I have a few questions I would like to share with the community and I appreciate any feedback given.
1. How are you guys finding your wholesale deals? I personally drive communities looking for abandon or vacant homes and follow up to find owner.
2. I've had several owners on the hook and they eventually decided not to sell. I know this is a numbers game but how common is this from your expereince ( PRO wholesalers)
3. Take a look at my first deal numbers (See below) that fell apart and let me know if those numbers made sense. Is it normal to make $30K on these assignments?
Under contract for 40K, assigned to investor for 70K, 25-30K in repairs, ARV $139,900
Depends on how accurate your repair calculations and ARV are.
How did you come into both amounts?
Why did the deal fall apart?
Its obvious you are being too greedy and not giving the investor enough profits for their troubles. If you want to continue to work with your buyers then they need to have the lions share of the profits. 72% of ARV is just not enough on a rehab deal.
As an investor/wholesaler I charge no more than $5k for any deal that I am marketing for anther investor. I find deals by finding vacant properties, expired listings, tax deed auctions, probate.
@Frank Edmondson @Account Closed Also curious as to why this deal fell apart? Did the seller show up to closing and realize you were trying to profit $30k off of a house you didn't own?
If there was that much profit, why not JUST BUY IT as I assume you led the seller to believe you were doing, and then sell it for however much you want?
Instead of letting deals like that fall apart by trying to make outrageous "wholesale" fees, use transactional funding / HML / private cash and buy them. I would venture to guess that a quick post on your local REIA facebook page would have found you multiple investors willing to make a quick 10-15% to float the deal.
I agree with Stephen Anderson regarding fees. I charge between $3500 - $5000. I'll do $7000 for a JV deal. I don't look for $10,000. I've come across wholesalers who have done this and they get discouraged because buyers won't work with them. Many times a deal is only $3000 - $6000 max from my experience. I like to give the buyer a lot of room because he is the one purchasing the property and has to do the renovations, not me. Also, I want them to keep coming back.
@Frank Edmondson , Ya I agree with what's being said on here. Volume is the name of the game in successful wholesaling. Maybe you could hold out for maximum profit on each deal ($30,000 should not be a goal), but why not find buyers who buy regularly, give them a property that is actually a deal, make your money ($3-6 thousand), and have them coming back for more in the future. If you can build trust with buyers like this and get your business up to 10 deals a month, you're bringing $40,000 a month by just repeating the system over and over again.
As far as where to find deals. I use direct mail, mls/HUD, craigslist, and have a website offering to buy properties.
I'm always on the look out for new opportunities and talk to potential partner/investors all the time.
When I find a good deal I get in touch with my network and see who is interested. If any of them purchase one of my finds and I don't put any of my own money in the deal I ask for 10% of the net profit after selling.
Would this be considered wholesaling?
If buyer decides to hold on property we would appraise the property and determine the current net profit and then they would cut me a check.
Anyone done something similar?
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