Off market properties, work with a realtor or purchase directly from a Wholesaler?

Question

Hello, I'm looking to purchase properties in my local area (Volusia County, Florida) with the goal of Fix and Flip, or BRRRR, should I work with a realtor or buy directly from a wholesaler? Any thoughts, recommendations, or pitfalls to avoid would be greatly appreciated.

Thank you

River Sava · Answer

Thanks for the mention @Tanner Lewis! Happy to connect with you Louis and point you in the right direction. As mentioned, it can be very helpful to have an investor friendly realtor guide you through the process. Let me know / send me a dm!

Shawn McCormick · Answer

@Louis Alumbaugh There are many questions to figure out what the right path would be here. If you buy from wholesalers, you understand the common 'rules' that apply. They sell to cash or hard money buyers only, generally no inspection period, non refundable deposit and you are paying the your and the sellers closing costs.

If you can accept those terms and have the cash, it can be a quick way to get a property, but if you don't have experience, you'll likely get taken advantage of in some way. Wholesalers tend to overinflate the ARV and under estimate repairs needed as many do very little due diligence, putting all the risk on you.

When you use a Realtor (especially one who invests themselves, don't fall for I'm an investor 'friendly' agent..of course they are, most will take a sale wherever it comes from and by shear numbers, they are bound to sell to an investor eventually. Find one that actually invests themselves, interview them. If you do find one that is good, they will have the tools and knowledge to help protect you and give you 'outs' of the contract that a wholesaler will not. If you are financing the purchase, the lender will also provide protection, you will get an inspection done to protect you and so on. I'm not bashing wholesalers or agents, but they each have their place and very few actually have the knowledge to have your best interest as a top priority. They should also be able to provide comps that are accurate and an ARV that is realistic and hopefully contractors that can give you real world estimates.

I would consider going to meet ups in your area. CFRI (Central Florida Realty Investors) has a county meeting for Volusia and you could come to the general meeting in Orlando too. Great place to network with other local investors, trades, wholesaler and agents. I can send you a free guest pass if you want to check it out.

Best of luck. Reach out if I can help any further.

Mike Klarman · Answer

So, however the property comes to you, it comes to you. Run the numbers and see if they work. Lots of times agents have the relationships with the wholesalers, but it is fine if you have the relationship directly too.

Build your property funnel as big as it can be, that is have properties coming at you from as many pipelines as possible. Only 1 out of every 10 may work so it takes some digging.

A good rule of thumb: If the purchase price + the rehab is equal to or less than 70% of the ARV then I'd say go for it.

Katie Smith · Answer

Hi Louis! I'm in Orlando! If you choose to work with a realtor, you're going to have to pay them a commission. I would recommend working directly with a trustworthy wholesaler. Are you connected with any wholesalers? Are you attending any local real estate meetups? What is your buybox? I have so many questions, I'd be happy to connect and walk you through some things.

Jason Meissner · Answer

I agree, but I think a lower percentage than 5% would know what to do investing and remodeling. That is the point. Now you have a criteria for a realtor that CAN help you. One who is doing more investing and remodeling than you (2-4 per year). If you are in business only hire the best.

If you have a nice house and you are in a busy real estate market you can let a relative or friend list your house without loosing too much, if they are good workers. But if it's your business, only go with a realtor who is richer than you and better at investing in real estate than you. Don't use out of area if there are local heavy hitters and you need top dollar.

Nothing ever applies to everything. I think there are locations where you won't find anyone dominating the area, or kicking ass remodeling homes. But if you do find that area ... why are you there? Who is your buyer?

I love working with people who I can learn from.

Tyler Gibson · Answer

I would echo many of the things that @Shawn McCormick said.

The number one thing I would suggest is to get involved in local real estate meetups and start to meet other wholesalers in person that you can develop relationships with.

@Bernadeau C. hosts a monthly gathering.

Tanner Lewis · Answer

Hey Louis, if you are a newer investor, I suggest working with a realtor, as they can help guide you through the process for your first deal. I sometimes see first-time investors get taken advantage of by wholesalers, and if you are an experienced investor, the probability of that decreases significantly. @River Sava has a pretty big network of realtors across the country; reach out to her if you want to be connected with an investor-friendly agent. I only work with agents who are also investors, as they are looking at a deal the same way that you are

Nadeem Alamgir · Answer

work with both!

Sebastian Marroquin · Answer

Work with both! :)

As an investor, you have to have not 1 way of getting properties, not 2 ways… but more like 10 to 20 ways of getting off market homes (or better yet.. good deals).

and keep in mind, that I am a realtor :)

The name of the game is "options"

You do want to have a great Realtor that you can bounce ideas and comps off of. Hopefully you respect their time and are loyal to them once the time comes to sell the properties.

I get calls and texts from my clients all the time saying, "Sebastian, what do you think about this deal from a whole-seller?"

and I don't mind giving them my opinion of value and doing some work for them, as they give me referrals and business when ever they can! Often times I go to other realtors in my area and let them rep. my buyers as long as I get the listing back once the homes are ready for sale.

So, to recap, work with Realtors, Lenders, Whole-sellers, other investors, friends, family, direct to seller mailers, cold-calling, etc etc to get the deals. Build a team of trusted people / advisors (ie contractors, lenders, realtors, wholesalers, drafters, architects, title reps, escrow officers, etc to m are sure you all achieve success!)

Good luck

Adam Bartomeo · Answer

I am fairly surprised to see the responses here. I have been a real estate investor for about 20 years and I opened my real estate brokerage 5+ years ago, I have found that the far majority of agents don't even understand the standard contracts. They barely know where the buyers and sellers are supposed to sign. How would you ever expect them to understand a wholesaler's contract or what ramifications that contract may have? My experience tells me that there are probably 5% of agents that would be able to assist you with this type of deal and finding them would be very difficult. It is probably better to ask an experienced investor to read over the contract to gain their thoughts. You could even ask an experienced wholesaler to look it over.

Off market properties, work with a realtor or purchase directly from a Wholesaler?

Off market properties, work with a realtor or purchase directly from a Wholesaler?

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