Do retail home buyers care as much about home value as investors do? Investors buy to make a profit, so I can see why home values are very important to them. Retail home buyers are buying to live in the homes not to make a profit from buying like investors do. Can you even wholesale homes to retail buyers? If so, how is that possible? You would want someone who can come in and close quick with cash.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Do retail buyers care as much about price? No, it is clear that they are willing to pay full retail and often, over retail to get into a home. With that said, selling to a retail fianced buyer is not "wholesaling", it is retailing.
If your intent is to wholesale and you have or can easily find real deals, then your issue is your lack of a buyers list. That is simple to build and many threads here on how to do it.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
13y
You can certainly wholesale to retail buyers.
But, as you pointed out, financing is going to be the sticking point. I don't know if you can find FHA or conventional lenders who'd be willing to finance a wholesaled property (actually, I know that in generally they won't), so the buyer will either need cash, private money or perhaps a portfolio loan from a commercial bank.
But, if you can get past the financing difficulties, the mechanics are the same as with any other wholesale deal.
J Scott I know a lot of motivated sellers in desperate need to sell their homes fast, which is why I want to wholesale these homes. I prefer cash buyers if there is a chance I find retail buyers with cash. Do you know of any private money lenders checking out? I just want to get a deal closed fast.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
13y
Originally posted by Antonio Bodley:
Do you know of any private money lenders checking out? I just want to get a deal closed fast.
Private money lenders are generally people that the borrowers know, like friends, family members, acquaintances, etc. These aren't professional lenders.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Do retail buyers care as much about price? No, it is clear that they are willing to pay full retail and often, over retail to get into a home. With that said, selling to a retail fianced buyer is not "wholesaling", it is retailing.
If your intent is to wholesale and you have or can easily find real deals, then your issue is your lack of a buyers list. That is simple to build and many threads here on how to do it.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
13y
Originally posted by Adam Salerno:
Originally posted by Antonio Bodley:
J Scott Oh well. Cash buyers may be the better option for me.
If you are looking for cash buyers, there are some alternative ways to open up your customer pool depending on the value of the property. I don't want to hijack the thread, so just contact me privately, and I'll explain what I mean.
Antonio -
Why not share your ideas publicly? Perhaps start a new thread?
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
I agree and since it is on topic, I don't consider it a hijack.
I'll share here as I have in other threads.
Publicly recoded doc search with criteria set for all cash transactions would be an easy and great start. Going to court house steps for trustee sales will also put you next to many all cash professional investor buyers.
Adam Salerno How do I contact you privately? I would like to hear about your alternative.
J Scott What should I label my new thread?
Will Barnard I don't doubt those are great options to find cash buyers. My problem lately has been getting good comps because all the comps for subject homes I am interested in are showing old comps from 2 to 3 years ago. I searched properties in more than 2 cities and all produced old comps. Appraisers even said it is not worth investing in homes like these because they will be difficult to resell seeing the comps are old.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
13y
Originally posted by Antonio Bodley:
J Scott What should I label my new thread?
I apologize, Antonio...that comment was directed at Adam...
For what it's worth, I'm always a little skeptical when someone joins the forum and their first post is something along the lines of, "I have exactly what you need -- contact me off the forum."
I'm not saying there's a scam involved, but if I were to run a scam, this is likely how I'd bait my marks. So, if you do contact him, be careful if he's trying to sell you stuff...
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Originally posted by Antonio Bodley:
I don't doubt those are great options to find cash buyers. My problem lately has been getting good comps because all the comps for subject homes I am interested in are showing old comps from 2 to 3 years ago. I searched properties in more than 2 cities and all produced old comps. Appraisers even said it is not worth investing in homes like these because they will be difficult to resell seeing the comps are old.
This tells me you are not looking in conforming areas with valid comps. This is something a rehab flipper would typically avoid. My suggestion, if this is the case, is to find another target market.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Cash retail buyers are most often those with sales pending or closed on homes with lots of equity. Finding repetitive cash buyers at the courthouse, unless excentric, are investors unless they in fact want a new home to live in.
This is pretty much why I get a kick out the wholesale issue as a sole strategy, properties can be sold retail for the buyer's consumption. While most of the investors chasing these fixers to wholesale, if you deal in higher priced homes, just median and upper, home buyers for other reasons, floor plan, location, schools, and potential. Many don't care that it won't go FHA, they have cash for renovations and 30% down, it not a problem getting what is called a bridge loan, purchase and rehab then refinance. Most 500K and up homes in this area are renovated to some extent before the retail buyer moves in! That way, they get what they want.
Realtors are a good source of cash retail buyers, they just sold the other house. look to Realtors that deal with relocation brokers as well, out of towners moving in. Overpriced homes here are said to be waiting for that Cali buyer. :)
You can always put a house on the market, expose it at retail make calls to you wholesale buyers as time passes, just reserve your buyer's list. :)
J Scott I gotcha. I am not use to contacting people privately off forum. Tell me how I do that.
Will Barnard I am still looking. I am only interested in these particular home because I got them from Zbuyer.
Bill Gulley For me wholesaling is just a start because it doesn't require spending my own money to get the home then flip it. After building up enough profit from wholesale deals then that money can be used towards other investment strategies.
Are you still talking about using those bridge loans? If so, this is my first time hearing anything about bridge loans. Wholesaling is all I know and heard of in my area as a means to make money without spending a dime. I am not familiar with what bridge loans are and how they work for an investor trying to flip residential only homes. This is going to take some research in to this bridge loan you speak of to fully understand what this is.
Originally posted by Bill Gulley:
Really? Why would it cost you more on an option of a $175K suburban ranch than a 40K trashed ranch in town?
Come on, it just boils down to knowledge and guts!
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
You can do what you do with a 175K home, the market is different,
A bridge loan in this case is obtained by the buyer, not you. You can sell retail, the buyer gets a bank loan, has it rehabed then refinances the temp. loan with the "end loan". Usually these folks get an contractor, the CG may do a construction loan and when completed the owner refinances.
The key to be successful in real estate is understanding financing, what the basic rules are, types of loans, when to use them, where to get them. Ignoring this side of RE really limites you and keeps you out of many or even most deals.
Get with a Realtor you can work with and make sure you have your buyers list exempt from the listing contract, let them sell, at a higher price. This won't happen with 40K junkers, move up!
Residential Loan Broker · Streamwood, IL · Member since 2013 · 2 posts · 0 votes
13y
Originally posted by J Scott:
Originally posted by Antonio Bodley:
J Scott What should I label my new thread?
I apologize, Antonio...that comment was directed at Adam...
For what it's worth, I'm always a little skeptical when someone joins the forum and their first post is something along the lines of, "I have exactly what you need -- contact me off the forum."
I'm not saying there's a scam involved, but if I were to run a scam, this is likely how I'd bait my marks. So, if you do contact him, be careful if he's trying to sell you stuff...
Ouch! One post and I'm being labeled.
For the record, I did not say, nor did I mean to suggest, that I have exactly what anyone here needs. The discussion had taken a turn toward cash buyers. My suggestion was that there may be ways to deepen the pool of buyers you can market to when you are looking for cash buyers. I am working on a full post to describe what I am talking about.Once I have it finished I will post it wherever seems appropriate to you all.
I apologize for not responding more promptly. I left my office for the day shortly after I posted that, and I am just seeing responses now. I realize that my silence after my initial post probably helped fuel speculation as to my motives.
I will not lie, I am a Funding Consultant for a business funding company. So, I work in business credit all day every day and part of my job is to sell. However, my initial comment was not geared towards selling anything, or at least not selling anything to anyone here.
Bill Gulley Yeah about that getting with a Realtor I can work with. That sorta didn't work out too well the last time I wanted to work with a Realtor once they found out I was an investor. So the bridge loan is not obtained by me but by the buyer. If that is how this works, I need to find buyers who use bridge loans. And how am I to find buyers who use these loans? I need to know the downside to this type of business transaction on my end as an investor. I have issues knowing what the home is worth in order to sell at retail value. That is due to the homes being in areas where there are no recent sold activity, which is all I keep finding even as I explore other areas. I want to get in and out fast, so how soon can a deal get closed using this bridge loan procedure?
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Antonio, I said you need to find a Realtor who will work with you, not all Realtors avoid investors, many work with and love to do so.
The buyer or a CG get bridge financing, not the seller (but could but that gets beyond this level of arrangements).
The problem, no offense, is that you started in a guru niche of wholesale deals and didn't begin RE with the bigger picture of the basic steps to facilitate any type of deal. That's also why you need a Realtor to work with, they can explain bridge financing between different transactions and functions.
Bottom line, you can certainly sell nicer properties at retail while having wholesale buyers. I also suggest you work out some payment for the Realtor if you pull the property from them, time and costs as well as something, but it need not be full commission, that may have been why it didn't work well last time, find another one. ;)
Bill Gulley I never said all Realtors avoid investors, but the ones I came across did just that. And what is this CG you mention? I know nicer properties can be sold at retail. There was a time when I asked a Realtor to help me determine the value on a home I wanted to put under contract and assign to end buyers. I offered the real estate agent a cut of the profit if I flip the house to another buyer. The agent was not interested. I didn't have any money upfront out of my own pocket to offer Realtors, so this was the only way I could pay them for their help. How do you suggest I approach these Realtors and ask for their assistance with this transaction?
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
GC is general contractor.
Attempting to have a Realtor enter a partnership arrangement will be difficult off the bat, that is not how they operate and asking them to do so may have had them run away.
They are paid either by commission or by fees for the sale of properties. Probably the best way, since you will not likely own the property to list it is to have them act as a buyers' agent on your deal and agree to pay the commission. If you do take title you simply list it with them and again, they will have to agree to exempt your list of buyers. You can't hand them a list of 200 names either, more like 5 or 6 who are the most likely to buy directly from you. In the end, you may need to just list it and pay a commission based on any sale.
Paying a commission is not a big deal considering the Realtors will usually get a much higher price than you will. Hiring a Realtor will establish a relationship that works both ways too, they will then work with you, pull comps if you need them, bring you deals and do marketing for you that could put your name out in the community. Consider working as a team.
If Realtors are running the other way, you're probably hitting them up with your wholesale stuff too early in the conversation. They usually see some of these techniques as practicing RE without a license and they really don't like that. So, I suggest you establish a relationship more slowly, discuss vinila deals, straight sales and purchases, look at a property and pick thier brain as to how they operate, do the show properties well or how they know the market....
It's an interview process for you and them, no Realtor wants to work with some flaky investor who has no money, so consider thier side and show them you are a capable operator that can facilitate transactions legally and ethically. Suggest your wholesale flip stuff gradually, perhaps as questions to have them arrive at solutions to a establish a strategy that works for them as well as you.
In RE (or any business) your ability to communicate ideas and lead others to arrive at conclusions that you desire them to follow takes leadership skills. The best way to lead is by demonstrating competence, fairness and an ethical business sence. If all you know is a guru approach to wholesale transactions, you'll have a hard time dealing with Realtors.
Maybe you should make friends first then establish business relationships. :)
Bill Gulley I need to find a good Realtor who will work with me in this deal. Finding some random agent to help out in this transction is going to be a little difficult because I am not good at picking agents or even good agents worth working with. The ones I was working with at the time never respond back after I contacted them. They just vanished after they were supposedly trying to help out. They were always busy or not in the office when I called them. These are issues I have when communicating with some random agent. Is it best to explain all what you mention to the agent over the phone or in person. I know agents are very busy, and I don't like taking up too much of their time. How do I explain all of what you said to these agents over the phone I guess or in person? I want to make this short and clear to them what I need from them with out going through some long version of what I am doing and what I need them to do for me. This includes talking to them about bridge loans you mentioned. I have not sold anything yet, so I don't have any trustworthy buyers. Long before now I was going to use transactional funding to buy and flip all the homes to end buyers.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
13y
Why would you mention bridge loans to a Realtor? Are you going to tell them how thier clients can finance a purchase? In all of this, as I said the bridge loan is not for you, just mentioned it to say how you could get into homes to retail and wholesale if you had to.
Your inability to carry yourself professionally in the eyes of a Realtor seems to weigh heavily with you, it might be a communication problem and lack of RE basic knowledge.
Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
13y
Originally posted by Antonio Bodley:
For me wholesaling is just a start because it doesn't require spending my own money to get the home then flip it. After building up enough profit from wholesale deals then that money can be used towards other investment strategies.
This isn't a perfect analogy (mine never are :), but when someone says they want to start out wholesaling in order to raise capital to do other types of investing, that to me is no different than saying, "I want to become a professional baseball player so I can make enough money to buy box seats for my favorite baseball team."
Wholesaling is a TOUGH way to make money -- tougher than rehabbing or landlording or note buying, in my opinion -- so using that avenue to gain enough money to do the other things just seems backwards to me.
If your goal is rehabbing or landlording and you need money, find a partner, a lender or get a job. Those are much more likely to work successfully for you than starting out wholesaling, where your chances of success are much lower and your chances of burning yourself out before we ever really jump into real estate are much higher.
A very, very small percentage of wannabe investors ever do that first deal...I have a feeling that a MUCH higher percentage of them would do their first deal if they didn't start out wholesaling. In fact, I think it's safe to say that if I had started out as a wholesaler, I'd have given up long ago.
Bill Gulley Disregard that statement about mentioning the bridge loan to the Realtor. I admit I don't have all the RE basic knowledge to communicate professionally with a Realtor, which is why I would like to improve in that area.
J Scott See what you are saying about wholesaling is completely different from what I have been listening to about wholesaling. Here you are saying how tough it is. Almost makes me want to give up trying to be a wholesaler. My goal was to someday do whichever that is going to provide me with steady cash flow every month. Whatever that may be doesn't matter as long as I don't have to keep spending my years hunting for a deal I can put under contract.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
13y
Antonio, keep in mind that nothing worth doing s easy in RE. The hard is what makes it great, and profitable. What you need to do is decide what you are good at and what skills you have. For instance, I am not the door knocker/cold caller via phone person, thus, I don't work strategies that require that.
Those who have contractor experience may decide that flipping is best for them due to their background (not to say hat is a necessary prerequisite.)
If passive cash flow is what you desire, you need to be a hands off landlord, note buyer, or lender. If an active campaign is in your reach, then perhaps rehab flips would be good to bring in be profits. Many choices, pick one and run hard at it.