The good and the bad from wholesalers

[Foster Algier]

Greetings everyone my name is Foster Algier and I have been wholesaling properties here in central Florida for many years. I thought it would be useful for all of us to have a discussion about what, as a rehabber, has brought you to a wholesaler. With so many deals available and so many wholesalers out there, how do you search for a good wholesaler? How much information do you want on a wholesaler’s property list and what information is irrelevant or makes a wholesaler’s analysis of a property unnecessarily congested? And finally, what has endeared you to a wholesaler you’ve worked with before and convinced you to continue working with them? Feel free to give your ideas, criticism, and stories, and let’s help each other work efficiently and successfully.

[Jaremy Moritz]

Saying there are no "good wholesalers" is relative to your position. If you are the wholesaler and can consistently sell properties above a % that most buyers want, you are successful. But to an investor looking to buy a good deal to fix & flip, they might think that you as a wholesaler have nothing but crap deals because your numbers don't fit their criteria.

Here's an example: I just closed a deal this week that was sold at 80% of LTV. ARV is $75K, repairs were $17K, and sale price was $43K. My purchase price was $25K and my gross profit was $18K. Is this an example of a "good wholesaler" or a "bad wholesaler"? Depends which side of the deal you're looking at. Most of my deals aren't like this, so don't get me wrong. This just happened to be one of the times when I was able to sell to an investor that lived on the same street as the property and he really wanted it and was happy with the price.

I try to keep my asking prices in line with what my buyers are willing to pay, but there are times when "premium" houses bring "premium" money. Don't blame me as a wholesaler for being able to sell a house for more than what you'd pay. I have investors that actually criticize me and think I'm crazy for having such a high asking price on some deals and having others that fit the 65% rule. Each property is evaluated and priced accordingly.

As a wholesaler, you don't make what you deserve, you make what you negotiate. Obviously, the better you are at negotiating (both on the buy and sale sides), the more you can make.

A lot of the wholesalers in my market do have crap deals, I'll admit. Many of their purchase prices are what I'd sell them for. But hey, to each his own.

To me, finding a good wholesaler is like finding a good realtor - you have to go through a lot of crap to find the good ones, but you can make a lot of money once you do find a good one. I've got one particular buyer that I've sold about 75 houses to, and all were sold at 75% of ARV, minimum. He's happy, I'm happy, and life goes on. Why sell for 65% when there are buyers willing and able to pay more?

The point of my ranting here is that while most wholesalers do have crap deals, there are good wholesalers out there that successfully close deals at prices and percentages that you wouldn't consider buying. That doesn't mean they aren't good wholesalers, it just means they've found a niche that you aren't in.