The Truth about Wholesaling!

891 Replies

The title of this thread should be changed to ;"opinions on Wholesaling"

I understand people being annoyed by newbies. They call in off my ads and ask me for my criterion every so often. I just say 50% arv minus repairs and know that I will never hear from them again.

And you're right that you can never count out noobs (always give them a chance). One guy I can remember called in like I mentioned and went out door knocking NOD leads. He called us with a good deal and made himself 5-7 grand "can't remember exactly". that was over 3 years ago and he's still in the biz today full time living comfortable. There are always exceptions and exceptional people

I appreciate this thread. There is much to learn about RE investing and there are many different personality types in this world. Some people understand the concept of due diligence and others...well and there are others. I come from a very diverse career background and the one thing I've learned in my career is educate yourself. Spend the time and money it takes to do something right and the rewards will be great. I may be a noob but I know enough to know there is much I still need to learn.
Thanks for this thread.

As far as re-naming this thread, I disagree. This thread is about the truth about wholesaling and not a bash on wholesalers in general, just for others to know how to be a real wholesaler, what to do, and what not to do. With many other comments, it has gone down an alternative road and that is fine since it is about the same topic, but to be crystal clear, my intent of this thread is to teach those looking to be wholesalers what it takes to do so, and to warn buyers like myself who could otherwise get burned without the example I have made here.

This has been a great thread. I think many new wholesalers are learning from it and will probably still be reading it months down the road.

Wholesaling is a business. Like any business you need to understand the ropes. If you don't know the product or service that you are selling very well, it is hard to expect great success.

I have only been around bigger Pockets a short while and it has been both exciting and amazing to hear how some have applied what they learn and really make RE work for them. Many examples com to mind.

Will, I think this will be a great thread that many will come back to. There are so many poor teachers out there and many just looking for many. I have to say that I have come to respect Will's ability to teach and I suspect that he has some great investors coming out of his classes.

I want to take this time to personally thank everyone in this forum for they're feedback be it positive or negative on this subject. As a young man who is looking to break into this bold new world of wholesaling, I find it enlightening that I am learning what to do and not to do when I get my business up and running by reading the feedback of real investors.

Christian, great to see you getting involved. Perhaps you can tell us more about yourself in the member intros. I think you will find that there are lot of people willing to help you out.

As several have said wholesaling may be a low cost way of getting into real estate investing, but there is far more to it than many might realize if you want to be successful.

As promissed, I would keep an eye out for this specific property I have used in this example. As it turns out, looks like the property will be back on the market soon as the buyer (the rip off artist, wannabie wholesaler) could not find a sucker dumb enough to buy this piece of crap for such a high price and must be backing out of the deal since the MLS shows it as back on the market subject to the completed cancellation of escrow.

This home should be purchased by an investor for no more than $205k and really should be purchased for $200k or less.

Is it fair to scream "I told you so Mr. Wholesaler!"? 

Originally posted by Will Barnard:
If you can make the trip up from San Diego, I will be speaking at Rosie's RE club next month (2nd Thursday in January 2011) in Los Angeles about this very subject along with many others. The main topic is the truth about starting out in RE.

You may find the club info by going to Rosie's profile - Rosie Nieto - BP Member.

Sorry for the last minute notice all but there has been a change in scheduling at Rosie's Club Meeting this month in Los Angeles. January meeting to be held this Thursday, 13th will not be me as headling speaker. The topic will be about raising private money (a great topic) and I will be doing my "Real Truth about Starting Out in RE" in February which will include wholesaling and be also include some very special raffle prizes for attendees.

Again, I appologize for any inconvenience. I will be in attendance and am sure I will speak briefly this Thursday so if you want to show up anyways, I will be there to chat with you all.

Interesting thread - should be required reading for ALL new wholesalers.

I talk fairly often to new wholesalers and unfortunately this is a common theme. Most people don't want to talk to lots of sellers to find good deals. They want to talk to a few and then TRY to make a wholesale deal out of something that clearly isn't. I think it is possible for people to make a good living wholesaling, but you've got to talk to a lot of sellers and get good at it so you can find real deals. Buyers are busy and the quickest way to lose them is to present a deal like this one...

I hate to be contrarian but...I'm going do it anyway. So why do i feel IMHO like this post in general is a bash on wholesalers? Am I reading to much into the post? Have you rehab investors NEVER received a good deal from a wholesaler? I know about skewing the numbers on deals. I've done it. Its part of the learning process. When buyers keep telling you I think I'll pass your numbers are probably bad. Its hard when the Wholesaling Guru course you attended has all these successful deal examples. Who hasnt been told that wholesaling is the quickest way to put cash in your pocket and build up reserves for those rehabs that you may graduate to? I've seen the deal analysis play out wrongly from the wholesaling side. (ask me how I know this :oops: ) Some of you wholesalers know this drill well. A wholesale deal finally comes across after weeks and/or months of marketing, putting out bandit signs, spending money on advertising and a guru course, etc. Most wholesalers are taught WMAO (wholesale maximum allowable offer) is ARV x 65% - repairs = purchase price. The issue arises whan the seller rejects the offer. This is deal shock so the wholesaler plays with the numbers...a little. First he/she adjusts the ARV a little, then lets modify the % a little...this repair estimate could use some adjusting....and finally ahh yes the purchase price is now...yes...just where I ( excuse me..the seller) needs it to be. This is where the wholesaler starts to suffer from that dreaded disease "gottadoadealitis". You know what I do with my buyers? Once I get control of the deal ie - access to the property...I let them go look at it. Sometimes I just send them the address and they will tell me if they are interested. They ask me how much and I say come take a look and let me know what you think. Once they give me a price based on repairs I'll ask is that the absolute most you willl pay? Now I have a more accurate number and some space to play with numbers a bit. This way there is no "pie in the sky" illusion about the reality of the deal and what the numbers should be. Like a few have already alluded to, wholesale deals are small ball (another baseball analogy...sorry) every deal is not a home run. In fact home runs are few and far between in the wholesaling business. Singles, doubles and triples and the occasional home run is more like it. It also gives me real numbers to take back to a private seller or a lender if I'm dealing with a short sale. When I do my estimates I use guidelines based on education, personal experience and just asking contractors questions. I estimate windows at 200-250 bucks per. Front door 500- 900 depending. Sometimes i'll call a contractor and say "I've gota 2100 sq foot splanch. Give me a siding estimate" I know contractors get a discount on supplies so I'll discount that 10%. The best is just having my buyers look at it. I've found out also that there is some tailoring that needs to happen in one's wholesaling business. Its not a picture perfect out of the box experience like depicted in the guru courses. The whole guru game is a slick one because they dont really disclose the amount of deals that will be duds. (most of them) That every body that calls my bandit signs doesnt really have a deal...that i will spend way more than I like on education, advertising and mistakes than I care to admit...but I digress. I think that if you rehab investors have ever had a good wholesale deal in your inventory you should tell that story also. The truth about wholesaling is that there are good wholesalers out there trying to get a slice of the proverbial RE pie and that wholesaling is a worthwhile endeavor if properly executed. Hope I didnt offend anyone...

Originally posted by Michael Greenidge:
I hate to be contrarian but...I'm going do it anyway. So why do i feel IMHO like this post in general is a bash on wholesalers? Am I reading to much into the post? Have you rehab investors NEVER received a good deal from a wholesaler?...

You have missed the point of this thread entirely! This is not a "bash on wholesalers" but an education on how to do wholesaling right by using an example of what NOT to do.

Often times, some of the best lessons are learned from mistakes and this thread is the perfect example. While I am "warning" and bashing this one so-called wholesaler, it is not a target to all. In fact, I wholesale, why would I bash myself!

As far as offending anyone, no offense taken. It is imperative that BP members engage in conversations in multiple topics to gain knowledge in this field.

Wholesaling is not easy like it is made out to be by the gurus, and as such, this thread is an educational tool for anybody reading it on how to properly perform a wholesale deal.

The Dos': Build a real all cash buyers list and find out what exactly each buyer is looking for. Gain an expert knowledge of the market and its conditions. Gain a knowldge of how to Properly estimate rehab costs. Build relationships to gain access to good deals from sellers. I highly recommend REO list brokers and go directly to them.
The Do Not's: Do not inflate ARV or use an ARV that is the very best case scenario
Do NOT under estimate rehab budgets
Do not market a deal that you do not control.

I haven't had as much trouble as the rest of you have. I am a wholesaler as well but thats not all I do. I also do flips and rehabs as well. So maybe I know what a rehab investor is looking at or for. The deals I get that are on the mls are typically 40% or less than the original listed price so I am offering some value to the deal.

Example: my latest deal was listed for $123k, I worked on it and got it under contract for $78k and sold it to an investor for $85k. Comps were from $135-$160k and it needed HONESTLY 5k in work max. It needed carpet and a A/C unit. So there was a great spread in there for the investor.

But I look at everydeal from an investors prospective and I know when I have a real deal and usually I have offers on them in a few days. So thats a tip for other wholesalers, look at every deal as if you are the end buyer and figure out if the value or risk/reward percentage is actually there for you to want this deal!

Brad, thanks for your input. This thread is not about anybody having trouble as you stated it, but again, as an example of a poor wholesaler and how one should do it right.

As you pointed out, you don;t have that trouble because you do things right. You add value to a deal and only offer a real deal, that is what it takes. Being a rehabber yourself gives you that edge to know a good deal from a bad one as I do. This is exatly what I am attempting to infom new wholesalers - learn all the ropes off a rehabber and BINGO, you can wholesale all day long with that skill under your belt.


I agree 100%. This is not an easy business and it isn't something that you can learn overnight. People think they can get rich quick by making an offer for $10k less than list price and then bump it up $5k. Its not that easy. You must put research in and a lot of time.
Most important thing that I learned was when I decided to do this full time and quit my day job. I figured I would only work 3 or 4 hours a day and live the good life. Well that wasn't exactly how it worked out. It is a full time job and I ended up working more like 12 hours + 7 days a week vs my normal 40/5. If you want to make money in wholesaling you need to be putting offers in all day and marketing all night and before you make those offers you need to have your research done to a T. Or else its going to be a bust. It can be done and you can make great money. The only reason it worked out for me is I hated going to work and I enjoy doing this so it works for me, I dont mind working more hours doing something that I enjoy.

Funniest thing just happened so I had to share it here.

A guy posted on craigslist for a 10k house with no pics. I called him and he said it was sold of course, but asked instead what I was looking for.

I played into it for fun, to see what would happen. And then he tried to sell me a house that we have for sale! When asked if he was a realtor he responded "I never said that!"

True story, it just happened and we cant stop laughing.

@ Bryan: No, I let him off easy on it. Felt bad for the guy. Then he tried selling me another one that we looked at this morning. I politely told him never to call again. It was funny the first time, but he didnt learn from his mistake.

@Jeff: No. Not currently. Everything we are marketing right now was closed on with cash recently. Although if I can get an assignable contract from someone at the right price, I wont hesitate.

Originally posted by Brad Gertz:
If you want to make money in wholesaling you need to be putting offers in all day and marketing all night and before you make those offers you need to have your research done to a T.

I am curious if you don't mind. I am entertaining the idea of wholesaling while being able to also purchase a property that I make an offer on. So I am curious about:

How many offers do you submit per day and do you submit them to REO agents and have them represent you as the buyer or are you an agent representing yourself/wife?
Are you actually looking at these homes only online or you go for a walk through?

Do you submit your offers in your name or LLC?