Dallas, TX · Member since 2016 · 23 posts · 2 votes
I know a lot of people say they don't use just any wholesalers for their deals, so how do you narrow down the ones who bring you good deals or the ones that bring bad deals??
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
9y
I have no problem buying from a wholesaler. The problem I see more often than not is that they've negotiated a sale price that leaves them with a reasonable profit, but no room left for the investor who either has to do rehab and rely on cash flow or rehab and pay a realtor, closing costs (twice, possibly) holding costs, etc. In order for their to be room for everyone to make money, the wholesaler has to negotiate a KILLER deal. That's not easy and that's why there aren't a ton of wholesalers out there who are making it. Newbies think you can mail a few postcards or make a few calls and round up a few deals from that. Nope, it's hard work and not many people are up for it- I sure know that I'm not.
Residential Real Estate Broker · Crystal Lake, IL · Member since 2012 · 124 posts · 94 votes
9y
Never bought anything from one; I'd guess you should do 2 things:
#1 evaluate their current "deals" on their website / mailing list to see if the numbers work.
#2 look up the "deals" that were on their list to see what happened to them. Did others buy and successfully flip? Alternatively ask for a reference from their other buyers.
Dallas, TX · Member since 2016 · 23 posts · 2 votes
9y
Eddie Egelston thanks for the input. I haven't either and I always hear that most people don't buy from a lot of wholesalers and what you said makes sense. It would be good to hear someone that has and what they experienced.
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
9y
I have no problem buying from a wholesaler. The problem I see more often than not is that they've negotiated a sale price that leaves them with a reasonable profit, but no room left for the investor who either has to do rehab and rely on cash flow or rehab and pay a realtor, closing costs (twice, possibly) holding costs, etc. In order for their to be room for everyone to make money, the wholesaler has to negotiate a KILLER deal. That's not easy and that's why there aren't a ton of wholesalers out there who are making it. Newbies think you can mail a few postcards or make a few calls and round up a few deals from that. Nope, it's hard work and not many people are up for it- I sure know that I'm not.
True pro wholesalers have only a few go-to guys that have been buying all their deals. It's the newbie wholesalers putting together crazy list of buyers after attending a guru seminar that can't even evaluate the rehab costs properly that sell duds and thus have to keep finding suckers.
If you're looking for an experienced wholesaler that may provide you with deals, then attend your local REIA and talk to these people after learning how to do comps properly and evaluate rehabs. Why? Because guess what, asking for a testimonial from another investor = increasing that buyer's competition. Why would they want their good wholesaler to sell to someone else? And why would the wholesaler want to sell to someone else when they have a done deal with the small handful of pro investors that buy all their deals without any problems?
You see the chicken and the egg?
That's why if you're looking for deals starting out, it's better to do some driving for dollars and do your own campaign. Or good luck trying to find one of the pro wholesalers lol. The pro wholesalers actually cherry-pick their own deals and rehab them, and then just sell the rest they can't manage with their own companies (which are still OK deals in general).