I have been looking for a multifamily property for over a year in the Minneapolis area and have not been able to execute as of yet. This has led me to try more creative ways than browsing the MLS such as making cold calls on Craigslist rental listings and signing up for wholesale newsletters.
I wanted to see what has worked for others as they find creative ways to purchase their properties. How have you gotten around a hot-market and what other methods would you recommend?
What is the best way to find and connect with wholesalers in order to execute a deal?
Get to you local REIA meetings. Make sure you let people know what you are looking for. You'll meet wholesalers and you'll also be able to ask some investors who they have had good luck with and who they haven't.
Why would you want to deal with people that skirt laws? Most of them are operating illegally. Here is what I warn people about before they deal with these types:
BEFORE you deal with any unlicensed broker consider these ideas:
1. Always require WRITTEN comps that can be substantiated
2. Always require WRITTEN bids from LICENSED contractors
3, Always require WRITTEN comps to substantiate ARV
4. NEVER pay a non-refundable fee
5. Always correspond via email so there is written record to bring suit in the event of misrepresentation.
Remember, these are middlemen trying to play RE agent without a license. Make sure they provide GOOD comps. Make sure if they are representing an ARV value make them provide ARV comps. If they make claims about rehab costs, make them provide WRITTEN bids from contractors. They are brokering real estate so make them PROVIDE good quality information like you could get from a licensed broker. Many of these unlicensed brokers simply make up figures that sound good but cannot back them up.
Unlicensed brokers generally have no insurance. From personal experience most just pull their ARV out of thin air. Lets see: claim it costs x and it will sell for y. If someone uses an agent, an agent won't provide or should NOT provide the BS an unlicensed broker does. They should not or do not provide rehab figures (to protect themselves). They should tell a prospective buyer to get their own bids. They can provide comps in some situations on an updated unit vs an original unit. Agents have something to lose, can be fined, and have their license suspended or revoked. Unlicensed brokers, acting as fringe operators skirting the laws have nothing to lose. They are acting as an agent without the laws, ethics requirements, education, and insurance that are vital IMO.
@Adam Alexander I like @John Thedford 's explanation. It is definitely buyer beware. I haven't seen many if any wholesaler's numbers to be accurate. Make sure you only use a wholesaler if you, in fact, come up with the market value, ARV, Rehab costs on your own through independent sources. A better avenue would be to contact @Ryan Luthi he is a licensed RE broker & agent. His company specializes in investment properties and they have many off-market properties.
Unlicensed broker lingo: ARV which stands for Absurd Resale Value
What are you looking for as far as returns?? I’ve found a few good ones in that time?
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