Buying a Wholesale Deal From a Rehabber

[Will Barnard]

Not too long ago, I was involved in a discussion where another BP member - Jason Scott, who is a rehabber in Atlanta, mentioned he would not purchase a wholesale deal from me for certain reasons. Thos reasons were based on the fact that I was a rehab flipper myself and his thoughts were that the only deals I would wholesale, would perhaps have something I didn't like and wouldn't keep for myself, or that something could be wrong with it, otherwise, why would I not keep it for myself and make the full profits!

This of course was all stated without offense to me. After contemnplating on this discussion, and due to the fact that I have recently offered several wholesale deals to BP Nation, I wanted to generate some discussion about this.

Here is my argument(for lack of a better term): I have noted that I am switching gears and trying to free up more of my time for a new venture I am involved in (non RE related), as such, I can not continue to take on all the deals I get, hence, they are being wholesaled. Secondly, I have also stated that I have too many deals going and am out of liquidity (that of my own cash and of my private investors). I currently have well over $2M into deals right now and have very little liquidity left.

That said, I have heard of other people stating similar things like, I have too many deals right now and can't take this next one or I am too busy with my current projects, or etc. These reasonjs or excuses are often ploys of others to hide the real facts. Perhaps the facts are that the seller does not have any money to do deals themselves and must wholesale, or perhaps teh deal is too tight and they have exagerated the exit price, underestimated the rehab costs, etc.

The truth is, these things can easily be uncovered through proper due diligence. I may be bias, but I persoanlly believe that wholesale buyers are better served doing business with my on my deals than someone else because I have the knowledge and experience to provide proper and accurate numbers and provide deals with good spreads so that the wholesale buyer is profitable.

What are your thoughts on buying a wholesale deal from a rehabber?
- Will Barnard

[Mike G.]

I certainly look at every deal presented, but I will admit that I am suspicious when I see a deal presented from another rehabber, for the reasons that Jason presented. But, like you said, ultimately the due diligence is up to me anyway. I don't trust anybody else's renovation cost estimate or suggested exit price. And who knows - a deal that is not as desirable to another rehabber may end up being acceptable to me.