Where is the end? Who is the end?

Where is the end? Who is the end?

Investor · Twin Falls, ID · Member since 2018 · 83 posts · 9 votes

Well I definitely have a question for everyone who's out there because I listen to almost 95 episodes of the BiggerPockets real estate show and I'm absolutely loving it. However what's going through my mind is this in the cycle of buying and selling and real estate and wondering where the end actually is. Now all of these numbers and all these people I'm going to point out and put in this Narrows completely fake and fictional but I just need to have something structure for an example so I can ask this question appropriately. The question simply is I start out with property a and I am an investor and I'm done upset this job such as a wholesale deal so I talked with property a and I'm going to set up a contract that states I am going to be the buyer and or my partner and this property is going to go for $20,000 and then I'm going to go out there and find a third party which that is part of this question who is that third-party? How will I know or I will I be able to identify what their intentions are of the property meaning if I knew that with their in-game was then I would be able to set a path and getting my connections made and my lists of the two or three fires that I could talk to you and figure out if they are a wholesale type of investor or there a they're a buying and  hold type of investor or they are going to get somebody in there for a rental property. Basically if I set up this contract for $20,000 and I wholesale the deal too that third-party How will I know for sure that third-party is who I want to sell it to when I could actually just sell it to a buy-and-hold investor instead or a Fix and Flip investor and let's say that Fix and Flip investor takes the house they buy it from me for 20k and then they do their own thing with it and they fix it and flip it turn around and sell it for $60,000 whatever and the question Still Remains where does it stop where does that price point cap out where is the ceiling for the value of that house to remain at a certain number or will it continue to go up because it seems to me like the whole real estate investing game will be swapping out one houses value at one point in time at a low price and then it'll just continue to go up depending on who is the next person that's going to buy it. So let's say that same scenario and property does sell higher than 60000 and the end person who does move in there would be a regular Joe and they're going to live in there with their family on a mortgage and a note, can someone then come in after 1 year of those people living there c sell that property again for 60000 70000 80000 whatever the amount is  and then the cycle starts back over again depending on who that buyer is if they're going to wholesale it for a higher amount or if they're going to live in it themselves as a primary residence I mean I'm just looking at this whole perspective for or real estate as a huge cycle like where is the beginning and where is the end for that price point on the house and is that all just based on running the numbers within that particular Market in that area to know the value of the home and then go from there?

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  • Real Estate Investor · Des Moines, IA · Member since 2016 · 922 posts · 533 votes
    7y

    @Matthew Koch

    Hey Matthew.  Welcome.  You're all over the place, to be honest.

    Yes, knowing your 'customer' as a wholesaler, will help you.  Most wholesalers I've met spend a little bit of networking time to understand what we're looking for.  

    I'd suggest slowing down, and forcing yourself to communicate a bit more concisely.  This will help you build relationships, and it will also help you when it comes time to communicate succinctly what you're looking to do.

    Regarding the 'cycle' you touch on - no, not really.  That fix/flip investor or the buy and hold investor are essentially the 'end game' for someone doing wholesaling.  No need to concern yourself with 'their' exit strategy.  Sure, that property in anywhere from 8 - 50 years may be again needing a substantial investment; it's not really material to what everyone's doing, at least with what you're talking about (wholesaling, etc).

    Jim

  • Investor · Twin Falls, ID · Member since 2018 · 83 posts · 9 votes
    7y

    Well thank you sir.

    I guess what I was trying to get at is knowing what the person is going to do with the property after I'm able to sell it to them to me I imagine it would be the difference between a wholesale deal and selling the house over the original $20,000 that I had suggested in the scenario meaning of to 70% value rule and technically the house we need to be sold somewhere between 150k to 200k.

    However if it's just a cash sale and it's bought at 20k fixed up with 40k and resold for 120k then that's a 50 percent profit then minus expenses and holding costs as well as insurance and closing fees and such.... I'm not sure how else to describe it except for asking how do you know who to sell the property to and if they're the "right" purchaser for giving you the most money for that property as the wholsaler will low ball you and retail buyers will pay the marked up price but rehab people will nogatiate a fair price.... I think.... Ill reag more onto the ubg and maybe ill figure out that answer...

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