A Flipper’s Best Friend? The Real Estate Wholesaler

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If you’ve read any of my other articles, you know I’m a believer in doing whatever you can to make the most efficient use of your time; which, in return, creates the maximum amount of freedom possible (the end goal for the majority of people getting into real estate). For the flippers out there, the one “to do” item on your daily checklist that never disappears should be:

Find a Wholesaler.

As far as I’m concerned, a wholesaler is right up at the same level of a lead contractor in terms of value. In my eyes, it’s not even really up for debate. When you look at the big picture, a worthwhile wholesaler is worth their weight in gold. If you find yourself thinking, “This is awesome! There are wholesalers all over the place!”, then take a step back, take a deep breath, and accept the fact right now it is NOT ‘that’ easy to find the type of “worthwhile” wholesaler I’m talking about.

I’m not going to go into great depth about this as there are various other quality articles on BiggerPockets about ‘what’ to look for in a wholesaler, but just a few little thoughts.

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What To Look for in a Real Estate Wholesaler

1. They look at it as a business rather than a hobby. By doing this, all the following points will fall into place naturally (well… hopefully).

2. They provide honest/accurate data. Whether it be after repair value or rehab costs, if you are getting inaccurate (or none at all) estimates, move on.

3. They actually DO MARKETING and/or HAVE CONNECTIONS. There is nothing more of a waste of time than getting an over-inflated property that is listed on the MLS for much less than what is being offered to you. I don’t mind buying properties off the MLS from wholesalers, but it needs to actually ‘make sense’.

Freedom Builder

Think about all the time that is required to do the items listed above correctly. Here’s just a few things to get started…

1) Determining which marketing methods to use

2) Testing those marketing methods – was it worth the money?

3) Fielding phone calls – many/most of which will be dead leads.

4) Checking out properties – figuring out the numbers on them

Those are just a few items. If you are a flipper just getting started and looking for deals, odds are you are doing all this yourself as you don’t know any wholesalers. I know I was when I first got started.

I’m not saying this is a bad use of your time by any means. What I ‘am’ saying though is that it is a use of your time, and not to state the obvious, but there are only 24 hours in a day, so time is limited.

It’s all a matter of goals and circumstances, but if your goal is to free up time and focus on other things, finding a worthwhile wholesaler is a great way to do it. What are the “other things” you could then focus on? How about…

  • Networking with contractors and subcontractors to really build a SOLID SOLID rehab team.
  • Refining your processes so that they become even more efficient…
  • Finding other worthwhile wholesalers…
  • Deciding if you want to go to Hawaii or the Bahamas… 😉

Avoid This Mindset

Don’t be like me and get trapped in this mindset trap that snared me when I was first getting started: I want to save and therefore make as much money as possible, so the last thing I want to do is buy some deal from a wholesaler who is marking it up on me.

Eeeek! The logic in my thought process is/was so flawed. Do you pay more if you buy through a wholesaler? Yes. Well, kinda… It may be more, but not by much. Remember, if you are doing it yourself (assuming you do it correctly), you will be spending money on marketing, networking, gas money, etc. Add on this the amount of time you spend on it, which takes away your ability to maximize other processes, which in the long run costs you even more time, so in the grand scheme of things, you are probably just paying a tad more.

Is that “tad more” worth it to you? There is no right or wrong answer to the question. To me, yes, it is worth it. Maybe not for you though.

Listen Up Wholesalers!

There is HUGE demand for you. Let me say that again, there is HUGE demand for you! Sure, there are many wholesalers out there, but make yourself a worthwhile wholesaler and you’ll have investors beating down your door. I currently have a couple worthwhile wholesalers that I work with, and I cherish them like gold. They make my life so much easier.

I know the gurus make wholesaling sound easy. It is not. But, get a good reputation for yourself, and like I said, the investors will hunt you down… no doubt in my mind.

Final Thoughts

If you like and enjoy being a detective to find those quality properties to flip, then finding a worthwhile wholesaler isn’t going to be at the top of your “to do” list. There’s nothing wrong with that. This is the best part about real estate. You get to do what you enjoy and what you think makes the most sense.

If you want more freedom, then find yourself someone who can help build that for you: the worthwhile wholesaler.

This isn’t easy to find, but when you do, you will quickly see how much time is freed up within your day. With that being said, go make some friends!

Photo: Tami Hills

About Author

Clay (G+) is a licensed real estate agent and the owner of Huber Property Group, LLC, a real estate investment company located in Grand Rapids, MI. His company purchases distressed properties with the main exit strategy of fixing them up and reselling with owner financing, particularly, land contracts.

25 Comments

  1. Wholesalers are a great and valuable resource for sure. As with any member of your house flip team, you may have to go through a few bad ones before you find one you both trust and brings good deals to the table for you. We still use wholesalers all the time – my last 2 deals were from wholesalers in fact – and if you latch onto a good one, they can bring you a nice steady stream of flips.

  2. Great article Clay, I don’t think people realize the amount of time, marketing and leg work involved for a decent wholesaler to find a flipper a good deal. As long as theres something on the table for both parties it should be a mutually beneficial relationship between the wholesaler and the flipper. Find a good wholesaler and hold on tight!

    • Agee 100% Howard. Guru’s like to make the wholesaler lifestyle being all glamorous and carefree, but it is pretty darn far from that. It can definitely be a lucrative way to make a living; however, it ‘does’ require effort.

    • Andrew you can contact me, I consider myself a great wholesaler. You let me know what city you are looking for and I will work my hardest to get you that deal! As I mentioned before, I see my business this way…. If I can deliver, i’m gold to an investor! It’s the long term relationship that counts!

      • Hi Addiel,

        I live in the East Bay and am fairly new to Biggerbuckets. I’m still learning about real estate investing but am becoming more interested in working with a wholesaler since I have a full-time job. I dont have much money to invest at the time so I was thinking of getting an FHA loan since the down payment requirements are pretty low. Do you think it’s a good idea to work with a wholesaler if I’m interested in a Buy and Hold multifamily home? Or is it better to work with wholesaler when flipping and selling right away? I’m still researching so am not too sure how much a wholesaler in the bay area would charge. I want to make sure that working with a wholesaler is a good idea for me since I’m just starting out and do have much cash to spend.

        Thanks,
        Alejandra

        • Hi Alejandra, and welcome to BiggerPockets. I think that in your situation, the best thing would be to work with a wholesaler, regardless of which of the two you choose, especially if you’re in the Bay area. That is a tougher market, but never impossible, especially for newer investors as yourself. Reason being is simply because of the price point that you will be working with. This is typically their full time job. Although there are some that do it just to create some extra income for themselves. In regards to your question about Buy and Hold vs Flip, they are very similar in the fact that either could be see simply as a cash purchase. Meaning, you will buy the property “cash” but it is up to you whether you want to hold on to it or turn around and flip it. That will be determined by YOUR strategy and the numbers and experience (when Flipping) YOU have. If you were working with me I would send you a deal and suggest a strategy for it based on my numbers i.e. this is a good flip home, along with my estimated repair costs and so on. But you still have to do your own due diligence to your comfort level. As far as the cost of a wholesaler, there is no specific cost that you will expect. Fees are based on the deal. If you will only be making 15K of profit, for example, there is no way I would feel right about keeping a 10K fee for myself (personal choice), but if I’m getting you a killer 100K deal, then that’s a different story. Bottom line is, I will get a fee that made it worth while for me and get you a really good deal as well that you will be comfortable with. The fee however, is usually built-in to your purchase price already. Side note: you mentioned that you will be working with an FHA loan, I’m not sure about other wholesalers out there but I have always passed on Investors that come in with loans especially here in CA. I have Buyers that are putting the money down the same day for the deals so there is no reason to hold on to it the time that it will take to use a loan. You are working with a different residential however, (multifamily) there is less competition on this.

          Best of luck to you and hope the info. helped.

          Addiel Flores

        • Hi Addiel,
          I really appreciate you taking the time to write back to me. Thank you for all the info you have given me. Can you clarify something for me? You said in your comment that you “always pass up investors that come in with loans, especially in California”. Why is that? To my understanding you only deal with investors that have much money available to be able to buy the property cash. Am I understanding correctly?

          Thanks,
          Alejandra

      • Hi Addiel,

        I know this was posted awhile ago, but can you recommend a software you use to do market research on the area, find comps, etc ? Thank you!

        -New and getting into wholesaling

        • Hey Natasha, first of all, best of luck to you in your wholesaling ventures. It’s a tough but very exciting world. There are several things I use but when I am focusing on a specific area, I will first go in and looking at title records. If you link up with an escrow or title company, they can get you access to that without having to go down to county records all the time. I linked up with First American Title from the beginning, before I even had my first deal. They were very helpful. I do this to verify as best as possible a houses’ specifications for when I do comps. After, I really like using Redfin.com to get sales and listings around the area. They aren’t available in every city though, not sure where you would be looking at. But if it’s not available, you can also use Zillow. I don’t go too much by their estimates though. I only use them to see the sold homes around the area. As a bonus, if you want to look at price movement in an area, check out the website FHFA.gov and it will show you city price movements. Very helpful for different strategies. Good luck!

  3. I’m assumed that I understood you’re question correctly. But let me elaborate on what I was saying. There are many people that come into real estate using different tools. I believe that you definitely use every tool at your disposal. Closing with cash, whether it be their own personal funds or hard money, will be much faster and smoother than when you have banks involved in the process, such as when you conventional, FHA, etc. loans. In what I do as a wholesaler, I am looking to get a property and unload it including getting it through escrow, all within a matter of week and half or so. There is a huge lack of inventory in CA right now and the prices are climbing very rapidly which means that when I am able to get a property and put it out the investors, there are some that will put money down the same day I present them the property because they are having a hard time acquiring them otherwise. This is a speed that a bank typically can not work at. So what I meant by “passing up” if I have two investors wanting my deal at the same asking price, I will always go with the cash buyer over the one funding with a bank loan. There are other markets I also work in, however, such as some cities in TX like El Paso, where the market is much slower and I will be willing to be more flexible in how investors will fund the deals that I send out to them. But like I said, you are a bit different because you are looking for multi-family which there are much less people on the market for. The majority go after the SFR.

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