my profits to what you think I should make, is that fair? and we can put it in the assignment that any profits over $ will be divided 50/50." Then shut up!
When I first started, wholesalers were very rare, and rehabbers and contractors wanting business were a dime a dozen, so it was never a problem.
The last rehabber that did that in my area became the victim of his greed. All the wholesalers wised up and formed an alliance to blacklist him, and with his basic greedy nature finding a deal and putting it together with a seller was not his thing.
He did try to go behind our backs when he heard of a deal we made, and he offered to work for other rehabbers or take over one of their deals, but eventually he had to come to us with his head down and agree to pay a 5% premium (of arv) for the next 3 years. I would have rather put him out of the business or forced him to move to new territory but was outvoted.
Maybe next time I'll form a wholesalers guild. I started as a rehabber and still do them most of the time when it makes sense. If your buyers list is not doing it for you, then rehab and retail the deal.
You may be worried about the rehab costs because you haven't got the money. but believe me it's easier to get then you think. You can get it from somewhere if you try.. Private loans, a 203k fha buyer, title one loans, suppliers that will carry, credit cards, car loan, internet loans like prosper, a one time partner,etc,.etc.,etc.
Lender · Honolulu, HI · Member since 2008 · 166 posts · 46 votes
17y
Originally posted by Jorge Caicedo:
Ryan, true wholesaling isn't for everyone but the same statement can be made for any other endeavor, especially when pursuing a music career, so that silly statement was neither here nor there and what was so funny about the comment?
Lender · Honolulu, HI · Member since 2008 · 166 posts · 46 votes
17y
Jorge, whats up man?? Thats like saying I tried getting into music, but it didnt work out. Would I then go to a forum for musicians and post my issues with that?
Metairie, LA · Member since 2008 · 165 posts · 1 vote
17y
Matt,actually, i'm still pursuing it albeit not as hardcore as i used to...it's not so much an issue as it is a ludicrous assumption made by a total stranger.
Metairie, LA · Member since 2008 · 165 posts · 1 vote
17y
...and I tend to exaggerate slightly..lol
I've already e-mailed Ryan about the comment so I won't address it here..if anyone on here would like to address me regarding it, please send messages to my PM....let's keep this about real estate..thank you
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
17y
Jorge,
I'm guessing you are referring to my comment about wholesaling not being for everybody. I didn't receive an email from you, but I have no issue with just discussing it here.
My laughter was based on your extreme negativity with wholesaling. It seems like you might be letting your lack of success sour your vision for the opportunity.
Failure will come in any endeavor, and how you deal with that failure is what will determine the level of success you achieve. You experienced failure in wholesaling, and you have become bitter and let it steal the vision you had.
I have come to similar hurdles in my business on multiple occasions and instead of letting it steal my vision, faith, and determination, I pushed harder. I strengthened my vision deeper and mustered my faith and determination to a higher level and pushed through.
Not everybody will make that choice. There is a price to pay for success in ANY endeavor, whether it be in real estate or in music or in anything. If you are not willing to pay that price, you will NEVER have any level of real or lasting success.
Homeowner · Abington · Member since 2009 · 61 posts · 1 vote
17y
Originally posted by Ryan Webber:
Jorge,
I have come to similar hurdles in my business on multiple occasions and instead of letting it steal my vision, faith, and determination, I pushed harder. I strengthened my vision deeper and mustered my faith and determination to a higher level and pushed through.
Real Estate Investor · Charlotte, NC · Member since 2008 · 368 posts · 42 votes
17y
Wholesaling is not for everybody. You have to find your niche and go with it. I have been wholesaling for a while and doing VERY WELL. But, I have a portfolio of buy and holds. Many so called wholesalers who I see getting into the game now are not TRULY wholesalers and this is why they are finding it hard to do it.
They read a few blogs and post and they think AH I can do that. Well if it was easy everyone would be doing it. Butl, from here since I have joined everyone or just about a high percentage of people are now wholesalers.
It is like when it was COOL to buy and flip you could not find wholesalers and now you can not really BUY and FLIP so a lot of those people have FOLDED and now here comes the NEW WAVE of WHOLESALERS.
I can you sell me something when you do not even know how to estimate the cost of repairs. It actually is funny to me and I read alot of comments on here and I say here we go again.
Many needing FAST CASH so that they can satisfy those BILLS and DEBTS. Not wanting to be a landlord because it is not cool. Well look deep into your heart and soul because landlording and buying and holding is where it is at.
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
17y
Well Douglas I think sometimes you exaggerate about EVERYONE being a wholesaler these days but I have to admit that there has been an increase.
I think wholesaling has become more popular because it fits the needs of a majority of people. Because of most people's inability to properly manage their finances, they do need fast cash. They want something with low risk, and they need something that doesn't require good credit and/or a lot of capital.
And that is exactly what wholesaling can offer.
But let's be clear, wholesaling is a J-O-B. Its earned income just as rehabbing to retail is. You're not going to wholesale yourself into retirement. True wealth is built with long term holdings (rentals and notes).
Metairie, LA · Member since 2008 · 165 posts · 1 vote
17y
Ryan, i'm well aware of the price to be paid pursuing music as a career or any endeavor for that matter, thank you very much...it just so happens if I'm gonna struggle and get aggravated, it might as well be w/ something I know well...lol
Metairie, LA · Member since 2008 · 165 posts · 1 vote
17y
First off Ryan, I don't anyone who thinks they can wholesale their way into retirement, that's ludicrous....Doug makes a good point about how people read a few articles and then think they can just do it but it's more complex than that...however I don't have a desire to be a landlord and hold rentals, I'd rather write a hit song for someone..but not everyone who gets into real estate to make money plan on making a career out of it..so in that respect Doug is correct, it's cash to take care of debts and whatever else you may need.
Metairie, LA · Member since 2008 · 165 posts · 1 vote
17y
also, I'm working on an e-book tentatively titled "REAL ESTATE WHOLESALING IN THE REAL WORLD"..
It's not gonna be pretty or give illusions of guaranteed pie-in-the-sky dividends but it wil be strightforward and to the point of what one can expect to encounter trying to pursue wholesaling...
I think a book like this is long overdue in the RE world....
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
17y
I think the main issue for most people is that they need to understand that no amount of money will fix bad money management skills. Wholesaling, rehabbing, rentals, or even winning the lottery will not be sufficient to compensate for the inability to live below your means. Until you learn to control money rather then let it control you, you will never have enough money.
In reference to making real estate a career, I think most people don't have a solid enough plan when they get involved with real estate. They get a whiff of easy cash and away they go. I think its very dangerous to have real estate as a hobby. If you are not planning on making at least a part time career out of it then I think you should never start. You can waste thousands of dollars and thousands of hours on figuring out how this game works, and if you don't have the commitment to see it through then it's just not worth the risk. Just as Jorge's e-book I'm sure will tell.
The learning curve with real estate investments requires you to commit years to this process to gain any real level of success. If you are not willing to commit the time to it, then you should move on to things that you can enjoy more, just as you have, Jorge.