Pros & Cons of wholesale deals?

[Seth Lacey]

What are the pros and cons of buying a property off a wholesaler?

[Matt Moreland]

Great question, @Seth Lacey! 

These are all just my opinion of course.

PROS:

• -Below market value properties
• -Eliminates the work involved finding cheap properties
• -Can be some great deals
• -Great opportunity to build relationship and reliable funnel of deals
• -More opportunity for margin than many MLS deals
• -Usually good honest people

CONS:

• -Many worth even less than wholesale price
• -Most do not allow buyer protections
• -Typically cannot have an inspection done
• -Usually cash only w/ quick close
• -Lots of bad actors. Especially since gurus started selling wholesaling courses.
• -Seem to go hand in hand with plumbing/electrical issues and hoarders
• -Usually not in appreciating neighborhoods

Buying a property off of a wholesaler can go either way, so in the end it is important in my opinion to know the individual you are working with. There are some wholesalers that I will not even bother to look at properties they send, whereas there are others who I start making calls to let my investors know before I even have time to load all the pictures. All comes down to finding a great group of wholesalers who consistently bring awesome deals to the table, and above all else are honest in their dealings. 

There are some phenomenal wholesalers here on BiggerPockets all over the country -- when speaking with wholesalers in any particular area, my recommendation is always to ask for references of agents and investors that they have previously worked with and their contact info. Hearing firsthand how the deal went, what communication and negotiation was like, and whether or not they would purchase another deal (or if they have) from the wholesaler is an immense value. If they do not have references they may be new so tread lightly, and if they refuse to provide any references, this could mean they burn bridges on each deal and is a red flag.