How Do I know When to Go With The Wholesale Play

Question

Would you turn down 40K for a wholesale deal that had a 159k ARV as it sat (1000 s/f 2 bed 1 bath)?

Joe Gonzalez · Answer

Great topic guys.

My opinion is that it depends on the source of your cashflow, if you're running a wholesaling operation then you need constant cash flow to operate. This means you must wholesale the majority and keep a few others.

If cashflow is not an issue then holding assets wins hands down.

John Leake · Answer

@Gary Nash There are definitely a bunch of different ways you could go! What would your strategy look like? I would probably BRRR the property, in that scenario you could pull out 125,000 to use for another property and repeat that process on another one! I've done that successfully a few times and been really happy with building my business that way!

Gary Nash · Answer

Most investors don’t identify their most profitable exit strategy on their deals therefore, they’re leaving big piles of money on the table. I was literally just telling a high-roller investor friend of mine last night, how I turned down 40k on a wholesale play.  He immediately said he would have taken that money and ran until I explained how I was going to put 65k tax-free in my pocket and receive at least 800 dollars positive cash flow per month for the rest of my life. Now think about that for a second and let that sink in.  You understand that 40K after tax is really only 26K and if you did that 10 times you would have 260k after tax. In two years, you’d probably be broke. Where 65K times 10 is 650K and with 96k per year residual income for the rest of your life, in two years you could retire. Just sayin ;- )...

John Leake · Answer

If your due diligence supports the same numbers then the only question is if you could make a better return with that money elsewhere over the same time frame. Usually if a deal seems to good to be true it is.