Wholesaling Thoughts

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Wholesaling Thoughts

J ScottPro Member
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Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes

This post doesn't really have much of a point...just some rambling from someone whose perspective on buying wholesale deals has changed over the past week...

As anyone who has read stuff I've written about wholesaling here on BP will know, I haven't been overly successful buying from wholesalers over the years. I get calls from wholesalers many times per week, and I get several deals sent to me each week/month, but I've never found any of the deals to be very good (at least not the ones in areas where I know/buy).

That said, I moved from Atlanta to Maryland a couple months ago, and decided to engage with a few wholesalers up here, to see if things were any different than in Georgia. To my surprise, in just the past week, I've seen two potentially good wholesale deals come across my desk here in Maryland.

The first was overpriced for a rehab/flip, but I was able to negotiate the wholesaler down to a reasonable price. It's still not a great deal as a flip, but it's decent, and it's actually a really good deal as a rental (all in for around $75K with rents around $1400) -- there's a good chance I'll hold it and attempt (once again) to build a longer-term portfolio of buy-and-holds.

The second was a wholesale deal from @Ned Carey. This deal was one that I probably would have jumped on quickly had I been better versed in the area and had a better idea of rehab costs in Maryland (I don't have a contractor team yet). I was ready to make an offer pretty close to full price, but about 10 minutes after I saw the property, another investor looked at it and immediately made a full-price offer to Ned. So, while I didn't get that deal, it was another good one that I had a shot at.

I'm not sure if Maryland is somehow different than Atlanta when it comes to wholesalers (certainly, it's nice to have professionals like Ned around)...or if it's just a coincidence. Regardless, it's interesting to me.

Anyway, as someone who has been pretty jaded about buying wholesale deals the past couple years, this has been pretty refreshing, and I'm hoping that buying from wholesalers can provide a viable stream of deals in the future.

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Jerry PuckettPro Member
Wholesaler · Fort Worth, TX · Member since 2010 · 1k+ posts · 1k+ votes
12y
Originally posted by @J Scott:

.....as someone who has been pretty jaded about buying wholesale deals the past couple years, this has been pretty refreshing, and I'm hoping that buying from wholesalers can provide a viable stream of deals in the future.

Ahhh yes young Skywalker......give in to the dark side!

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  • Karen MargraveBusiness Member
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    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y

    @J Scott I hear you. I think that in areas that aren't extremely depressed finding wholesale deals that make any sense at all are very hard to come by. I know since being in southern California I haven't see any, because there's just too much competition for fixer type properties.

    Hopefully @Ned Carey will be able to send more your way. I know being in a new area, and feeling confident in your pricing, etc. takes some time. You'll get it! Good luck.

    1Reply
  • Steven J.
    Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
    12y

    I hope you do indeed just have a jaded view of certain wholesalers. I have a theory about wholesalers in the larger metro areas. After making a move from Colorado Springs to the flat barren cold lands of Fargo, ND there is a huge difference in the markets. Investors here are discussing how hard it is to find a deal right now and in my mind I'm thinking they should be grateful right now because it hasn't gotten as competitive as the Springs or Denver was. Minneapolis is as well a very hot and competitive market for investors.

    Of course there is more demand for real estate in these large metro areas but I think what really brings in the wholesalers, many of whom you have a jaded relationship with, is the gurus who visit those large cities. When they pass through the metros they are targeting a much larger audience and are therefore able to pull more people in with the idea that wholesaling is get rich quick scheme. I've noticed the folks in this market are much more cautious and hesitant when the big city swindlers come to town and promise riches. Its a different mentality out here where you work hard for your wealth and it doesn't happen overnight. We get our gurus to come through every so often but rather than 4-5 introductary 'seminars' we get 2 and the turn out is maybe 40 people.

    I still have yet to find a good wholesale deal out here but I know that my competition is minimal. I don't have the sense that I need to act quickly right away because there is maybe a handful of wholesalers and of that group most are not hitting the same target audience I'm aiming for.

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  • Account Closed
    Involved In Real Estate · Lynchburg, VA · Member since 2013 · 246 posts · 75 votes
    12y
    Originally posted by @J Scott:

    I'm not sure if Maryland is somehow different than Atlanta when it comes to wholesalers (certainly, it's nice to have professionals like Ned around)...or if it's just a coincidence. Regardless, it's interesting to me.

    I feel like the key word is professional. I don't know Ned personally but from reading his posts here, he seems like someone who does this as a business, not some random guy looking for the next magic bullet. You know, the people that just wake up one morning and call themselves wholesalers with no money and no plan.

    Whether it's wholesalers, agents, inspectors, some people are just motivated and competent while others aren't.

    I'm still kind of surprised that you did not find one of those competent wholesalers in Atlanta. Sounds like an opportunity for someone from BP to take that spot in that market.

    1Reply
  • Arktavious Sally
    Real Estate Investor · Upper Marlboro, MD · Member since 2008 · 289 posts · 80 votes
    12y

    @J Scott

    Finding and developing relationships with the real players that deliver killer deals to their cash buyers are definitely the key. I get calls all the time from newbie wholesalers that get a property under contract and need help finding a cash buyer. After doing some due diligence, I have to tell them it's not a deal and none of my buyers would be interested because the numbers don't work. I have a reputation of delivering great deals to my cash buyers. I have pocket buyers that always get first looks when I put a property under contract and my deals are usually sold within a couple of hours. There are good and bad wholesalers in every market. Your network will determine your net worth.

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  • Samantha M.
    Landlord · Dallas, TX · Member since 2012 · 505 posts · 34 votes
    12y

    @Ned Carey How you typically source your deals Ned?

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  • Christina R.
    Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
    12y

    @ J Scott

    @J Scott I learned a valuable lesson with that @Ned Carey property too and that was why didn't I think to bring that to your attention sooner??? I think I can answer my own question - that was in the city and my feeling was that you didn't really want to rehab in the city. I should have not made any assumptions. I did and a potential good one got away

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  • Bryce Robbins
    Real Estate Investor · Atlanta, GA · Member since 2013 · 18 posts · 6 votes
    12y

    My wife and I recently started to invest in real estate in the Atlanta area. We've gone to a few REIA meetings and have met a few wholesalers, but we're primarily marketing to motivated sellers ourselves and have had pretty good success doing so. So far, we haven't taken on any deals from wholesalers though.

    J Scott, you mentioned that you never really had any luck working with wholesalers, but I was wondering if you've had any experience working with wholesalers that are affiliated with either the Georgia or Atlanta REIAs? I would venture to guess that their reputation as a wholesaler within the REIA would be quickly tarnished if their deals weren't of any interest to local investors but I really can't speak too much as we haven't branched out our marketing in that direction...

    Has anybody else had any experience working with wholesalers that are affiliated with REIAs?

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  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Christina R.:
    @J Scott I learned a valuable lesson with that @Ned Carey property too and that was why didn't I think to bring that to your attention sooner??? I think I can answer my own question - that was in the city and my feeling was that you didn't really want to rehab in the city. I should have not made any assumptions. I did and a potential good one got away

    Christina -

    Not a big deal...don't ever dwell on the "what ifs" in this business...

    There will be plenty more properties in the future we can partner on!

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  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Bryce Robbins:
    J Scott, you mentioned that you never really had any luck working with wholesalers, but I was wondering if you've had any experience working with wholesalers that are affiliated with either the Georgia or Atlanta REIAs? I would venture to guess that their reputation as a wholesaler within the REIA would be quickly tarnished if their deals weren't of any interest to local investors but I really can't speak too much as we haven't branched out our marketing in that direction...

    Many of the larger wholesalers in Atlanta focus on deals inside the perimeter (in the city), whereas my target areas were mostly focused on the suburbs, so I didn't have much dealing with the larger wholesalers.

    That said, I looked at some wholesale deals from some of these larger wholesaling groups, and my impression was that the deals were marginal at best. In several cases, the numbers looked good on paper, but once you jumped in and did more research, you realized that the ARVs being suggested by the wholesaler weren't accurate (house was in a flood zone or just over the border in a worse school district) or the rehab estimates provided by the wholesaler was off by just enough to make the deal less than appealing.

    It doesn't surprise me that they were able to get these deals sold, either to newer investors who didn't know the area well (or didn't have good estimating ability) or to more experienced investors who could do rehabs for lower prices. Most of the deals weren't "bad," just not great.

    And, of course, it's also possible that my analysis of these deals was off, as they were located in areas where I didn't typically work...

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  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y

    Just an interesting turn of events...

    The wholesaler who is selling me the rental property (the first one I mentioned above) called me last night to tell me she had another one under contract and asking if I was interested. I went to look at it this morning. She was selling it for at least $15K too much ($85K, when I would need it for $70K to make it work for me).

    She's relatively new to wholesaling, but she immediately headed to the property to talk to the owner, and two hours later, she called to tell me that I could get it for $70K.

    So, now I've contracted two properties with the same (relatively new) wholesaler in one week. Pretty crazy...hopefully she can bring me 30-40 deals per year... :-)

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  • Shaun Reilly
    Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
    12y

    My general theory on why it would be hard to get good wholesale deals in a place like Atlanta these days would be because it is such a hot and trendy market. Anything the news tells you is a place to be is going to be tough to get really good deals.

    You have a lot of people flocking there to buy stuff and people that don't know the area and are just getting into investing will pay more just because they don't know any better if nothing else.

    So if you are wholesaling it will be hard to compete if you have to buy stuff at <65% to be able to sell the established investors at 70% when they can by at 75% to resell to newer guys at 80+%. Or be able to sell a turnkey place at full retail or to a "Hedge Fund" at or above retail without even throwing the turnkey lipstick on it.

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  • AC Cooley
    Real Estate Investor · Atlanta, GA · Member since 2010 · 126 posts · 43 votes
    12y
    Originally posted by @J Scott:

    So, now I've contracted two properties with the same (relatively new) wholesaler in one week. Pretty crazy...hopefully she can bring me 30-40 deals per year... :-)

    Great post @J Scott

    You probably did not have a point in mind to make but what stands out to me from your post is

    1) There is a big difference between a marginal opportunity that isn't "bad" and what is truly a DEAL.

    2) If a wholesaler has a TRUE great deal there are proven buyers like yourself that will buy them all day long.

    Beginners looking to do wholesale deals should take heed of how a proven buyer as yourself thinks.

    1Reply
  • J ScottPro Member
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    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @AC Cooley:

    1) There is a big difference between a marginal opportunity that isn't "bad" and what is truly a DEAL.


    Yup...though it's worth it to point out that neither of the deals this wholesaler brought to me are "great," but they're both decent. I probably wouldn't have paid as much for either of them had I been negotiating them myself with the seller, but I bought them from this wholesaler two reasons:

    1. This wholesaler has great potential, and the encouragement of selling two deals in a week will likely make her much, much more enthusiastic about finding a lot more deals;

    2. She'll always call me first (hopefully)... :-)

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  • David T.
    Specialist · Las Vegas, NV · Member since 2013 · 639 posts · 176 votes
    12y

    @J Scott, here's a blog I wrote a few months ago and reading through these postings now, is still highly relevant. It might even offer you some consolation for where you're at.

    Wholesalers, bird dogs and none of the above!

    http://www.biggerpockets.com/blogs/4226-classifying-real-estate

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  • Jerry PuckettPro Member
    Wholesaler · Fort Worth, TX · Member since 2010 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @J Scott:

    .....as someone who has been pretty jaded about buying wholesale deals the past couple years, this has been pretty refreshing, and I'm hoping that buying from wholesalers can provide a viable stream of deals in the future.

    Ahhh yes young Skywalker......give in to the dark side!

    2Reply
  • J ScottPro Member
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    OP
    Investor · Sarasota, FL · Member since 2008 · 18k+ posts · 17k+ votes
    12y
    Originally posted by @Jerry Puckett:
    Ahhh yes young Skywalker......give in to the dark side!

    I love the dark side...historically, I just haven't been impressed with their management team... :-)

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  • Shaun Reilly
    Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes
    12y
    Originally posted by @J Scott:
    Originally posted by @Jerry Puckett:
    Ahhh yes young Skywalker......give in to the dark side!

    I love the dark side...historically, I just haven't been impressed with their management team... :-)

    They do seem undaunted in trying to pull off large new construction projects, even in the face of sabotage by the disgruntled locals. :)

    1Reply
  • Jerry PuckettPro Member
    Wholesaler · Fort Worth, TX · Member since 2010 · 1k+ posts · 1k+ votes
    12y
    Originally posted by @Shaun Reilly:
    Originally posted by @J Scott:
    Originally posted by @Jerry Puckett:
    Ahhh yes young Skywalker......give in to the dark side!

    I love the dark side...historically, I just haven't been impressed with their management team... :-)

    They do seem undaunted in trying to pull off large new construction projects, even in the face of sabotage by the disgruntled locals. :)

    But they sure do know how to take care of problem tenants!

    2Reply
  • Stan Butler
    Investor · Roswell, GA · Member since 2008 · 231 posts · 104 votes
    12y

    I am pretty near your old stomping grounds and I have the exact same experiences as you. I don't venture inside the perimeter either and there are very few wholesalers that work the northern suburbs. I keep hoping to run across that one wholesaler that can feed me a good/great deal every month. In almost 10 years of investing, I have only bought 2 deals from individual wholesalers and 1 from a larger wholesaling group. I believe there are good ones out there that work in my target areas, but I think it must be a closed group like during the prohibition days... :-)

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  • Joe Fairless
    Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
    12y

    @J Scott - thx for the story. Interesting to hear how the different markets stack up. In DFW I bought a place via a wholesaler for 35k and it rents for $800. It's worth about 56k and I had to put about 11k into it. All and all it's a decent deal. I've found it's beneficial to use wholesalers in markets like DFW that tight right now because they can open up the deal flow.

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