When Buying From a Wholesaler, What makes the deal appealing?

7 Replies

I'm new to wholesaling and want to make sure I get investors the best deals possible, even if it means my profits will be low. Personally, my main focus is providing investors with real value. I want repeat buyers and I want to make sure I make whoever chooses to work with me happy. I want to be a reputable name in this business. 

So I have what I believe are two very important questions. If you're an investor who deals with wholesalers, please answer. 

1. What makes a deal appealing to you as an investor when buying from a wholesaler? 

2. And when say "No" to a deal, what are some of the reasons you choose NOT to work with a wholesaler?

 @Juan Santiago   You are asking great questions!  This blog post will be able to provide some clarity to your questions.  

https://www.biggerpockets.com/renewsblog/2015/01/31/ultimate-beginners-guide-real-estate-wholesaling-2/

I’m having trouble finding a good wholesaler because no one ever gets back to me or keeps me on their buyers list or maybe it’s too tough in the Bay Area allot of competition

An appealing deal is one where it makes me the money I need it to make. The reason I say no, it doesn't make me the money I need to make. To date I have yet to see a wholesale lead where the ARV, and rehab costs were in line with my research and the deals have never made sense.

@Brian Pulaski How much would you typically WANT to make on a deal coming from a wholesaler? I think this is rally important to know for me or any beginner wholesaler. From my research, it seems that most inexperienced wholesalers have the same problem...they don't know how to calculate the ARV or Rehab costs. Which is something I'm trying to learn more than ANYTHING because if I do that wrong, there will never be a deal.

Originally posted by @Juan Santiago :

@Brian Pulaski How much would you typically WANT to make on a deal coming from a wholesaler? I think this is rally important to know for me or any beginner wholesaler. From my research, it seems that most inexperienced wholesalers have the same problem...they don't know how to calculate the ARV or Rehab costs. Which is something I'm trying to learn more than ANYTHING because if I do that wrong, there will never be a deal.

Honestly, this answer changes with every single investor on every single deal. Currently I am under contract on a deal now that is lower than I like. The conservative numbers say $20k profit. My realtor feels I am low on my ARV and I have some fluff in my rehab. The deal made sense (not from a wholesaler).

My issue with wholesalers, they miss a lot, they miss the MEP costs required to rehab, they miss holding costs, they miss closing costs, they give a very basic ($20,000 to rehab) budget but it is rarely correct. Then they use an ARV of the highest, most well done comp they can find. Usually they tell you $40k profit, but when you crunch the real numbers the profit is $10-15k at best, some I have seen actually show big losses.

Great question! When I'm dealing with a wholesaler it starts with the deal analysis. Make sure your ARV is on target and your asking price leaves enough room for the end buyer to make at least $30k. You'll want to do a renovation budget so that you can estimate the value of the home, however I suggest that you do NOT share the reno budget with your buyer's since no one will ever agree with it anyway.

Besides the deal itself, I look for wholesalers who are ethical and have fully disclosed to the homeowner that they are going to assign the contract.  Its easy to spot someone who is trying to play games so just don't be that guy!

Join the Largest Real Estate Investing Community

Basic membership is free, forever.