All Forum Posts by: Luis Toledo

Good luck guys!

"70% - repairs" is what your customer is looking to pay in most markets for an average amount of risk. So your deals need to come in at a better price or at a lower risk to justify your margin as a wholesaler. For instance, if you manage to land a relatively new home that just needs basic landscaping, paint and carpet to sell, then maybe you could justify offering it at 80% minus repairs assuming you can buy it at better than that and keep the difference. You'd have to be very confident that your buyers are willing to pay that much though or you might get stuck putting the lipstick on yourself. Another thing to keep I mind is that the buyers that purchase from wholesalers are typically advanced investors with better than average capital costs, economies of scale for rehabs and possibly the ability to list the property themselves... all these advantages reduce their costs and thus allow them to take on deals with tighter margins. From what I've read, 70% is a good rule of thumb for bread and butter SFR in the 100-200k price range. Lower than 100k probably need margins greater than 70% and greater than 200k can probably justify margins smaller than 70%. Consider the cost of a fixed price job like an HVAC install relative to the price of the house to understand the relationship. If you're buying a cheap house and it needs a new furnace, that could eat up all your profit right there while a larger home is less likely to wipe out your margins with one missed repair (holding costs seem to work the other way around.) My plan is to solicit buying criteria from the people I want on my list if buyers and then match the deals I dig up to those criteria when choosing who to approach first.

@ Michael Jobe Thanks Michael! I'm definitely going to check those J Scott books and I'm steadily making my way through the Wholesaling 101 thread. So much good info there. It looks like I've found the firehose I'll be drinking from for the foreseeable future :)

Hello BP,

I live in Durham, NC and am just getting started. Four weeks ago I decided that I needed to make extra money in order to get out of (consumer) debt and build a better future for my family. My parents flipped a few houses while I was growing up and I knew that it was one way to go but I didn't really start to understand the OPM part of this business until just recently.

My short term goal is to start a wholesaling business that locks up flip properties at 50-60% of ARV and wholesales them to investors at 65-75%. I don't have much in the way of startup capital, so my plan is to start out driving for dollars and bidding on short sales and REOs off the MLS. I'm currently working on putting together proof of funds for a couple of properties I've seen on the MLS.

As far as education goes, I've listened to all of the house flipping HQ podcasts and have started on the BP podcasts. I also started attending local TREIA meetings to meet and learn from other investors. I'd love to hear about other free or cheap sources of education.

My challenges right now are estimating repairs/rehab costs and filling the sales funnel.