Newbie Thoughts on Wholesaling

[Mike Conley]

Like every other newbie on this forum I have dreams of being a real estate investor. My initial interest was in rehabbing / flipping but after reading and lurking for a couple of weeks, from an educational and financial perspective, I am not prepared to take on a project.

The obvious first step is wholesaling so I have now turned my attention to this part of the business. Learning more and more I have no perceptions of easy money. My perspective is this: If I expect to be successful as a rehabber, I need to have the skills one would expect from a successful wholesaler. As I began to build my wholesale strategy, I envision total transparency with my perspective buyers.

• Accurate and documented rehab cost using J. Scott’s methods with cost verification and adjustments from local contractors.

• Conservative ARV with supporting logic

• Purchase targets would be 70% of ARV minus rehab cost. I have read that the 70 % is considered a home run. It would be helpful to know what the actual average is for most, 75% - 80%?

• Although I have not experimented with the reporting, I would use the rehab and rental property estimators on this site to prepare a professional investment analysis for perspective buyers. Buyers would receive a packet contacting both reports along with the documented rehab estimates.

• I also envision a fair fee structure. Perhaps 10% of the purchase price with a $5,000 cap up to $75,000. Beyond $75,000 the cap would be held at $6,000. Thoughts are definitely welcome here!

I have read many issues investors have with wholesalers. My focus is on identifying these issues and putting systems into place that will provide investors with reliable and accurate information. I want business partners and in my experience that requires open and honest dialogue.

Keep in mind I am very new and based on what I have learned to date, the above represents my current thoughts. Feedback is always appreciated!

Thanks

Mike