One Way to Develop a Solid Wholesale Reputation.

11 Replies

Many people just getting started with little capital turn to wholesaling for obvious reasons.  Most of the articles I've seen posted by investors here is 'Here is why wholesalers suck' and not 'here is how investors and wholesalers can help each other'.  

Let's face it, if wholesalers knew the real estate investment and rehab world inside and out (like most investors expect them to) THEY WOULDN'T BE WHOLESALING.  They would be putting deal analysis in front of their own private investors and they would instantly be your competition.

With that said, I would like an investor's point of view on this situation:

I am a new REI in the Boston area who can find motivated sellers (NOT 'DEALS') - Does it make sense for me to:

1) Take initial call from the seller, getting as much info as possible

2) Put information in front of MY buyers list, and ask them to deduct my fee [ideally 10k to start- (these properties ARV is between 500k and 1.5M)]

3) Ask my buyers for THEIR number to put the deal under contract (I can still send the buyers list my own rough numbers just for sh*ts, as I should be practicing anyway)

4) Bring the first buyer who is available from my buyers list to the very first consultation (as my partner) with the seller to give them 'our' price

5) If the seller is okay with it, my buyer puts it under contract and cuts me a check for my fee upon closing.

Is this a situation that investors out there would consider in order to help wholesalers build a better name for themselves?  This way they (end buyer/investor) have the flexibility to negotiate the deal based on the wholesaler's fee instead of the lack of flexibility that seems to often come with the wholesalers inability to correctly estimate rehab costs and run accurate comps.  (Although wholesalers should still be attempting to do this and get better at it with every single motivated seller)

Thanks All!

Chime in if you are a Boston wholesaler, Boston rehabber, or Boston Investor.

What you are describing sounds a lot like being a buyer's agent. If you have a real estate license, then you can do this all day long. You just get a buyer's rep agreement from the investor that you bring along. If you don't have a license, I would consult your attorney on the legality. It's hard to understand how the strategy you are describing isn't just brokering the deal.

You may be right, regardless, I should still be able to work alongside the end buyer, put the house under contract myself if they agree to take it off my hands, and either double close or assign it to the end buyer if it is just a matter of having my needing to legally have my signature on the paperwork somewhere.

I would check with your state real estate licensing agency.. and ask them.. this sounds like brokering without a license which could get you in trouble.

Plus savvy investors at that price level could easily just cut you out.  

in high priced markets like Boston the play is to be a real estate broker and get listings and build a real business.

ask @Russell Brazil who works high priced DC..  it takes time to build your business but once you have those markets

will allow you some really great income.  Plus your working in the industry not in the shadows.. 

Thanks @Jay Hinrichs

I definitely want to do things by the books as far as wholesaling and investments go, so I will definitely look into the legality of the process I laid out in Massachusetts.

For me the idea is to be an investor with integrity and work with other investors with integrity, so hopefully if another investor sees me bringing a decent deal to them, their first thought will not be to immediately cut me out of the deal so we can establish what I like to call a ‘business relationship’.

I understand the benefits of being a licensed real estate agent and have definitely heard pros and cons to being licensed as an investor.

My current mindset is to tread carefully as a new investor and try to partner with people who have been in the industry for a while that can give me some guidance but also benefit from the relationship.

Thanks for the feedback. Definitely don’t want to break laws the second I enter the industry.

-Mike

Originally posted by @Michael Rivers :

Thanks @Jay Hinrichs

I definitely want to do things by the books as far as wholesaling and investments go, so I will definitely look into the legality of the process I laid out in Massachusetts.

For me the idea is to be an investor with integrity and work with other investors with integrity, so hopefully if another investor sees me bringing a decent deal to them, their first thought will not be to immediately cut me out of the deal so we can establish what I like to call a ‘business relationship’.

I understand the benefits of being a licensed real estate agent and have definitely heard pros and cons to being licensed as an investor.

My current mindset is to tread carefully as a new investor and try to partner with people who have been in the industry for a while that can give me some guidance but also benefit from the relationship.

Thanks for the feedback. Definitely don’t want to break laws the second I enter the industry.

-Mike

don't confuse being an investor with being a marketer sales person.. investors buy and own property. or have cash invested in some sort of asset ..  marketers and sales folks make fee's for putting two parties together..  ( which I have done most of my career)

 

Originally posted by @Michael Rivers :

Thanks @Jay Hinrichs

I definitely want to do things by the books as far as wholesaling and investments go, so I will definitely look into the legality of the process I laid out in Massachusetts.

For me the idea is to be an investor with integrity and work with other investors with integrity, so hopefully if another investor sees me bringing a decent deal to them, their first thought will not be to immediately cut me out of the deal so we can establish what I like to call a ‘business relationship’.

I understand the benefits of being a licensed real estate agent and have definitely heard pros and cons to being licensed as an investor.

My current mindset is to tread carefully as a new investor and try to partner with people who have been in the industry for a while that can give me some guidance but also benefit from the relationship.

Thanks for the feedback. Definitely don’t want to break laws the second I enter the industry.

-Mike

 If you actually want to put transactions together and make money to put into investments there really isn't a downside to being an agent. Being an agent only wouldn't benefit you if you don't plan to actually take clients because then you are paying fees without getting much in return but if you want to actually work with clients and market properties being an agent is worth it. People talk about the "downsides" which literally is just telling all parties involved that you are an agent in writing. I have never actually seen or heard of anyone caring that an agent was involved as a party to the transaction. Also in my opinion making money as an agent is a lot easier than as a wholesaler. 

Totally agree @David Nacco .  It's not the putting listed deals together that I am after, but rather helping out the people who aren't going to be able to list their properties solve their problems.  Then I could rehab the property and sell for a profit or hang on to it as a buy and hold.  

I suppose what I am really looking for currently is a mentor in the fix/flip realm.  But I don't want to be a worthless time-suck to them, so I'd like to be able to at least bring them off-market deals via motivated sellers that cannot or will not go through normal channels anyway. 

Just trying to navigate the best way to go about this and certainly want to keep it legal and ethical.

@Michael Rivers That makes sense. Have you considered researching out to some flippers and asking them if they will partner with you on a deal if you bring the deal to them? Also I would read up on the laws before starting wholesaling. https://www.mass.gov/lists/statutes-and-regulations-real-estate-brokers-and-salespersons check this out and pay extra attention to the licensure section. This one might be useful too https://www.mass.gov/info-details/massachusetts-law-about-real-estate