The Truth about Wholesaling!

891 Replies

Originally posted by @David Avery :

It ( wholesaling ) will be gone within 3 years.

It is practicing ( Real Estate ) without a license. 

No meat on any bones in Phoenix. ( no deal worth looking at)

If it goes to the list, then it is not a good deal.  They always have 2-5 buyers that get the best deals!  Always!

They would sell their Mother for a buck!!!

 Questions: What source are you referencing that shows wholesaling will be gone in 3 years? I find that not possible.

Wholesaling is practicing RE without a license - In many cases, yes, not in all cases. There are ways to wholesale RE legally and without a license and there are many more ways to do it illegally. Just like driving a car, it is not illegal to drive but you can perform it illegally.

No meat on any bones - That is a broad and bold statement, while I agree with you that the market conditions in AZ are fully on the side of sellers not buyers (this is the case in most areas across the country and even more prevalent here in So Cal), this is not to say that there is no such thing as a deal, you just have to get creative and go after more quantity to land that one deal.

Your list statement - absolutely true! Your Mother statement - I see many where this is true. I just had a wholesaler send out a deal where it was a 2 week escrow all cash with an $80k mark up on a home under $1M. That is over an 8% fee! Now the fee is down to $30k and still not a deal at that price. Too greedy!

Aloha, This forum is amazing and very informative. 

I am "Semi-Retired" and very interested in wholesaling. I fully realize that I will not "Get Rich Quick" my needs are few. I just want to do some work and get a reasonable return. I've got a pretty good handle on 70% minus repair costs. I need to work on the rest. 

Mahalo nui loa, 

Tom

This thread was posted over 10 years ago and it still rings true! The few wholesalers I've received deals from were not deals at all once I was able to complete my due diligence. Newbie investors should educate themselves on wholesaling so they know what makes a great wholesale deal, learn to run comps, and how to calculate rehab costs. Trust but verify when dealing with a wholesaler or company. Newbie wholesalers should learn what makes a great wholesale deal as well and stop taking advantage of sellers and newbie investors with crap deals. So much time is wasted when wholesalers become greedy!

Yikes. As someone looking to get into wholesaling, one of the first problems I'm seeing with many are a lack of integrity. It's a great lesson to learn from the start; I need to develop my knowledge and skills, but if I want to be taken seriously I also need to be honest and straightforward. Thanks, Will!

Under these incredibly competitive market conditions, it can very well be easier to actually do your own flip as opposed to wholesaling. If the wholesale deal is a flip, then you must find a deal with enough meat on the bone for the flipper AND you. If you flip it yourself, less of a spread needed (from a general numbers perspective). That said, you need to also build a team of agents, construction crews, material suppliers, lenders, (a designer perhaps), escrow, title, etc. 

So many people are told that wholesaling is easy and no money or credit required. Simply not the truth and in these times, perhaps even more difficult. 

Oh, wow. Thankfully, I didn't expect wholesaling to be easy, but I had no idea that doing my own flip might even be easier! I originally wanted to wholesale first to build up cash reserves then get into flipping since, like you said, I would need to build a team (and the idea is intimidating, of course). With this new perspective in mind, I'll look more into keeping any deals I find. Thanks again, Will!

I was involved in wholesaling for a few years, or should I say, "attempted" wholesaling. I was pretty good at getting good properties under contract, but not having a good buyers list it didn't matter. Only closed 2 deals in over 3 years. And, even then, at least to me, the amount of hours I was spending reviewing properties, only to give them back, just didn't make sense. 

Now what did make sense was what I learned and how to get good deals on properties. We ended up buying 5 of the properties that we were going to wholesale, and flipped them. What people don't tell you is that unless you do everything correct, using too expensive of items driving up cost, carrying costs, etc., we probably left over $100K on the table, maybe more on 5 rehabs. And though we did ok, if you spread out what we made over the past 5 years, it wouldn't be enough to live on. 

As an aspiring wholesaler and real estate investor, I thank you for sharing this information. Although I don't have much, if any, experience in the field, I have already noticed that a large number of individuals do the bare minimum, causing me to think that "the minimum" was the norm in this industry. This post reassures me that going the extra mile will pay off!

What I have learned in todays market .... Everything is a deal for the right unique Investor. There are Investors who know what they want, and are willing to pay up to 90% / 95% of market value.. Basically turn key Investors, who know where they want and or need to allocate funds .. Not all REI are buying deals to flip... But may want a ready to go investment that will create short term, or long term passive income and or write offs... Im sure I am not saying anything unique that most already know. But after meeting with an Investor through a referral, I learned why , where, and how they wish to allocate funds. Now I am off to the races to find what they are looking for.

Unfortunately this is very common among whole sellers. Low threshold of entry typically means low performance umong the majority. But just like any other business this also allows for the quality whole sellers to shine and build long lasting relationships. 

Originally posted by @Eric Clinton :

What I have learned in todays market .... Everything is a deal for the right unique Investor. There are Investors who know what they want, and are willing to pay up to 90% / 95% of market value.. Basically turn key Investors, who know where they want and or need to allocate funds .. Not all REI are buying deals to flip... But may want a ready to go investment that will create short term, or long term passive income and or write offs... Im sure I am not saying anything unique that most already know. But after meeting with an Investor through a referral, I learned why , where, and how they wish to allocate funds. Now I am off to the races to find what they are looking for.

That is a good point! It is really perspective based when speaking about "deals" and investors! There are plenty of turn key investors out there looking to offload and load units!