Use Wholesalers to Find Deals?

Question

Look, I'm becoming overwhelmed at the task in front of me.  I've never bought an investment property, but I need to magically become a wizard-ninja at finding good deals.  If our first investment doesn't go well, my wife, who is already nervous about this whole real estate investing thing, will fall apart.  I'm out 5-7 hours a day looking for deals.  Driving around the city, checking KSL, calling real estate agents, calling absentee home owners from PropStream, scanning MLS, calling foreclosures.  I feel like i'm getting nowhere.

Homes in Utah are expensive.  Even tiny, run-down 2/1 houses are well over $200K.  Meanwhile I'm watching people on YouTube buy $40K houses, charge $1200 rent, and cashflow $900 per unit in C-class neighborhoods!  How will I ever pull numbers like that in Utah?  I'm thinking "Crap! will I have to move to Ohio just to BRRRR some cheap houses?!

Then today I called a wholesaler.  Should I work with wholesalers?  Or should I work on becoming a ninja at finding off market deals?  And if I should work with wholesalers, where do I go to meet a bunch of them?  I feel alone.  I want to find a local support group or something because this is all too to overwhelming on my own just starting out.  I want to run with a herd.  Are there any herds of RE Investors in Ogden Utah that meet weekly to regale each other with heroic stories of investing victories and share their investing wisdom in person?

Several people I know keep trying to recruit me to join RENATUS which costs $20,000 (whoa!)  I mean, gees, I already paid Kris Krohn $3K.  Do all R.E. investor groups cost money?

Anyway whatever, my main question is should I work with wholesalers.

Thanks, I didn't expect this to be a rant. Sorry.

Alan Walker · Answer

@Nathan Reo , hang in there.  It takes some time for the parts to all come together.  There are investor groups in Ogden, I was just at a meeting with them on Tuesday.  Check out the Northern Utah Real Estate Investors Association at https://www.nureia.org/.  There's also a monthly lunch in Roy that I found super helpful.

In terms of whether or not to use wholesalers, it really comes down to what your end goal is in real estate.  If its buy and holds or flips, I have found wholesalers to be really useful. I bought 6 houses this year all from wholesalers.  But you have to do the numbers yourself.  They are selling a deal, so they are presenting best case scenario (and sometimes they are so high, its ridiculous).  If you want to buy and hold or flip, I suggest coming to some meetings and meeting wholesalers.  Real Estate is a relationship business.  I've had the privilege of becoming friends with some great folks by going to as many events as possible.  Some of those friends are wholesalers and they keep an eye out for me.

You've clearly got the drive to make this work.  There's also a facebook group founded by Zack Boothe at https://www.facebook.com/groups/229318174304821/.   You can hit him up directly on Facebook at https://www.facebook.com/zackboothe.

Hope that helps!

Cherie Orellana · Answer

There is an investor meetup first Thursday each month. You will meet lots of people in the business there.  I am on several wholesalers lists and honestly when they send them and I run the numbers they are not good deals and I often wonder why the heck they put them under contract. I have seen far better deals on the mls than what they send me. I’m wondering if they work work with their few elite buyers and send the junk out that doesn’t get picked up quickly to their email list. I see a good one hit the market that would cashflow $1,000 plus a months once every 2-3 months so not often. And they go fast! I will let you know if I see anything. Don’t be discouraged , and don’t spend so many hours a day searching. You will find what you are looking for.

Blair Poelman · Answer

Wholesalers are just people - some people are good and some people are not.  However, when it comes to wholesaling, it really doesn't matter if the people are good or bad.  It's all about the deal and nothing else- the wholesaler is just somebody making money in the chain.  If the deal is legal and the numbers work it might be a deal - or if might not.

Also, don't expect a wholesaler to do anything for you or help you out if a deal goes south.  There are countless stories about how a deal went south and the investor goes back to the wholesaler and the wholesaler gives the ol' 1 finger salute.  This business can be brutal, so be careful.

Trevor Bingham · Answer

I'm in the same boat you're in and have asked many of the same questions. I've considered/considering investing out of state. Which opens up a whole other can of worms. The things that have helped me are going to the REIA meetups and listening to the BP podcasts. When I get discouraged I ask, "What's the alternative?" I don't like the answer and it keeps me motivated. I don't hate my day job, but it isn't what I want in life either.

Keep going and buy smart. Don't buy, just to check a box and own something. Getting the grand slam requires getting a few on base first.

Good luck and keep going.

Tyler Gregerson · Answer

Starting out is definitely rough... There's a fair amount of competition through Utah and houses are not cheap. Keep up the grind and connect with people and things will happen. Let's be friends as I also dodged groups like RENATUS to invest money more wisely.

Blair Poelman · Answer

A good deal to me may or may not be good to anybody else - we're all unique, as is every single deal, and we all play this game our own way.

While it is difficult to give a definition of a "good deal", the few common qualities that must be in place in order for a deal to reach the "good" category (for me) are a.) the deal must be legal, b.) the deal must be compliant, and c.) the deal must make financial sense.  Beyond these basics there are countless factors, each unique to every deal, that will then come into play in order for a deal to make sense, including things like how long it will take to turn my money, how far away the deal is from my home, what are the resources, who are the players in the deal, etc...

Christian Brown · Answer

@Nathan Reo I would definitely suggest building a relationship with a wholesaler or two.. or five. Real estate is definitely a relationship business, so why not start the conversation? I'm an advocate of wholesalers because if the numbers are right, it can be a win win for both of you. Especially if there's some work that has to be done.

A wholesaler can bring you a good deal, but if the wholesaler is not in the business of renovations or even the "slow grind" of renting homes out, they may be fine with giving you a deal in exchange for their finders fee - typically around $5,000. After all, they spend the time and money to find great deals and if you're not finding your own deals, there's nothing wrong with following up on their leads.

Just like @Edgar U. has said, make sure you run your numbers. If it's a good deal for you, don't worry about how much a wholesaler is making off the deal. Just make sure that the home is the type of home you would like to buy and the numbers fit your investment criteria.

Good luck in Utah!

Nathan P. · Answer

@Dale Nesmith ksl.com has a large classifieds section specifically for utah and some of idaho.

@Nathan Reo Hey another Nathan here. Your probably becoming a pro at analyzing deals by now so you know one when you see one. It sounds like you are doing your part to find a deal. If you get out to some of these networking events and let them know what your looking for then you can have multiple eyes out there looking for you.

Use Wholesalers to Find Deals?

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