MY FINAL QUESTIONS BEFORE I DIVE IN!!!

[Chaz Reid]

This is a first for me so please be gentle. I've been doing a ton of research on wholesaling and I think this will be the go to route for me. But throughout all of my research I still have a couple questions that are kind of holding me back from diving in. I'm going to list them and if they don't make sense or you would like more information about a question to help you better understand, please just say so and I'll see what I can do. So here goes nothing.

I really hope I didn't sound too stupid but I thank you for all your help.

[J Scott]

Wholesalers make money by buying property for much less than they are worth and then selling them to someone else for closer to what they're worth (but often still less). For example, if a house is worth $100K, you might be able to sell it to another investor for $85K, which means that you need to buy it for $80K to make a reasonable fee. These are just made up numbers, but that's the gist of wholesaling.

Given that, here are the answers to your questions:

1. Since you want to buy the properties at a big discount, you're more likely to have success working with distressed sellers than with non-distressed sellers. Someone who is desperate to sell is more likely to sell their $100K house for $80K than a "regular old Joe." Regular old Joe is more likely to call a real estate agent and listen when the real estate agent says, "Your house is worth $100K and we can get you that." Of course, if you're a great salesman, you may be able to convince Joe to sell his $100K house for $80K, but it's much less likely than convincing someone who is desperate.

2. I generally recommend using your state approved contracts. They may be online somewhere. If you can't go that route, find an attorney to write one up for you or provide you one.

3. Your discount is going to be based on what your end-buyers require. For example, let's say you want to wholesale a property to me. I might tell you that I only buy properties at 70% of after repair value (ARV) minus repair costs. If you find a property that will resell for $150K after it's repaired and it requires $30K in repairs, that means I would buy it for $75K ($150K * 70% - $30K). So, you need to buy this property for less than $75K to make a profit by selling it to me. If you want to sell it to someone else, they might have a different formula or criteria they use. So, you need to know what their criteria is as well. Likewise with all your potential buyers. This is no different than any wholesaler or retailer -- you have to know what your buyers are willing to pay and then you have to procure inventory for less than that amount to generate net income.

4. Do you have buyers looking for a home in great shape? If so, these are potential deals. If not, you won't be able to resell the house, and therefore it's not a great deal. Again, the key is knowing what your buyers want. You can purchase absolutely anything and make a profit if you have a buyer for it and can get it below the price that buyer would pay.