Your Top Due Diligence Tips When Working With Wholesalers

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I'm considering partnering with a wholesaler for my first deal. I found one here on BP who is both a realtor and a wholesaler, which reassures me because they'll need to keep their real estate license in good standing.  The research and online footprints of both the wholesaler and his business partner make them both seem trustworthy (licenses are current, no suspensions, active involvement with thousands of posts here on BP, no red flags on the BBB).  I also plan on finding a realtor in the wholesaler's farm area who offers consulting services, and have them look at the properties the wholesaler sends me, once that process kicks off.

I haven't found anything to make me doubt their credibility, but this is my first rodeo and I'd like to lean on the BP community folks who have been through this before.  I'm interested in performing sufficient research, both on these potential partners AND on the properties they send via their buyer list.  Trust but verify, right?

If you've been buying from wholesalers for awhile, what are the top due diligence checks you've learned to perform over the years?

Sounds like you have already done a fair amount of research on the wholesaler, great job! Plan sounds solid, wholesaler sounds legit from the info you provided.

When it comes to the properties, never take the wholesaler at their word on any assumptions. Do your own analysis from scratch, make sure the numbers make sense for you. I often get deals sent to me by wholesalers only to find out they cherry picked comps or under estimated rehab. Of course they are running a business and need to make money, so I chalk this up to salesmanship and generally wont hold it against them. Its up to the investor to do their due diligence.

The hard part is getting it all done in time. Usually these wholesale deals move quickly and usually require a non-refundable deposit within a few days. So you have to move quick on the due diligence. I always get a GC and inspector out to walk the property with me at the initial showing to get bids. This helps me immensely with making a decision on the spot. Also, always bake in some contingency. Personally, I like to add a 10% contingency to any rehab bid I get from the GC.

In the end, know the market, know your numbers, do the analysis, and use the wholesaler for what they are, a salesman. That said there are some great wholesalers out there and if you find them, build a strong relationship with them and this process will become much easier.

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