Wholsaling properties from MLS

28 Replies

I have started searching the MLS (Realtor.com, Zillow, etc.) for properties to wholesale, primarily to sell to buy and hold/landlords. BP actually has a calculator for analyzing properties. I look for certain properties, for now I am looking at SFR, and if they meet the criteria (say $150* cash flow (after all the bills are paid) and a Cash on Cash Return of Investment of 9%+ I will make an offer on the property. Is anyone else doing this?

This is an easy way to analyze 10 or more properties a week. I do this in addition to D4$. I also have a lead generating website (just a few months online).

Doug

Doug:

My wife and I are just starting in real estate. As we look at deals, we are using the calculator on BP’s platform. We are currently looking to cash flow $200 per month and have Cash on cash of 10%.  

You mentioned D4$ in your post, what is that?

Thanks!

@Doug Haisten If you wanna make it as a real wholesaler in this business do not try to regurgitate leads off of MLS and give them to buy and hold investors As an investor that does buy and holds there's nothing worse when I get an email or text from a "wholesaler" telling me they got a great deal and it's just a house that's been languishing on MLS that everybody sees and knows about. As a wholesaler you gotta bring a real deal to the table not a house that already exists on a network that everybody looks at..MLS Wholesalers that do what you do have absolutely no credibility in the industry and they don't survive. Stick to driving for dollars, SEO, probate...etc... Bring a real deal to the table and you will have great relationships with buyers.

MLS properties are a good way to practice analyzing properties, but you're probably not going to gain any traction with buyers. Wholesalers add value by bringing deals to the market that aren't already on the market...

@Chris LeMay D4$ is Driving For Dollars. That's driving around certain neighborhoods looking for boarded up or neglected/stressed houses, search out the owners of that house (there are a number of APPS that use GPS tech to help you with that), you contact the people and see if they want to sell. You can amass a could size list in just a couple of weeks for the cost of a couple tanks of gas and the cost of mailing and the app. Not only that you get to see the house first hand and know more what the house and the neighborhood looks like.

@Mark Fries I appreciate your remarks but don't understand how ,if the property can generate income and a good return, it matters if I find it on Zillow, Realtor, or a agent brings it to me. I know not every property is going to be such a deal but direct mail (whether by a list or even D4$) brings in a very small % of response. Can you explain? I am doing driving with 500 plus names and the SEO is going too but very slow. 

@Nick C. @Mark Fries

Current property I am looking at from MLS:

Cash Flow (after all the bills and expenses paid like vaca, repairs(future), CAP Ex, Mgmt) $183 pm. Based on rental information from a property manager)

COC 12.79%

Purchase Price $56,000 (includes my fee). Comps about $65K. (from realtor and my own calcs)

Repairs $2000 (but actually move in ready)

Realtor fee paid by seller

@Doug Haisten No experienced realestate investor is gonna want to pay you a fee for this deal because they can buy it themselves right off of MLS... Yes you might find an inexperienced out of state beginner investor that will jump on this deal but if that's the kind of potential buyers you are looking for you're never gonna reach the upper echelon of becoming a real wholesaler. Wholesaling is all about bringing deals that normal investors can't find to the table...
@Doug Haisten What you are talking about doing with these homes that you find off of MLS is similar to going to Walmart and purchasing a microwave and then listing it on eBay for $3 more than what you paid for it... This is not what real wholesalers do... This is more of some kind of property liaison service
Originally posted by @Doug Haisten :

@Nick C. @Mark Fries

Current property I am looking at from MLS:

Cash Flow (after all the bills and expenses paid like vaca, repairs(future), CAP Ex, Mgmt) $183 pm. Based on rental information from a property manager)

COC 12.79%

Purchase Price $56,000 (includes my fee). Comps about $65K. (from realtor and my own calcs)

Repairs $2000 (but actually move in ready)

Realtor fee paid by seller

this is what a few companies in Texas do  and I could never understand who would pay them a premium to buy something that is listed. 

just put a back up offer in.. or beat them to the MLS.. its a very weird way to try to make money in my mind..

@Doug Haisten

This is what i was doing, trying to wholesale a property that is Listed on the MLS, i can tell you from my experience it doesn't work for me & i had to realize that for myself, like right now i actually have a property under contract that was listed on Zillow, the problem is while i finally got a property listed on the MLS its not valuable to many buyers i got in contact with, this Property is A Rental Property with no Mortgage Free & Clear Good Tenants & the seller was looking for $85,000 made me feel like im doing a whole lot for nothing just to get an assignment fee. Basically a Learning experience for myself.

et al:

All very good points and I understand what you are saying. What is perplexing is why BP puts on webinars almost every week saying to go to Realtor.com (MLS) to look for deals, some to buy for myself and some to wholesale. True, an investor could buy a deal himself (from the MLS) but not if I find it first. @Brandon Turner , who usually gives the webinar, states 90% of what I look at won't be a deal. The deal is in the income and return yes?

@Doug Haisten there is two problems with your plan:

1. Purchase contracts on the MLS typically use standard contracts which will likely require you to have proof of financing or funds. Do you plan to actually buy the properties?

2. Why wouldn't a landlord just buy the property off the MLS? I don't see what value you bring. Landlords are shopping the same source you are.

As far as what you hear on BP, not everything that is taught is real world. They tell you to make hundreds of offers too. Not only is it a waste of time, but it destroys your reputation. What realtor will take someone seriously who is just an inexperienced low baller?

Your best bet for wholesaling is finding off market deals, either through driving for dollars, mailers, referrals or website. Then use a wholesaler contract to lock up the deal.

@Joe Splitrock In answer to #1, yes I will need to get proof of funds and may have to do a double close. In my area title companies don't want (read won't) do the typical assignments or double closing anyway (use B-C funds to pay for the A-B purchase). In any deal practically I have to provide POF and funds to pay for the deal anyway. #2, everyone asks that. The landlord could but that can be said for any deal, why doesn't the investor buy from the owner. In this case whether I find the deal by direct mail, driving for dollars, or a web site it is the one that puts in the effort that finds the deal. I am learning most people aren't looking at the MLS. Not all the properties of course are deals. I have sent out thousands of mailers too unknown unseen properties (bought a list) and only get a few responses and even fewer deals. I have 500-600 properties I found D4$ and sent mailers to and get 2-3 calls a month. The investor could do (and probably is doing) these things too.

Originally posted by @Doug Haisten :

@Joe Splitrock In answer to #1, yes I will need to get proof of funds and may have to do a double close. In my area title companies don't want (read won't) do the typical assignments or double closing anyway (use B-C funds to pay for the A-B purchase). In any deal practically I have to provide POF and funds to pay for the deal anyway. #2, everyone asks that. The landlord could but that can be said for any deal, why doesn't the investor buy from the owner. In this case whether I find the deal by direct mail, driving for dollars, or a web site it is the one that puts in the effort that finds the deal. I am learning most people aren't looking at the MLS. Not all the properties of course are deals. I have sent out thousands of mailers too unknown unseen properties (bought a list) and only get a few responses and even fewer deals. I have 500-600 properties I found D4$ and sent mailers to and get 2-3 calls a month. The investor could do (and probably is doing) these things too.

There is a reason that every asks number 2. It is because wholesaling the MLS is not the best business model.

There is a massive difference between shopping deals on the MLS and versus hunting down deals using mailers, door knocking or a website. At no cost and minimal time commitment, I can shop deals on the MLS. It is not just as likely that investors will use other methods, compared to just the MLS. If an investor is using all these methods, they are probably finding their own deals and don't need you at all.

@Doug Haisten I think the real question here is WHY are the buy and hold investors not just buying off the MLS in the first place? What do they have running in their numbers that you may not, hence not making it such a great deal?
@Joe Splitrock Would be effective if Doug sifted the results down till he could find deep enough discount, say he has to go through a thousand but eventually he finds one he can contract for 65-70% of value. It will be very difficult however he will have to work very hard to find the off market deal as Well. Do you think one in a thousand exists?
@Doug Haisten Sounds like you are putting in the hard work, I question why some are saying you are wasting your time as what you say is true, basically there is huge competition in every method mentioned on the thread thus far.

don't get me wrong there are deal from MLS. It is rare though. Number has to work. Sometimes to get lucky. But remember. End buyer needs spread. We as the investor. Need free equity on top of decent cash flow to call it a deal.

@Doug Haisten I've watched many of Brandon's webinars and when he talks about going to Realtor.com and searching for deals, he's talking about deals to buy and hold (or possibly flip), but I've never heard him say to use Realtor.com to find wholesale deals. 

I really don't think that strategy is going to work well for you. Any halfway decent investor is going to look a property up online during their due diligence and when they do so, they will find it listed on the MLS via Zillow, Realtor.com, etc. Once they find it and realize they can avoid your fee by buying it straight off the MLS themselves, why would they buy it from you? It just doesn't make sense. While you might get lucky and find a newbie to take advantage of here and there, it won't be a viable long-term strategy.

I think driving for dollars or direct mail would work much better for you. Another option (from Brandon's webinars) is to use Craigslist to search for homes listed for rent by owner. You'll want to look for owners who may be burnt out and ask them if they would consider selling.

Good luck!

The only way I will buy properties from a wholesaler who finds the deal from the MLS is if he/she can sell it to me a lot lower than the MLS list price.

For example, for a property listed for $65,000 on the MLS, if you can sell it to me for $45,000 and show me the numbers make sense even with the repairs (say with an ARV of $100,000 and repairs of $15,000), then sure I will buy it from you. You are providing a real benefit to me by securing the property at such a low price that you are saving me time in finding a deal and negotiating it.

But once you market a property on the MLS selling it for $56,000 and it's listed right now for $65,000 - then it is not worth it for your buyer (as he/she can just wait until your contract expires and buy it off the MLS) and it's not worth your time too.

@Doug Haisten yeah, right, in your dreams... How can you find it first off MLS if I (as investor) check MLS every day and jump on a deal with cash? You can try to wholesale properties off MLS, but keep in mind that most of the investors will turn back on you. Wholesalers from mls don't add value to anyone.

@Doug Haisten this is what F2F company does. They make a list of pending contracts (properties under contract) and offer reassignment of those contracts for a fee. Usually, the contract price is lower than the LP - and the LP is what everyone sees on MLS. I got on their list from an ad on BP.

@Alex B F2F = Flip to Freedom?

@Kate J. Most asked the question is why would I find a deal (from the MLS) and not other investors? Because I looked/analyzed it and others didn't? I am picking up a property I found driving for dollars. The house is being lived in. From the outside the house doesn't look stressed and is in a nice neighborhood (last sale in the neighborhood was a few months ago for $90K+). I didn't find it on any delinquent list or purchased list but the grass was a little tall, the roof a little tired. I sent the owner a card and 2 months after the card the owner calls me and wants to sell. It turns out the interior/mechanical/electrical is a MESS and I'll get for $26K. Why didn't another investor find it?

@Shawn Swisher I agree with what you said about how @Brandon Turner in the webinars is buying for himself but if a deal is good for me, and I add a fee and the income and ROI is still what an investor might want (those numbers Brandon says he targets), why not wholesale it?

We have all seen flippers may not like how much fee the wholesaler is putting on the deal. Some wholesalers  move from an assignment to double close to hide the fee. I have seen/read responses to such by saying what does the investor/flipper (or even the home owner) care that I bought the property from (or where) as long as they get a deal for what they negotiated or look for?

In the end I am prospecting or might even say wildcatting. Hopefully I will find some deals. This area where this property I am told is a hot market (especially for rentals) but time will tell. I am not stopping D4$ or taking down my lead generating website. I will still do those.