How To Get Real "FAT" Wholesale Deals

[Wendell De Guzman]

As a wholesaler and private money lender, getting "real" wholesale deals is crucial. Let me give you an example of a recent wholesale deal that I just closed yesterday.

House has been appraised for $350,000. The appraisal came in higher than what I expected. I estimated the value to be around $300K.

I got the house for $123,103.29. The house was listed with HUD and on the MLS for $144,000. Here's the listing:

http://www.redfin.com/IL/Flossmoor/1130-Western-Ave-60422/home/12875347

I wholesaled the house for $129,000.

My buyer-rehabber said he would spend $80,000 to rehab the house.

With the 70% rule...my rehabber-buyer's maximum offer based on the appraisal (ordered by his hard money lender) is:

70% x $350K - $80K (repairs) = $165K...

Why no one bought it for $144,000, I can't say. I made the offer and I got the house.

Based on my analysis of the after repair value and the 70% rule...

The Maximum for my buyer is: 70% x $300K - $80K = $130K.

Hence, I sold the house for $129K.

Regardless of which maximum offer is right...the point is: WHOLESALERS, LEAVE MONEY ON THE TABLE! Don't be greedy. What you are after is REPEAT BUSINESS. My buyer is making over $100K on this house. My name is on top of his list as a source of deals.

So how do you get "real FAT" wholesale deals with a lot of meat so you and your buyers will both be fed? Here are the sources of deals for my wholesaling business:

1. HUD

2. People who are in preforeclosure

3. Other wholesalers

4. People with properties in demolition court

5. Properties with code violations

6. The MLS - REOs

Surprisingly, the list is not that long. The key is to have systems for each lead pipeline. A system is a way of doing things to produce results that you can reproduce again and again. Then what I do is delegate each system to a person who will run it. For example, my HUD system is being ran by a Virtual Assistant named Jitesh from India.

Another key to getting real wholesale deals (as opposed to overpriced deals) is to have lead sources that not everyone is doing or are hard to do. For instance, #s 4 and 5 above are great sources of good deals because they are not easy. The lists are hard to find. For properties in demolition court...you have to have a way to help those people or else, the property will be demolished before you can even wholesale them.

Lastly, for sources that are available to others like HUD and the MLS, you have to have a source of competitive edge. It could be as simple as making offers consistently (daily basis). It could be the fact that you have private money lined up so you can make credible offers to the banks when they check you out. It could be good relationships with real estate agents who can forward you pocket listings or properties before they get listed on the MLS.

What about the other wholesalers out there? What are your sources of great wholesale deals?