5 ADVANTAGES OF WORKING WITH A WHOLESALER
As an investor, you are constantly looking for the value in every aspect of your investment purchase. What’s the ARV on a property? What’s the rehab cost? What’s the startup equity? And of course, what is my exit strategy going to be? These are all important and constant questions you ask when making a purchase, but how can you be sure you’ve covered all the bases to make the right decision whether to buy or let it go? How much time will it take to make the right decision? Are you able to devote enough time and resources to find the right numbers and the right deals effectively? It takes many hours of devotion to get exactly what you want and at the price you need.
Introducing the wholesaler. Many people have given wholesalers a bad reputation, but did you know there are two different kind of real estate wholesalers? There is your typical wholesaler, they went to a weekend seminar, bought the DVD, and now call themselves a wholesaler. These individuals usually don’t understand the market or the process, they just see dollar signs. The other type are the professional wholesale agents. Wholesale agents are there to take the guess work out of your investment purchase. They are there to look after you and your investment goals. If a wholesale agent wants to make money, he/she must insure that their client makes money first. So how do they do it and what value do they bring to an investor?
- 1.TIME: This may be the most important value for an investor, and yet, the one point most overlooked. How valuable is your time? What is your hourly rate as an investor? Investors use up a lot of valuable time and resources working to find properties, analysis numbers, place bids, work highest and best offers, only to lose the property to another buyer. Has this ever happened to you? Did you think about how much time it took away from your family and other activities? Was it worth it if you didn’t get the property?
- Wholesale agents have already done all that work for you. They have run the numbers for you, bid down the cost, analyzed the numbers, found out the values and are able to present the property to you with the hard work already done in a nice and concise marketing flyer.
- 2.ANALYSIS: Investors know that it all comes down to the numbers. The purchase is the easy part, the numbers are what usually trip up an investor and where the big mistakes can be made. This is called “Analysis Paralysis”. Everyone knows the MLS is the best resource for getting accurate market value. Wholesale agents analyze the rental comps, rehab cost, demographics, upcoming growth in particular areas and buying trends. Then they figure out closing cost for both purchase and the resale, taxes during rehab, estimated utility costs, commission cost when you resell, HOA restrictions, HOA fees and insurance cost. All these numbers and costs are evaluated to insure the investor has all the information necessary to make a good decision and an equitable investment.
- 3.RELATIONSHIPS: Wholesale agents have established relationships with the banks and other real estate agents. One of the reasons is we are all licensed real estate agents. They have developed a history of moving big quantities of properties quickly and easily for everyone involved. For this reason, they are usually contacted first when a property is about to come available and they are able to get the property at a price that the average investor is unable to obtain. This makes your bottom line even better and you don’t have to waste your time bidding on a property to a number that will work for you. The wholesale agent has already done it for you.
- 4.ONE STOP SHOP: A well established wholesale firm should be able to provide you with anything and everything you would need to have a profitable and manageable investment. They can provide you with proper management companies for your investment, refer you to investment friendly lenders, recommend the appropriate contractors that understand the difference between a homeowner rehab cost and an investors cost. Most wholesale agents are investors as well, and understand what each property would require and will help you get the most out of your property for as little as possible.
- 5.COST: Licensed wholesalers work in volume. What that means for you is less money out of your pocket for assignment fees. A typical wholesaler may do one or two deals a month. To compensate for this, they mark up their properties with huge assignment fees to try and knock it out of the park. Licensed wholesale agents don’t want you to buy just one property from them, they want you to buy 5, 10 or 15 a year! Because of this, agents make their money on volume, not just one deal so your fees are much less.
- Do your research and find a reputable, licensed wholesaler. They are there to help you become successful. They can only succeed when you succeed.