Wanting to be a good wholesaler

Wholesaling
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Wanting to be a good wholesaler

Elisha Mcginley
Lexington, KY · Member since 2016 · 28 posts · 10 votes
So, right now, I'm new to the game and I'm in the planning phase. I think it's a good idea to begin in wholesaling so I can get some good hands-on experience of the market and build a network. I've been doing a bit of research, and I have plenty more to do, but I have some inquiries I'm hoping someone can help me with. From my understanding, the basic process is: I. Meet a few serious buyers and ask them some questions to find out what they are specifically looking for, so I know what I'm looking for and who to call once I find it. II. Begin marketing to find the deals I am looking for in accordance with my buyers' criteria. • question: 1. When I get calls from sellers, how do I know which deals are worth looking into further and which are not worth my time? What specific information do I need to gather from the seller? 2. Should I get comps at this stage for ARV? 3. Should I contact a general contractor at this stage and have them accompany me to meet with the seller? III. Meet with the potential seller at the property in question and discuss their situation. •questions: 1. Should I crunch the numbers during our meeting and make an offer, or should I go home, crunch the numbers, gather data, then call them back with the offer? IV. Make the offer and negotiate with the seller. V. Sign the contract with seller. VI. Meet with buyer(s) with a complete report of the offer and negotiate. VII. Sign the contract with buyer. Any additional suggestions would be appreciated. Thanks!
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Adrienne Bryson
Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes
10y

I agree with Diedrick I wouldn't worry too much about getting a buyer's list first per say...  I did both sort of simultaneously, searched for both qualified leads and serious buyers at the same time.

I can only speak for myself and say that I am a novice so just take my word with a grain of salt. But I have a spreadsheet for my leads with relevant info that I try to have filled in before a potential seller calls. That way as soon as I answer and get their name, I can open my spreadsheet and see which house it is, bed/bath/sqft, neighborhood, built/renovation date, owner address (to know if O/O or absentee), if it's SFR/MFR/Condo, my estimated ARV, when I sent the letter to them/how many letters I've sent to them, and the general condition of the house from what I could see and find online. All this info by going to my county tax assessor website and sites like realtor.com and redfin for house info and value estimates, takes me about a minute per lead to get it all. I also have a separate sheet for each list, so I can tailor the conversation accordingly.

Having that info at my fingertips has saved me a lot of time when I actually do get a call, because I don't have to sit there and waste 20 minutes with "what's the address, how many bedrooms, how old is the house, do you live there" blah blah.  I can just ask a couple of open ended questions ("tell me a little about the house" to which the response usually includes if/when improvements were made, why they like/dislike the house, and if they owe a lot on it... and "what are your reasons for wanting to sell" to which the response usually includes their motivation and how much they're looking to get).  At that point we're only 5-10 minutes into the conversation, and the seller feels like we're having a friendly chat rather than an interview/interrogation.

I end the conversation by setting up a time to see the house. Since I already have most of the info, I don't need much time to gather intel. I can actually set a time within a couple hours to meet, which if you ask any salesperson the quicker you move the more likely you are to close. I take a few minutes to calculate my MAO from the ARV I already have, the usual assumptions for cleaning paint etc, and the info I got from the seller, and jot it down in my notebook, which I take with me to the meeting.

Then all that's left is to meet, go through the house and take note of anything that wasn't discussed on the phone (like cracked outlet covers, clogged gutters, faded siding, etc) and jot everything down in my notebook. By the time we sit down to talk I've already recalculated my MAO and we start negotiating on the spot.

I have not used a contractor at this point, however like I said I am still a beginner and I do plan to actually start getting inspections for each property I get under contract before passing them on to my end buyer.  Having read J Scott's book on estimating rehab costs I feel confident and informed enough to go in without a contractor.

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  • Account Closed
    Rental Property Investor · Denver, CO · Member since 2015 · 109 posts · 34 votes
    10y

    @Elisha Mcginley The process you outlined is pretty much spot on. I would say don't worry too much about what comes first, chicken or the egg (i.e buyer or seller)

    My best advice would be to find good deals (50-70% below ARV) and then market those deals once under contract. The serious buyers will find you. Everyone is looking for a good deal.

    Network, network, network. On biggerpockets, at local REIA meetings, meetups, twitter, facebook. Eventually people will know your name and game and you will know theirs.

    Possibly find an established wholesaler in the area to do your first deal with so that they can better show you the ropes. Hope some of this helps.

    Let's connect,

    Diedrick Z. 

    1Reply
  • Adrienne Bryson
    Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes
    10y

    I agree with Diedrick I wouldn't worry too much about getting a buyer's list first per say...  I did both sort of simultaneously, searched for both qualified leads and serious buyers at the same time.

    I can only speak for myself and say that I am a novice so just take my word with a grain of salt. But I have a spreadsheet for my leads with relevant info that I try to have filled in before a potential seller calls. That way as soon as I answer and get their name, I can open my spreadsheet and see which house it is, bed/bath/sqft, neighborhood, built/renovation date, owner address (to know if O/O or absentee), if it's SFR/MFR/Condo, my estimated ARV, when I sent the letter to them/how many letters I've sent to them, and the general condition of the house from what I could see and find online. All this info by going to my county tax assessor website and sites like realtor.com and redfin for house info and value estimates, takes me about a minute per lead to get it all. I also have a separate sheet for each list, so I can tailor the conversation accordingly.

    Having that info at my fingertips has saved me a lot of time when I actually do get a call, because I don't have to sit there and waste 20 minutes with "what's the address, how many bedrooms, how old is the house, do you live there" blah blah.  I can just ask a couple of open ended questions ("tell me a little about the house" to which the response usually includes if/when improvements were made, why they like/dislike the house, and if they owe a lot on it... and "what are your reasons for wanting to sell" to which the response usually includes their motivation and how much they're looking to get).  At that point we're only 5-10 minutes into the conversation, and the seller feels like we're having a friendly chat rather than an interview/interrogation.

    I end the conversation by setting up a time to see the house. Since I already have most of the info, I don't need much time to gather intel. I can actually set a time within a couple hours to meet, which if you ask any salesperson the quicker you move the more likely you are to close. I take a few minutes to calculate my MAO from the ARV I already have, the usual assumptions for cleaning paint etc, and the info I got from the seller, and jot it down in my notebook, which I take with me to the meeting.

    Then all that's left is to meet, go through the house and take note of anything that wasn't discussed on the phone (like cracked outlet covers, clogged gutters, faded siding, etc) and jot everything down in my notebook. By the time we sit down to talk I've already recalculated my MAO and we start negotiating on the spot.

    I have not used a contractor at this point, however like I said I am still a beginner and I do plan to actually start getting inspections for each property I get under contract before passing them on to my end buyer.  Having read J Scott's book on estimating rehab costs I feel confident and informed enough to go in without a contractor.

    4Reply
  • Allen Felker
    Wholesaler · Madison , WI · Member since 2016 · 79 posts · 64 votes
    10y

    Build your buyers list first, at least get 3-5 people and a general understanding of what buyers in your target area are looking for. 

    PM me for more information, I'm not selling any coaching programs this is all free info. 

    2Reply
  • Elisha Mcginley
    OP
    Lexington, KY · Member since 2016 · 28 posts · 10 votes
    10y

    @Adrienne Bryson where do you get your leads before even talking to the seller?  It sounds as if you already know the leads then you send letters to the sellers.  I was under the impression that I post things on sites like craigslist and send mailers and expect a small percentage of callers from those marketing strategies.

    0Reply
  • Adrienne Bryson
    Flipper/Rehabber · High Point, NC · Member since 2016 · 276 posts · 183 votes
    10y

    That's just the way I do it. There are 1,000,001 ways to get leads haha

    My leads primarily come from driving for dollars, so I have the address first and look up everything else, then send letters to those I think are most likely to be interested. I ignore properties owned by commercial entities, bought within the last few years, etc.

    I also am using specific lists (recent arrests, code violations, high equity owners over 50...) All of which I have either name or address or both and can very easily look up the rest. For these lists I take a little extra time trying to figure out if the house is a candidate.

    You could definitely post on craigslist or put out bandit signs. For Craigslist it might do you good to ask in your post for anyone interested to respond with their name and address so you can look that stuff up before calling them. You are going to have to do a little more talking if getting calls from bandit signs. I'd say at least get their name, address, and ask them to tell you about the house, them schedule a time to meet in the same conversation. Take the time before you meet to look them up.

    When doing direct mail it's important you narrow it down to those most likely to call... Otherwise you're going to spend thousands of dollars sending cards and letters to people that aren't even close to interested.

    2Reply
  • Elisha Mcginley
    OP
    Lexington, KY · Member since 2016 · 28 posts · 10 votes
    10y
    Thank you all for the great advice! It's really helping me wrap my mind around a concrete plan. Much appreciation!
    0Reply
  • Charles Nyasha
    Real Estate Investor · Gilbert, AZ · Member since 2016 · 42 posts · 9 votes
    10y
    Originally posted by @Allen Felker:

    Build your buyers list first, at least get 3-5 people and a general understanding of what buyers in your target area are looking for. 

    PM me for more information, I'm not selling any coaching programs this is all free info. 

     @Allen Felker,

    Thank you Allen for sharing.I am still a newbie and also had the same questions.I will PM you.

    Regards 

    Charles

    2Reply
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