How Big Is Too Big For A First Deal?

Question

Haven't gotten my first deal or even a phone call YET, but I did receive my 1st list today. I jumped on the MLS to take a look at the other houses in the area of the properties on the list and saw that some were upwards of $1M! I believe in the law of attraction, faith and all that good stuff so I allowed my mind to wonder what'd it'd be like to get my 1st deal on a $1M home and the type of profit I could expect from that. Then I thought, what IF my 1st deal is on a $1M home?!?! Would I have enough money for an earnest deposit? (I'm thinking for house like that, $10 wouldn't suffice). I don't want to have "weasel clauses" so what if the home passes inspection and is good to go and I don't find a buyer?

I'd probably go for it with a lot of help and advice along the way, but are there some deals that new wholesalers should just stay away from, purely because of lack of experience?

Jessica Gourdine · Answer

Thanks @Edward, @Lisa and @Wayne. 'Preciate the responses.  No, I don't have a spare $10k sitting around at the moment or a slew of million dollar homebuyers on call (tho they'd be paying a fraction of tht million dollar price), but remember, this is all hypothetical coming from a thought I had while looking over my list.  Just having a little fun and doing a little dreaming.

By the way, this particular property was inherited, it's not on the MLS.

Wayne Woodson · Answer

@Lisa I assume you are going to wholesale this milliondollar home in which you would need a milliondollar buyer to do so.

1. Most buyers have access to or know someone who has access to the MLS. If they are like me they see a MLS deal they run. When I see a wholesaler with blasting an MLS listing it just screams noob.

2. With a million dollar listing you can bet the agent will run you through the ringer with Proof of Funds, Verification of Deposits and Numerous Background and credit checks. As Edward mentioned do you have $10k that you can afford to loose?

I highly recommend as a new wholesaler that you say in property's below the median home range for your area. If your market is like mine "which I believe it is" the median home value should be close to $140k. My advice is for you to find houses below that number and not only will you be able to find buyers but you will do more deals as well.

Good Luck

Lisa Phillips · Answer

I mean, you dont have to do it now without the preliminary research, right? Because, without knowing all that research, you're asking for it. REI is a little part emotion, a lot of part numbers and research - a business. Let us know what you find out!

Lisa Phillips · Answer

How funny! Go hard or go home, I say!

Im not saying just do it, but find out what the payments are, find out how much you  need, find out the rents you can expect to make...

Then, starting setting your goals and  a time line to get there.

:-) This made me smile though.

Edward Burns · Answer

First off, personally I would not even consider any offer that did not include at least 10K as non-refundable earnest deposit if I was the owner.  Second, can you afford a million dollar deal.  There are always pitfalls and you must be able to survive them as you encounter them.  If you can't you will set back your goals by years trying to recover. So essentially I am saying at this time with my resources, I would not even consider it.