how many should be on your buyers list before start wholesaling?

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how many should be on your buyers list before start wholesaling?

Mubasher Riaz

Real Estate Investor · Ypsilanti, MI · Member since 2011 · 98 posts · 6 votes

hi there

so i wanted to know how many does one need to have on there buyers list before going wholesaling? Any ideas. Thanks.

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John Hanley

Real Estate Investor · Burlington, MA · Member since 2010 · 12 posts · 7 votes

15y

A good way to find more rehab buyers is to put up flyers at hardware stores, lumber yards, paint stores and supply houses. It can say something as simple as "your company name, is seeking 3 additional contractor buyers that are looking to purchase homes at deep discounted prices. Must be able to close within 14 days, 7 days is preferred. Contact me below to get on our pre qualified list of buyers"
Another good thing to do is if you see contractors working on a home go talk to them and see if they do just for hire work or if they buy and rehab their own properties.

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Uryss Mitchell
Wholesaler · San Antonio, TX · Member since 2011 · 23 posts · 5 votes
15y
That depends on if you've qualified you buyers.I mean do you know for sure they have funding in place so you're not wasting your time finding properties they're interested in. Also, make sure they will pull the trigger when it comes down to the purchase. BASICALLY it takes one serious ready buyer
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Chris Colvard
Wholesaler · Dallas, TX · Member since 2009 · 308 posts · 92 votes
15y
You also have the option of promoting to actual wholesale cash buyers that have recently purchased around your property.

You can tell wholesale buyers by average retail price vs. sales that seem much lower on mls comps. Then use tax database to find them, the address is never the same as property address.

Sounds complicated but it is as simple as locating them via tax database and sending postcards within 24 hours of your contract.

In a perfect world you already have buyers, but if you don't what's next?
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Kevin Cardinale
Real Estate Investor · Las Vegas, NV · Member since 2011 · 111 posts · 10 votes
15y
Take what I say with a grain of salt.

From what I have gathered thus far, the concensus [Al Gore] seems to be that: "You should have a list of 100 potential buyers. Depending on what you find, you'll always have a core of 10 that you can call right away and they'll go over the details with you, right on the phone. You'll have another 20-50 that you'll figure out when not to call them. The rest will have bought 1 house from you at one point and you just keep on the list, just in case you come across that house shaped like a cowboy boot again"

The bad news is, you cannot prejudge which buyers are going to be the "core". You could end up with a plumber that you call and 50% of the time he somehow buys the house. The guy on the hills, amazingly does not. Those are extreme examples, just to make sure you don't prejudge.

But, what Uryss said is always true. Try to prequalify your list. But, once you have exhausted your core, that's when you start calling the other 20 - 50 and then the outside chance buyers. In the end, everyone I've listened to, said the magic number is 100. Since 2008, that's probably 150 now.
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John Hanley
Real Estate Investor · Burlington, MA · Member since 2010 · 12 posts · 7 votes
15y
A good way to find more rehab buyers is to put up flyers at hardware stores, lumber yards, paint stores and supply houses. It can say something as simple as "your company name, is seeking 3 additional contractor buyers that are looking to purchase homes at deep discounted prices. Must be able to close within 14 days, 7 days is preferred. Contact me below to get on our pre qualified list of buyers"
Another good thing to do is if you see contractors working on a home go talk to them and see if they do just for hire work or if they buy and rehab their own properties.
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Cory Smith
Real Estate Investor · phoenix, AZ · Member since 2011 · 4 posts · 9 votes
15y
You don't need any buyers before you start wholesaling especially if you live in a bigger city. The only time I would look for buyers first is if you are in a smaller city or the property is in a rural area then I would look for buyers first. If you find a true wholesale deal, you will have no problem finding buyers. If you cant find buyers to buy your wholesale deal then you most likely haven't done enough marketing to let people know about the deal or you don't have a deal. The most important aspect of being a wholesaler is to have houses to sell. No Houses to sell = No Money. I would start by marketing to motivated sellers, then buyers. If you have a good deal the buyers will come. Hope this helps.
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Sharon Vornholt
Goshen, KY · Member since 2009 · 835 posts · 683 votes
15y
Mubasher-

If you find a good deal, you will be able to sell it. I know it's scary, but you need a deal.

Your local REIA group is where I would begin. There will always be some serious buyers there. Next, put up some handwritten signs in the area that say "House for sale - Cheap". You will get calls. Put an ad on Craigs list. All of these things will help build your buyers list. Lastly, don't forget about Bigger Pockets. List it on BP. I found my last buyer right here!
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Aaron Mazzrillo
Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes
15y
I have 5;
1 - Trustee sale buyer looking for anything he can make 15% or more return on his money. This investor does 100+ deals a year.
2 - condo buyer who likes to hold them as rentals
3 - Another trustee sale buyer who only does a few deals a year in specific areas I also farm.
4 - An investor who owns a lot of rentals and is looking for more all the time at good prices, but doesn't need a smoking deal to be interested.
5 - My go to, he can sell anything affiliate. If I get a property I can't move, he knows someone who will buy it and we split the wholesale fee. This would be a much more experienced wholesaler in your area.

People who have 100+ buyers on their list need them because their deals are too skinny and they need the next bigger fool to come along and bail them out.
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Grant Hwang
Seattle, WA · Member since 2011 · 70 posts · 11 votes
15y
I know I will get flamed for this, but the real answer is.............0!!!!!!

Dead serious.
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Anson YoungBusiness Member
Flipper/Rehabber · Denver, CO · Member since 2009 · 1k+ posts · 726 votes
15y
Hard to say...

80/20 rule is always in play. I have about 30 on the list, the same 5 keep buying it all. Now I just market to 5.

Didnt know they would be the players from the beginning, so I'd say find as many people as you can. You never know.
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Mubasher Riaz
OP
Real Estate Investor · Ypsilanti, MI · Member since 2011 · 98 posts · 6 votes
15y
Originally posted by Grant Hwang:
I know I will get flamed for this, but the real answer is.............0!!!!!!
Dead serious.

How so, please tell us?
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George P.
Real Estate Investor · Baltimore, MD · Member since 2008 · 1k+ posts · 268 votes
15y
is not about the quantity, but about the quality
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David Wedemire
Real Estate Investor · Bellingham, WA · Member since 2008 · 407 posts · 90 votes
15y
and the quality of the product that you market to your list. If the deals are good the list will buy and word will get around
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Nick J.
Residential Real Estate Broker · Payson, AZ · Member since 2009 · 3k+ posts · 1k+ votes
15y
I'm with Grant and I'll take a flaming along with him if it comes our way.

0 is the answer for me. My reasoning is simple. If you have a deal, a real deal, you will find a buyer plain and simple.

Sure it would be wise to know where to find these buyers but to have yourself some 'list' before you go and get out there is only keeping you busy and you're NOT doing any deals.

A new wholesaler here in the Phoenix market sat down with me. He was soooooo concerned about getting a buyers list before he started. I asked him how long he's been trying to get a 'solid' buyers list together. He told me months. I asked in him in that time, how many sellers has he talked to, offers he submitted etc... He said NONE.

Kinda seems like it should be the opposite doesn't it?
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Joel Block
Real Estate Investor · Agoura Hills, CA · Member since 2010 · 55 posts · 66 votes
15y
In all of sales, the money is made when you buy. If you buy right, anyone can sell it for a profit, but if you overpay, it will be hard to sell. Focus on your acquisition skills and buyers will flock to you - and your margins will be larger.

The other problem with buyers (and lists) is that they can waste a lot of time. Be known for your buying skills and people will beg you to call them with deals.
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Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
15y
Mubasher -

There are some great replies on here and while I do agree with the idea that the number is "0" and a great deal will always find an investor - I think if you are just starting out, you are looking for 1 buyer.

1 buyer who is very clear to you on what he/she expects in a great deal. Number of beds/baths, location, type of neighborhood, expected rent range are only 4 criteria that investors will be very specific on.

For a beginner, instead of trying to determine yourself what is great deal - wouldn't it be great if the buyer told you exactly what they wanted and you went shopping for that deal.

Over time, as you learn the business and what true investors expect from you as a wholesaler, then the answer of "0" becomes more relevant. You'll be able to buy what investors want at any given time - and like the other posters stated...a great deal will always find a buyer.

Do not waste your time trying to build a huge "buyers list" that you cannot possibly manage or glean any real data from at the beginning. Concentrate on as few buyers as possible that will be very specific with you on what they will buy. That will shorten your learning curve and help you be successful faster.

Just my opinion - Good luck with getting started!
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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
I don't agree with this, however, there is always different opinions on this topic,
Grant and Nick both agree that you need 0 too. Again, I disagree. I do agree that IF you find a deal with enough spread, you should not have a problem getting a buyer, particularly in this market where investors are scrambling to find their next deal. However, that said, for someone starting out, you MUST (in my opinion) have buyers on your list ahead of time and here is why: Having buyers ahead of time allows you to know what their criteria is so you know what to shop for. That is half the battle. Secondly, structure is very important. If you are going after REO or short sales, which is 80% or more of the market in many areas of the country, you will not be able to "assign" your contract so you must structure it properly. I can't tell you all how many deals I see fall apart because the buyer did not structure the offer so that he/she could properly transfer it to their wholesale buyer. For instance, I was just contacted to transactional fund a deal where the wholesaler locked up an REO in his personal name. This will not allow one to get transactional funding due to usury laws and the seller's agent was a complete jerk and would not allow him to change the vesting into an entity.
Lastly, if you have buyers on your list ahead of time and you intend to lock-up an REO, you have a few options - vest in an entity and double close using your funds or borrwed funds (two escrows), use a new entity and name your buyer as part of the company and tehn sell your interest in the company for your fee (this allows you to use your end buyer's POF and removes the need for the double clsoing or borrwed funds cost. You can do the similar using a trust.

So in conclusion, having (real cash)buyers on your list upfront, gives you more options and more negotiating power to lock a deal.
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Michael G.
Wholesaler · Bay Shore, NY · Member since 2009 · 359 posts · 199 votes
15y
Mubasher is a newbie. Why would anyone suggest that he not have a buyers list?

Not having a buyer to sell deals to actually seems like mistake number 1 in Seven Mistakes to Avoid When Wholesaling.

Someone please show me in the Wholesaling 101 manual where it says you dont need a buyer before you find a deal?

A bird in the hand ALWAYS beats 2 in the bush.

So lets imagine a deal falls into Mubasher's lap TODAY. Are all the 0 buyer advocates suggesting he now start looking for buyers? That process in and of itself can take 2 weeks minimum to sort out and find "qualified cash buyers". Not just tire kicker fake rehab investors who respond to a craigslist post.

Mubasher - heres my 3 cents. Time is money my man. I don't suggest you not have clients to sell your inventory to when you get some inventory.

FIND 20 CASH BUYERS. In the end you may end up doing business with a HANDFUL if not less of those 20 but better to be safe than sorry.

When I had to fatten up my buyers list I went to my favorite realtor and had them run a report of all the short-sale and REO properties in zip code xxxxx knowing full well that the buyers of these properties will probably be cash rehab investors. I took that report to the county clerks office and looked up the deeds for those properties which gave me the purchaser and their address. Some of those same purchasers had bought several properties for cash in the last 12 months. I then sent them all a form letter stating that I have come across fixer properties and to call me to discuss future fixer's I may come across. These were not tire kicker's. These were real players (alot of them were listed as corporations on the deeds) who are in the game buying houses. So when they call I collect cell phone numbers, email addresses, what type of houses they like and what price range so I have all the right info when I come across a deal.

I cannot see the value in having a deal in the pipeline tomorrow and no one to sell them to.

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Mubasher Riaz
OP
Real Estate Investor · Ypsilanti, MI · Member since 2011 · 98 posts · 6 votes
15y
great argument on both sides, I would be more comfortable with a buyers list not asking a huge list but 10-20 can be favorable.
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Kevin Yeats
Lender · Fort Pierce, FL · Member since 2009 · 825 posts · 486 votes
15y
This is akin to Grant's answer

One!

You only need one buyer if you have the product that one buyer seeks.

Why would you wait until your list is a certain size before asking all of the buyers on your list if they have interest in your product?
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James Hiddle
Altus, OK · Member since 2008 · 2k+ posts · 690 votes
15y
Both sides have a point. On one hand if you have a solid wholesale deal than buyers will flock to you and on the other hand if you find buyers and get their criteria it will be a lot easier to negotiate with motivated sellers based on your buyers criteria.

But if you go with just finding deals than you need to know what a solid deal is. A lot of wholesalers fail at this because what they think is a good deal turns out not to.
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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
Originally posted by James Hiddle:
But if you go with just finding deals than you need to know what a solid deal is. A lot of wholesalers fail at this because what they think is a good deal turns out not to.
This is a great point and goes along with what I ahve preached in numerous wholesale threads. So many people market a property as a deal, yet the numbers are nowhere close to a deal. The other mistake (often intentional) is that they provide false numbers (higher exit values and lower rehab costs) when the real truth is the exit value is actually lower and the rehab costs are actually higher. So their advertised 75% of exit value deal is really 82% - not a deal.
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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
By the way to all those who are on the side of no need to have buyers upfront, since James pointed out that there are good arguments for both sides of this coin, I don't see a negative to the having buyers lined up first, yet I see several negatives if you do it your way. Any response to that?
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Chris Colvard
Wholesaler · Dallas, TX · Member since 2009 · 308 posts · 92 votes
15y
I think what most of them were saying is not to just freeze and do nothing until they have a big buyers list.

The negative side of it is if they don't know how to even promote a deal when having no buyers. Then they are doomed by not having a buyers list before then.

What if your buyers list is in a hot area, but you found a great deal in another area? Don't you still have to learn to find new cash buyers in this area? And very quickly.
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Will BarnardPro Member
Moderator
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
Originally posted by Chris Colvard:
I think what most of them were saying is not to just freeze and do nothing until they have a big buyers list.
I agree, but same could be said both ways, either way one could freeze and do nothing. Plus, you don;t need a big buyers list, just a quality one or even with just one quality buyer on it. That is true, but you should be shopping in your farm area (or that of your buyers)so how would that even take place?
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Chris Colvard
Wholesaler · Dallas, TX · Member since 2009 · 308 posts · 92 votes
15y
I see what you mean.

I work probates in 2 large counties. So, there is never a farm and a deal could be in one of 20 cities. While some of my buyers will go all over, most do not.

So, many times I'm starting from scratch in an area.
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