Wholesaling during COVID-19!

16 Replies

First off definitely want to wish everyone good health during this tough time.

With the current crisis going on alot of people will look to get ride of their properties to get much needed cash. But my question is are investors looking to buy from a wholesaler during this time also? During this time I feel like finding a cash investor would be tough.

Let me know your thoughts ..

I'm considering backing out of the deal I was going to do.  No money exchanged yet, but signed a contract with a wholesaler.  I really wanted to get this house and think it would have been a great first flip for me.  With the crisis going on, I feel like things have not peaked yet and will get worse until we stabilize.  

I think as a HM lender they will be taking on higher risk hoping that a renovated home will sell in a timely manner AND for a good price.  Banks will have a smaller pool of qualified buyers due to job loss.

With people out of work and the market having crashed in the last 6 weeks or so, cash buyers will not have the cash they once had.  People collecting unemployment will not be able to qualify for a mortgage.  It's a risky time for both sides of any real estate transaction.

I hate to sit on the side lines but I would rather be wrong than broke!  :(

The investor pool and buyer lists for wholesalers will shrink substantially right now. HML are not going to take chances on new investors right now with the uncertainty of the end date of the virus. Established investors with a track record of deals should still be able to close with cash, LOC, or HM, but we will be surveying to deals to make sure they are no-brainers. I think this dip is going to put most inexperienced wholesalers out of business. Not because there won't be people looking to sell, but because stringing the deal together will be much, much harder right now, especially for a wholesaler without a vetted buyer's list.

I just backed out of the deal that I was going to do. Would rather lose a couple thousand dollars than my shirt! Hard money lender I had lined up is also pulling back so it looks like it’s going to be a tough ride for a while.

Probably will be harder to find cash buyers or HM, but I have no doubt you could find aggressive investors looking for a good deal. It’s been said that people build the most wealth during recessions. Now might be a good time to start knocking on doors that way when the crisis does peak and eventually subside, you’ll be in a good position to capitalize. 

Originally posted by @Deb S. :

I'm considering backing out of the deal I was going to do.  No money exchanged yet, but signed a contract with a wholesaler.  I really wanted to get this house and think it would have been a great first flip for me.  With the crisis going on, I feel like things have not peaked yet and will get worse until we stabilize.  

I think as a HM lender they will be taking on higher risk hoping that a renovated home will sell in a timely manner AND for a good price.  Banks will have a smaller pool of qualified buyers due to job loss.

With people out of work and the market having crashed in the last 6 weeks or so, cash buyers will not have the cash they once had.  People collecting unemployment will not be able to qualify for a mortgage.  It's a risky time for both sides of any real estate transaction.

I hate to sit on the side lines but I would rather be wrong than broke!  :(

why do you think Cash buyers one week ago had cash and this week they have no cash. ?  I would think wholesaling would be tough now.. 

 

Same here. I have a wholesaler that showed us a property 2 weeks ago (before lockdowns,all these C-19 erupted) Another investor beat me to the property by 10 minutes because my GC came to the showing 10 mins late. The last investor, left 5 minutes after I got to the site and offered. The wholesaler had to give it to him, first come first serve, he said, Anyway, this week the same wholesaler called said that the other investor lost his job and is now backing out of the deal, 2 days before closing and if I'm interested. I am now weighing my options. Secondly, another wholesaler had a property, looked up property, looks like a good deal and a few days later called that they are decreasing the asking price. I have a property on a market, a rental that we wanted to off load since its a bigger house and I needed the equity to buy more properties. My realtor advised to take the first offer (good offer though) said market is changing and we might get caught into the declining market. My other relator who finds me deals as well said that her showings have been canceled off, whether buyers are holding off or seller does not want other people to show their home (which might be good) but basically everybody is on hold for any reason.

Originally posted by @Jonathan Greene :

The investor pool and buyer lists for wholesalers will shrink substantially right now. HML are not going to take chances on new investors right now with the uncertainty of the end date of the virus. Established investors with a track record of deals should still be able to close with cash, LOC, or HM, but we will be surveying to deals to make sure they are no-brainers. I think this dip is going to put most inexperienced wholesalers out of business. Not because there won't be people looking to sell, but because stringing the deal together will be much, much harder right now, especially for a wholesaler without a vetted buyer's list.

well just look at wholesaling logistically.. the wholesaler ( not all but most) tell the seller they ARE the cash buyer.. and they are just bringing their partner through the house etc etc.. people are in lock down mode..  investors wont walk through the house  sellers dont want people in the house.. wholesaler has no real cash cant close  deal dies.  Pretty wild right now.. we had 5 closings this week all of them closed ( we are the seller).. i had one buy in Maryland that escrow sent the money back.  Seller could not get their sherrifs deed recorded so they had nothing to sell..  in states that rely a lot on attorney closings and physical signings and dont have E recordings are going to be hampered.

WE do all of ours as mail away and i have in house notary so not an issue for me.. and then the counties have E recording..

WE had one yesterday that we closed in Vegas were the buyer was FHA but worked at Casino and of course is laid off for 30 days as mandated by the state.. She had to produce a letter from her employer that she will be back to work in 30 days and that was enough to fund the deal and close yesterday..

HML of course are in charge of their own funding and not obligated to fund anything.. of course you dont make any money as a lender if your not funding deals. I think your right though.. no experience to limited experience investors will probably have a hard time in the near future securing funding.

In reality though you either have faith things will turn around or you just stop working.. I mean if things subside in 30 to 60 days.. even if your doing a flip you close today most flips take 6 months or so for full cycle..

But like you said the nature of wholesaling with many to most not 100% honest with their sellers these folks will have to do some fast talking or just sit on the sidelines for a few months

AS real estate Brokers we are still getting deals done.  Listings are getting shown offers are being made and as I said in states that are not attorney driven closing states its no problem.. Even here in Vegas Title company is non essential I was the last appointment on Wednesday for a property i sold in Indy to a hedge fund.. escrow officers were packing their office and working from home.  then closings were done by appointment just like always or mobile notary.. just no gathering.. Banks are working we got all our wires this week like normal. 

 

There is no simple answer to this question. I got into real estate investing back in 2009-10 when the market was dropping fast with no recovery in sight. I have personally witnessed people make millions lose it all and make it all back again. In any economic crisis there is never a guarantee of a timeline as to when the economy will recover or ever recover for that matter. The best answer is to take emotion out of your decision. You have to sit down and look at your financial situation as well as current and historical facts about economic crisis and how the real estate market was affected and make a game plan based on that. Real estate is slow in nature to react to market conditions and usually last to respond to a down market. With so much being undetermined right now I feel a lot of investors are going to be looking to take their money out of highly liquid and volatile markets and move their attention to more tangible less volatile assets like real estate. From personal experience many seasoned investors, lenders, who were around for other economic downturns of the past will still be pursuing deals as it comes down to will you make the decision to take the available opportunities with the risks on the table or play it safe and not. This is the nature of the business when you come down to it. My best advise is if you are new to real estate investing and losing a deal will put you on the streets than It's probably something you shouldn't be doing regardless. If you are in a position to do a deal with money that you can afford to lose without losing your shirt than its a personal decision if you have the stomach for it. Hope this helps.