Asking for feedback on a ws deal from an investor who passed...

Charlotte, North Carolina
Wholesaling
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Asking for feedback on a ws deal from an investor who passed...

Bonita Woodbury
Member since 2022 · 9 posts · 2 votes

Hi everyone! So glad to be a part of this community and for all of the information I've obtained here so far. I'm new to investing and currently implementing wholesaling as a strategy to build capital before scaling into buy and holds. I educated myself to death and finally started taking action, and I have a deal under contract! Based on everything I learned over the past year I felt it was a pretty good deal, but I'm having trouble finding a buyer. I've had a lot of interest, probably based on the location, but once I send the full details and pics over to investors....crickets. 

I finally had one buyer come by and view the property and he completely lowballed me on the offer. At first I thought maybe I had grossly underestimated the cost of repairs, but after review, I don't think I could have been that far off. I estimated repairs anywhere between $50K - $60K, total rehab, with a 30% ROI. Based on their offer, they seem to be estimating the cost at somewhere like $120K...for a 1,900 sq ft manufactured home.

As I'm new to this and really value the opportunity to build relationships, I'm not sure how to approach this buyer for feedback. Is it appropriate to ask for a breakdown of his numbers and how he got to his offer? What other questions would you ask? Am I placing too much stock in this one person's opinion? 

I appreciate any insight you all have :-) 

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  • Nathan A.
    New to Real Estate · Sunnyvale CA and Maplewood, NJ · Member since 2022 · 257 posts · 161 votes
    3y

    If people seem interested until they run the numbers and then you hear nothing, that could very well mean your own analysis is off base. People probably wouldn't pass on a good deal. I would approach the potential buyer and politely ask for a simple breakdown of how he is estimating the rehab cost. What is he estimating for demolition, for plumbing, for electrical, for painting, for HVAC, for cabinets, for appliances, for flooring, for the roof, etc.? Then compare that to your own numbers. That would then be a basis for negotiation. Maybe you know (and he doesn't) that the property doesn't need one of those things. Maybe you have better estimates than he does for how much some of those things cost, and can prove it to him. Or maybe vice versa. You could frame how you approach him as "hey, I would like to figure out how to make this deal work but I first need to understand why we are so far apart."

    It's impossible to tell in the abstract whether your $50K - $60K or his $120K is closer to the truth without knowing more about the property and what it needs, though.

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  • Lawrence Potts
    Real Estate Agent · Member since 2018 · 459 posts · 414 votes
    3y

    Hi @Bonita Woodbury, congratulations on taking action and getting your first whole sale deal under contract! That's exciting.

    Now you're at the tricky part with finding the right buyer...I think you could assume that the first buyer didn't think the numbers made sense. But here's another thing: because you're new, they may not want to take the risk. As unfortunate as it sounds, trust is your key to winning in wholesaling. Sellers have to trust you. Title has to trust you. Buyers have to trust you.

    Now it's going to be hard to know exactly if your numbers are off without details of the property. But having a rehab estimate difference of $60-70k is significant. I would be completely transparent and ask how he got his number without coming across as rude or arrogant. They'll show you their numbers and then you can be the judge of what the true rehab budget should be. But they may not, they may not want to share their secrets, and that's fine. Here's the truth: no matter how good a deal you have, you may not be the right wholesaler for them, and they may not be the right buyer for you. So you move on. And if it's a good deal, you'll find someone. Go to REI meetings. Network. Talk to everyone. Talk to experienced and trustworthy wholesalers! Don't spam facebook groups, everyone hates that.

    If I were you, this is what I would do:

    I'd find the top wholesaler in your area, someone that everyone trusts. Or someone that is nearby, not exactly in your area but has influence and a track record for success. I'd bring them this deal and I'd give them profit for their help in return and learn everything I can from them. Because what you'll learn from them is worth more than one deal could ever get you. You'll be able to do the next deal on your own and scale up and do more and more deals. Or I'd first offer a profit split, 50/50. Go from there. But either way, I wouldn't be afraid to give away momentary profit for knowledge that costs thousands of dollars through courses and mentors and have the ability to repeat and grow more deals.

    Hope that helps! 

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