All Forum Posts by: Michael Slockers

I've spent the last few months reading, learning, and marketing to start a wholesaling business. My goal has been to start wholesaling in order to learn the marketing and eventually be able to acquire properties into my own portfolio for long-term holds and also fix-n-flips (love love love construction-related projects, so this is a goal of mine...).

That said, I have talked with many sellers, been hung up on many times and cussed out at least once.... so I figure I'm on the right track as far as making the right offers, etc. Haven't found that truly motivated seller yet.

I spoke with a retired man in a nearby community the other night. (important detail: the nearby community is a distant suburb but not the most popular suburb. I'd say it is steady, but not growing like some of our other areas.) He has a package deal - he wants to clear out his portfolio of 25 properties as a package deal. You could imagine that's a little intimidating for my first deal :-)

Alleged value of the 25 properties is $1,300,000

Seller started his talking at $1,000,000. 100% occupancy and rents bring in $13k per month. 

What are your initial thoughts? My initial desire was to find ONE house to wholesale, though I've never been opposed to building a portfolio.

Wondering what my entry and exit strategies could be.

Entry ideas: Owner financing, bank financing (portfolio loan?), private money, partnership, could move on all or negotiate for just a portion of the portfolio

Exit ideas: Sell some, sell all, hold all, sell as turnkey investments

Appreciate your input, and I understand many of the details aren't here. If I desire to move forward, my plan would be to get a list of all 25 properties, run numbers on values, rents, etc, and what a great price would be (goal of 30% immediate equity).

Michael

Great job! I've just sent out my first mailing also and I've not been OVERWHELMED, but I have been pleased.

I have put a Podio CRM system in place (free) and my voicemails forward straight to Podio to start the CRM activity. 

@Billy Runyan

What do you say in a follow-up call to someone in the fast/med/slow categories? And secondly, for those who are tire-kickers and really don't have a house to sell, do you still follow up?

@Will Barnard, would you be willing to share any spreadsheet or property analysis tool you are using for your analysis? It must be very crisp if you've analyzed so many properties. Thanks!

great thread. very informative discussion. thanks guys.

@Aaron Montague

 Thanks again for another good response. I'm learning a lot on this forum.

@Jesse T.

I can close a deal today if I give the appropriate number to the seller. So I'm avoiding the 70% stuff because this is going to be a long-term hold in relatively decent condition.

Market value based on comps is around $125,000; the property needs about $18k in estimated repairs; the owner has no mortgage, and I'd like to offer 81k, then turn it to a cash buyer for 86k.

So for 86k + 18k repairs, that cash buyer would be in for 104k. Rent is 1250/month. Are these numbers any good from a buy-and-hold strategy? I was up late last night trying to understand MORE about some of the rental metrics. My rental buyers have simply told me, "if the numbers look good, we'll buy".

To me a $21,000 equity position + good cash flow (I THINK?) seem like the numbers work. Still doesn't meet the 2% rule... 1250/104000 = 1.2%

Again, thanks for the input. Any input relative to these specific numbers would be hugely helpful. I struggled last night to find the RIGHT spreadsheet for seeing the big picture.

That's fantastic @Aaron Montague

I appreciate the insight and definitely see how catering to the monthly cash flow is of great interest to the buyer in this case. But just curious, how much does a strong equity position play into your decision? If it is a 1.5% cash flow but you're buying at market value, is that okay with you? 

Thank you all for your thoughtful responses!

In summary:

1. Know the market

2. Know your buyers' needs/desires/terms

3. Be honest, of course

4. ROT are only ROT

@Hattie Dizmond, I'd like to talk to you more. I have family in Southlake and it sounds like you are doing a lot in that area. I may DM you with some additional questions! Thanks!

I understand how and why to use a standard formula of 70% ARV - repairs - my wholesale profit when making an offer to a motivated seller.

However, I have some buyers who seem less interested in getting a great deal (30% equity position) on a property and more interested in just monthly cash flow (for example, they may be okay with a 5-10% discount if cash flow is where they need it).

For properties that fit those sellers' guidelines, I assume that I can work with a less motivated seller (maybe use 85% ARV - repairs - profit) and still make the deal happen?

Does this sound accurate? It seems this could still be a win-win-win.

I'm new to this and I've been talking to many quasi-motivated but not-quite-desperate potential sellers.

Thanks in advance!

I realize this is an older conversation, but I have 2 quick thoughts/questions:

1. What happened? Did things change? Did you find motivated sellers after all? Did you close any deals that initially sounded un-motivated?

2. What about other creative options? What options would the folks on this forum suggest outside of just "here's the dollar amount I offer, take it or leave it." Does anyone use a 3-option LOI? If so, how do you calculate and structure it?