New Comer Advice on Investor Backed Wholesaling

[Stefon Bostick]

Good Morning,

i'm new to the real estate sector and wanted to get as much advice as possible on the area i would like to get started in which is wholesaling. I've done research for years on various sectors of the business but decided that this is the best for me at this stage of my real estate career. I've decided that im done with research and now diving in head first hoping to get through the learning curve as soon as possible. With that said im going to have to start off by looking for investors to back me for my first few deals as i gain some momentum.  Does anyone have any suggestions on the best route to take in finding investors?  Also, what due diligence should i partake in when looking for an investor?  And lastly, what are the "DONT DOs" and what to watch out for in this process to protect myself.  Any advice on this would be great and thank you in advance. 

[J Scott]

I'd say it's VERY unlikely that a company that is selling you properties will be selling them at enough of a discount that you can turn around and resell them at a profit.  There are two reasons for this:

1.  Most wholesalers (whether individuals or brokerages) are going to mark up their properties as high as possible when selling.  There is unlikely to be additional markup available in this properties as-is;

2.  If this brokerage that you're working with is willing to work with any investors, it's likely that your potential buyers (investors with cash) will have access to these same deals before you buy them.  Investors are unlikely to pay you more for a property they could have purchased directly for less.

Add to this the fact that, if you purchase the properties outright from the brokerage, you will have extra closing costs (the first purchase), loan fees and potentially other costs that eat into your margins.

All-in-all, this doesn't sound like a good way to try to make money in this business...