Wholesaling a Portfolio

Investor · LA, TX · Member since 2014 · 93 posts · 46 votes

Hi BP Community,

I notice this question has been asked a couple of times before with no response but I'm hoping since then, new members have joined BP that may have experience in this area. I have a seller who wants to sell his whole portfolio of rental properties (10) and he wants to sell them together instead of breaking them up. I have buyers who are interested in that area but may only want to buy one or two houses each. I think I can sell them all between all my buyers but not all to one of them. How should I handle this? Should I reveal to the seller that I'm a wholesaler and I have relationships with end buyers but need to sell each one separately or do I try to put them all under contract as I would a sf deal and just try to sell them to my end buyers before my 30-45 days are up?

0 Reply

101 views

Most Popular Reply

John Thedford

Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes

again we have posters pushing dishonesty garbage with the sellars promoting lying If you cannot find an end-use. no wonder the world is full of so many cheats and Liars because it seems to be acceptable

3 Reply

See this reply in the discussion

58 Replies

Jump to latestLatest

Sort by

Account Closed
Investor · Orlando, FL · Member since 2016 · 1k+ posts · 780 votes
9y
Do you have the cash to close on all of them? If not then get a contract with the seller to allow you to market the properties to your buyers as a wholesaler. If the total purchase price is low enough, then maybe one of your buyers will buy the portfolio and sell them seperately.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
this is super simple.. you close on them.. as you probably got to talk to him in the first place because he thought you were a cash buyer. then sell them off piece meal.
if your not a cash buyer and your trying to do the wholesale dance with out full disclosure.. then you would need be up front with him.. by posing as a cash buyer when your not pisses people off.
Now this one thing I see with many who have larger portfolios it can be VERY VERY tough to sell those for anywhere near what they want..
Simply because the dollars are so. .high and folks that can afford ( lets say 10 props is a million bucks) generally start looking at multi family as it cash flow better its all in one spot etc.
I see this often with folks that own 100 200 300 sfr's exit to one buyer is Very very tough unless its B class and better... C class or worse game be almost imposible
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
2 Reply
Lena Claybon
OP
Investor · LA, TX · Member since 2014 · 93 posts · 46 votes
9y
@Account Closed Thank both you guys for your comments. Definitely food for thought. I really appreciate your feedback!
0 Reply
Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
Hi @Lena Claybon This is a very good question. What I would do in this case scenario is 1. put all properties under contract. You must have the control of the properties to make things happen. However after the properties are under contract I would 2. Explain to the seller that although you are an investor and will need to do your due diligence on all properties and if any of the properties do not fit within your portfolio criteria you will sell to your "partners" (End buyers). I've found this strategy keeps things transparent. You can certainly say that none of the properties fit your criteria if you cannot sell any. Be sure to create the agreement using an assignable contract!
1 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
why would a seller allow you to tie those up without ability to close unless you were hoping for somebody without full knowledge and you are hoping to take advantage of them
1 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
again we have posters pushing dishonesty garbage with the sellars promoting lying If you cannot find an end-use. no wonder the world is full of so many cheats and Liars because it seems to be acceptable
3 Reply
Lena Claybon
OP
Investor · LA, TX · Member since 2014 · 93 posts · 46 votes
9y
@John Thedford
You seem to be assuming a lot without knowing me. I'm not trying to `take advantage' of anyone. I'm still learning like many people on BP and seeking advice. I thought that's what these forums were for, not belittling people or jumping to conclusions about people just because you may not agree with the question. If that's all you can do, maybe you should stay off the forums. No one needs that kind of negativity. I don't think anyone on these forums are crooks. We are all trying to learn this business to make money. That's it!
3 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
you have people giving you advice on how to be a liar and a cheat you can take it or you can leave it
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
Again my question is why would have seller allow somebody to tie up their properties with no ability to close unless they were being misled?. that is how most unlicensed brokers work skirting the laws and deception
0 Reply
Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@John Thedford what's with the anonymity? And also why so harsh? @Lena Claybon is clearly learning the rules of engagement and strategy. The purpose for her post was to seek advice and clearly you have not provided any which illegitimizes your position.
While we are on the topic of liars and cheats how about we explore why HML hide fees on the back end and charge up front fees to unsuspecting newbies.
It's really disappointing when to see new investors and wealth builders have to go through being ridiculed and demeaned when in the learning phaze. I guess the world needs people like you to keep everything in alignment. I wish you much success and prosperity @John Thedford
3 Reply
Lena Claybon
OP
Investor · LA, TX · Member since 2014 · 93 posts · 46 votes
9y
Thank you! @Shawn Ackerman
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
Well shawn by your own post you're the one promoting dishonesty
0 Reply
Riley Gilson
Hilliard, OH · Member since 2015 · 54 posts · 18 votes
9y
@John Thedford While we generally disagree w/ the concept of wholesaling as a whole (no pun intended), I do agree that the shifty nature of some of the deals discussed is an issue for me.
I don't have an issue w/ wholesaling and I don't think most people would - if you were up front about it.
Business people like direct people. It saves time and hassle. He likely knows it's going to be a pain to sell that many at once, so tell him why you're the right person to help.
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
I would pose the same questions too many people about putting a property under contract but no ability to close. The.quick money misleads everyone into dishonest practices trying to make a quick buck
0 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
the sellers are hurt and the crooks walk away
0 Reply
Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@John Thedford I guess you'd prefer to skip right over my questioning your anonymity and unfair practices of HML LOL!!! I wish only the best for you @John Thedford
@Riley Gilson I agree with you 100% on the direct approach. However I also believe that one should be creative in the manner in which he/she approaches a potentially motivated seller. You may have to mask your intention to help them out otherwise many sellers can simply put their properties on the MLS with an agent.
Now I'm not advocating putting the properties under contract without being involved with active end buyers. And even in that case the deals may not all work out and that's how things go sometime. @Lena Claybon mentions in her original post that she likely can sell then Piece Meal @Jay Hinrichs mentioned.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
Originally posted by @Shawn Ackerman:

Hi @Lena Claybon This is a very good question. What I would do in this case scenario is 1. put all properties under contract. You must have the control of the properties to make things happen. However after the properties are under contract I would 2. Explain to the seller that although you are an investor and will need to do your due diligence on all properties and if any of the properties do not fit within your portfolio criteria you will sell to your "partners" (End buyers). I've found this strategy keeps things transparent. You can certainly say that none of the properties fit your criteria if you cannot sell any. Be sure to create the agreement using an assignable contract!
Shawn I understand what your saying but its this canned guru wholesale pitch that gives wholesalers such a bad name and a stain on the industry...
When the facts are
1`. you have no intention of paying cash as you either don't want to ( or with most they don't have it)
2. your using weasel clauses to get out of the deal.. there by getting your EM back ( which most starting out can't afford to lose)
3, Your partners are nebulous you don't actually have partners you might have a list of investors but they ARE not your partners... Partners have formal associations and companies established.
So look at it from the other side of the fence... do you like it when someone ties up your property and says they are a cash buyer when they are not.. and then if they can't close they just say sorry bout that but it did not work.. leaving you with a sale fail.. you may have based on this cash buyer went out and gone into contract to buy something else.. you may have packed your home up to move only to find out the nice cash buyer really is not and can't close.. Think about this from your mothers stand point..
I have zero problem with actual full disclosure and doing this in states were it is legal.. its not legal in many states IE selling RE without a license..
So it comes down to morals and ethics... neither of these are LAWS just morals ethics and character.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
Shawn anyone that operates dishonestly doesn't get a pass. private lender agent investor doesn't matter
0 Reply
Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Jay HinrichsI get what you are saying. Trust me I do but imagine this. Your contacted by a solicitor who says to you they want to assist you with selling your property for a cut at closing. This is what a wholesaler in essence sounds like. Many who are not licensed salespersons. Why would anyone in their right mind, who by the way are speaking to you for the first time agree to work with you? That's my feeling on the matter. Secondly, I'd like to hear a direct approach that may be good for @Lena Claybon to use. Being able to purchase the property because you have the cash is always the best option but for a newbie you know that's not always possible Jay. C'mon you were not always "Jay Hinrichs the real estate titan". In the beginning you have to scratch and claw your way out of the barrel to put yourself in position. That's the school I come from. I just think your a bit removed from the beginner stages of things.
0 Reply
Aaron Mazzrillo
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
9y
Most likely, you won't be able to do one escrow for all 10 properties so that solves part of the problem. I've purchased packages of homes from sellers in the past and have wholesaled the whole pile, but have also wholesaled the parts.
Make a gross offer for the whole pile, for ease of understanding, let's say $1M. Then, assign individual prices to each house so escrow knows how to handle the transaction, so let's say $100K each. Now find buyers above $100K and sell the pile off one by one.
The great thing about this deal is if you can find enough buyers to meet your agreed upon sales price with the seller, you get to keep the rest free & clear. Sell off 6, 7 or 8 of the properties over that $100K price until you get to your $1M offer and pay off the seller. Then keep the remaining 4, 3 or 2 houses as free & clear rentals.
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Shawn Ackerman when I started there was no such thing as wholesaling if you wanted in the real estate industry you got a licesne or went to work with a developer or builder or property manager.. you went into resi or retail commericial etc etc.
So for me I got my RE license at 18 and made commission my brokers at 20.. become a HML of some repute by 32.. and so on and so forth all with proper licenses and I worked as a professional in the industry.
Now granted what you folks have in your neck of the woods is a lot of rental SFRs we don't have that here.. and you have a ton of landlord burn out syndrome and or just plain older real estate owned by older folks.. and so on and so forth.. So it was very different in my day.
I think what we see now is this idea spurned by the Guru's that the way to get into real estate is NOT get a license and work in the industry.. its to be unlicensed but do the same thing because you can earn money to then buy and hold which virtually anyone coming on BP says the EXACT same thing verbatim HI I am newbie wholesaler I am going to wholesale until I get enough cash to buy and hold then I am going to buy and hold until I get enough cash flow that I can quit my corporate job or ho hum job and never work again.. ( Right).. that's the dream
So you have dream merchants who need to make money selling course to people with very limited to no funds.. and they have to have something that allows these people to think they can achieve those goals and dreams... but the reality is Wholesaling is a very advanced strategy.. its VERY VERY HARD... 95% who try it flame out in 6 months .. now again its regionalized .. in areas were there are just more houses than buyers wholesalers do a lot better.. out here on the west coast you would be lucky to do 1 or 2 deals a year.. or you need to be super man.. and or very well cashed up.. so you can spend 10 to 30k a month on direct mail or other media to drive leads..
Most buy and hold investors I have worked with over the 42 years I have been slogging away at this got their money in their job.... IE CPA Lawyer Doctor,, Software engineer.. Fed ex driver etc etc. and or are one of the millions of small business owners in the US...
So we can be ra ra for beginners I answer a lot of beginner questions and sometimes will sit down and have lunch.. ( they want to buy me lunch but I end up buying since I can tell this would strain their budget)... but most that I see do well in Real estate over a career have gotten in the industry in some capacity... Agent broker PM commercial agent.. Land acquisition for a builder number of ways.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Shawn Ackerman and when I say superman I am referring to Aaron who posted above.. super smart , capacity and ability... not everyone has what he has. frankly not many to most.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
0 Reply
Lena Claybon
OP
Investor · LA, TX · Member since 2014 · 93 posts · 46 votes
9y
@Aaron Mazzrillo
Thank you for the great advice! I like that strategy as well. I have a lot to think about!
0 Reply
Shawn AckermanPro Member
Real Estate Entrepreneur · Mid West, East Coast · Member since 2015 · 3k+ posts · 1k+ votes
9y
@Jay Hinrichs and again I get what your saying regarding regionalism. I also commend you for sharing your wealth of experience with guys like me and newbies who are just starting out. And yes guru's are pedaling getting into real estate with $0 money. That's the world we live in today so I see many people starting out that way. And like you say most flame out and some make it(the barrel effect).
I have my real estate licence here in NY but I i'm not particularly happy with paying a broker for my hard work. To that effect I will be applying for my brokers license in 2017. To be honest I didn't get my license to be an agent as I have no interest doing open houses and running around town with fickle retail buyers. I got my license for the education and understanding of how real estate works. I always encourage new investors to get their license when they attend my REI meet up.
To go back to the crux of this conversation, there is no place for dishonesty, misdirection and unethical behavior however there is a place for the advanced strategy of wholesaling and unfortunately there isn't a streamlined approach to it as every market, situation and buyer are different. I think that wholesalers need to exercise caution and sound judgement when dealing with a prospective seller and perhaps inform the seller of the many possibilities that could possibly come up.
Lastly, I had a 5 property package deal under contract with a seller for 45 days with conventional financing. Two weeks before closing the lender emailed me and stated they could not do the loan. I had every intention on purchasing the deal but couldn't because financing fell through. These are things that happen all the time. I see no difference in putting a property under contract then having fall apart because you couldn't not find a buyer and having it fall apart because of due diligence and or financing.
Just some of my thoughts.
Aaron that's a great idea!!
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Shawn Ackerman thank you for the polite back and forth.
again I think we are 97% on the same page
I will just mention though that a financing contingency is not the same as tieing something up with the hopes of selling it.. we see sale fails a lot the last few years .. when financing is turned down literally days before closing.. but its legit.. I blame those failures two fold.. buyers lying on intital app and getting caught.. or going out and buying a high ticket item they were told not to buy until houses closes.. or simply RMLO incompetence on the front end..
Also this really boils down to EM... wholesalers if they wanted to could simply option a property put up non refundable option money.. then go about their business. but many are so undercapitalized that the thought of losing 500 to 1000 dollars will make them not sleep...
Along with paying for transactional funding this works as well.. close and resell.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.