Wholesaling Basics Questions

[David Linton]

So if you're new to real estate in the real estate world, and you're thinking of wholesaling... what's the lowest you could buy a property to sell it again? I was told to always know your market, so basically always live where you're investing. Is this wise for all types of real estate? What about wholesaling? And when in your real estate career would you fly down to a disaster to assess property? Do you have to operate on credit in order to get a bank loan? How much should you ask for on your first loan? Should you start out wholesaling, renting out, or flipping houses? In other words how do you start? What are some of the best tools you guys have ever used? I already have some, and any more would be appreciated. And I'm also talking about the big leaguers out there. Thanks, David Linton

[Nereo Mendoza]

When you are looking for properties to acquire for wholesale, is very important to think like your buyer will,  think he needs to pay:

• The property (lets assume 95k for example), 
• You (lets say 5k), 
• Closing cost at purchase (lets say 2k if paying cash)
• Made the rehab (lets say 50k, asumming kitchen, floors, 2 baths, painting and no major surprises),  
• Pay his hard money or private lender (for example 3 point at start and 12% yearly can be around 3k and 5k for 5 months financing, assuming 1 month rehab, 1 month selling and 3 months waiting for closing ),  
• holding costs (utilities, taxes, insurance, etc can be 2k or more)
• Realtor commissions 6% (12k if it sells for 200k)
• closing costs at selling (around 6 to 8k)

If he closes for 200k he will be making 20k for all the risk and 5 months wait, if it takes longer than a month to find a buyer his profit shrinks paying financing, if the rehab budget goes up he loses profit or even money

So choose carefully your properties, if your investor buyers make money quickly you will sell quickly and more important last in this business, if your properties are not appealing to savvy investor maybe some new one will buy you and he will get in trouble and loose money and your reputation will suffer

Is not easy find properties heavily discounted in areas moving fast, that is why you are paid 5k  without putting any money or risk

My numbers can be wrong if somebody has a correction please jump in