How do you find properties to wholesale?
Hi,
I'm a newbie here so my question may seem juvenile. My question is how do you find these properties to wholesale? I've read a lot on the board and I'm gathering that most wholesalers aren't doing any business, and my guess would be because they cannot find these properties to wholesale. Am I correct in assuming finding properties is the largest stumbling block for newbies?
Have a great day!
Kevin
There are many ways to get leads, but ultimately you have to determine what works best for the market you're in.
If you look at Will Barnard, for example, he does so much business that he gets more good deals than he can take down - so he wholesales them. There is another So Cal flipper I know of - she wholesales when she can't take on everything that comes to her.
Most wholesaling is taught from the perspective of "you have no money, so make some money wholesaling."
Since you need to find great deals, you're mostly going to be looking for motivated sellers. There are generally two places to find motivated sellers:
1. On the MLS. This will be REO sellers, HUD properties, short sales and other distressed property owners. Often these are corporate owners or lenders planning to take a loss on the property.
2. Non-Public Sales. These are generally property owners who aren't currently thinking about selling -- you need to get them to think about selling. These may be sellers in an obvious distressed situation (behind on mortgage, in pre-foreclosure, probate, divorce, etc) or sellers in a less obvious distressed situation (landlords with equity, older owners of investment properties, etc). You generally find these sellers by marketing -- bandit signs, cold calling, door knocking, direct mail, billboards, radio ads, etc.
#1 is much easier to do, but it's much harder to find great deals. #2 is much harder to do, but you can make a lot of money when you uncover a motivated seller.
Kevin, I wouldn't say that wholesalers aren't doing any business but it is tougher to make wholesale deals happen right now.
Am I correct in assuming finding properties is the largest stumbling block for newbies?
Well it depends on the person, but this is certainly a problem for most newbies. Also many newbies don't know what constitutes a good deal. If you develop the ability to find great deals it will serve you in whatever aspect of real estate you choose to pursue.
I recently wrote this in another post, but this may help you get an idea where to find deals.
Marketing ideas
For sale by owner
Craig's List ads
For rent ads - if a landlord has a vacant property, maybe they are ready to sell.
Pre-foreclosure
code violations
owners behind in water or tax bills
rent court
vacant and or boarded up houses
estates
Direct mail to any of the above, to absentee, or out of state owners
non arms length transactions
nominal transfers
Bandit signs
"we buy houses" ads
Networking
Real estate clubs
Auctions
Driving for dollars is a good one. Look for any signs of the above. Talk to neighbors about the vacant house next door. Walk into properties being renovated and get cards from the contractor or owner.
Good Luck, - Ned
Hello Ned,
When you say that it is difficult to do wholesale deals NOW, why is that? Was it easier to do wholesaling 2-3 years ago?
Originally posted by Ivan Alexander:
Hello Ned,When you say that it is difficult to do wholesale deals NOW, why is that? Was it easier to do wholesaling 2-3 years ago?
In my opinion, they were easier to do just a few months ago...the market has heated up a bunch since the beginning of the year, and new investors are coming out of the woodwork, making it more and more difficult to find great deals.
That said, they're still out there...you just have to work a little more diligently to find them...
Deals are harder to get not only because the competition has soared, but due to the record low inventory levels in most of the country. In fact, an article was just posted today regarding the top 10 cities where inventory levels have dropped by the largest % since May of 2011. Almost half of the cities were in CA! Another was Atlanta - J Scott territory
There is another very similar thread posted today regarding a question on where to find wholesalers. The gist of it is that it is more important to locate deals. That has been answered by others here so I will not be repetitive.
J Scott and Will Barnard gave you great answers, I would add that in some markets or price ranges there is a limited pool of cash buyers. In my market even hard money lenders won't do loans in Baltimore City.
It is tough to find buyers for low end properties. At the same time properties in good homeowner/rehab areas are tough to find due to the competition.
There is a bright spot to this market though . . . The inventory is so low, that if you have a deal already rehabbed in a good area, it should sell first week on the market!
Originally posted by Will Barnard:
There is a bright spot to this market though . . . The inventory is so low, that if you have a deal already rehabbed in a good area, it should sell first week on the market!
I just put one under contract tonight that is still torn down to the studs! The buyer can't find anything else he likes, and wanted to tie up our property NOW, despite the fact that we're barely finished the demo and mold remediation...
So, yes, that is certainly a bright spot... :)
Kevin Parnella I think your question is the right one from someone starting out. It seems that a lot of newbies these days get sold at seminars that they should get started by creating a buyer's list. Knowing your market and getting the deal is the work. Ned's ideas could keep you busy exploring and learning your market for years. Pick a few and get started! Find and talk to potentially motivated sellers. Then do your comps and send a one-page, written offer for every even half-motivated seller or lead. Seriously. The seller doesn't need the offer. You need to make it. It's like actors auditioning for parts they'll never get. It's free experience! I still force myself to do this in new markets or when marketing to new targets. Takes me 10 minutes and costs 45 cents. (As a side benefit, there's nothing like the power of a written offer in a seller's hands. If you've ever been a motivated seller, you would know the truth of that statement.)
All that being said, IMO not everyone is cut out to work directly with sellers. It's messy and has TONS of variables. Making offers on REOs and short sales on the MLS is totally antiseptic by comparison. If you end up not digging working with sellers, don't sweat it. Learn to network and work the MLS from every angle you can think of.
Happy hunting!
J Scott - Nice, gotta love when that happens! That is one way to keep your holding costs lower!
K. Marie Poe - Nice post, I agree.
Despite what most of the guru programs pass along, the saying "it takes money to make money" applies to wholesaling too.
Although it is not 100% impossible to find deals with no money in your bank account; however, the odds greatly increase when you have some money to put to use.
Lots of good advice already posted here in terms of 'where' leads could come from, so not going to add to that.
Hi Kevin,
You can either subscribe to lead services or drive areas you want to work in and write down addresses of the vacant properties. Do research on the vacant properties to see if it is worth pursuing. You have to look for properties daily. Wholesaling is not easy.
This all is very interesting and enlightening at the same time, I however try not to be discourage about how much competition their is and what inventory is left other Investors still find and do deals all the time.
Not as much but they are their patience and working everyday will make the difference in finding opportunities if your always ready.
Thanks everyone for the input and for Kevin to ask the question that was on my mind too.
Originally posted by @Jonathan Choyce:
This all is very interesting and enlightening at the same time, I however try not to be discourage about how much competition their is and what inventory is left other Investors still find and do deals all the time.
Not as much but they are their patience and working everyday will make the difference in finding opportunities if your always ready.
Thanks everyone for the input and for Kevin to ask the question that was on my mind too.
Keep in mind that this thread was from over 4 years ago. It's much tougher to find wholesale deals today than it was back then...
I find difficulty with finding buyers in the lower income properties and if I do they low ball the crap out of the sellers to the point where I don't even like to make them offers. What I do is I try to cater my offers to my strong buyers criteria so I don't waste time with dead end deals. Post cards work best and I also do jv deals as well. The profit is slit 50/50 but pennies do add up. Find your niche and perfect it.