As cash buyers, where and how can we find good wholesalers?

Question

In this forum, most time people talking about how to do wholesales. However, as end buyers, how or where can we find reputable wholesalers? I am real estate broker and have a group of clients that are cash buyers and interested in investing in real estate, triangle area, NC. But it's hard to find good deals through MLS. So I wonder how to approach those wholesalers that can bring off-market deals to us. Any thought?

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Matt Huneycutt · Answer

@Ping Chen ,

There are literally hundreds of wholesalers in North Carolina, especially Charlotte, trying to off-load inventory.  My advice would be to set up key-word alerts here on BP, and check in regularly to the BP marketplace.  You will find member wholesalers.  Also, speak with some of the NC investors on the site.  They may have some good references for you as well.  O

If you can't turn up any Wholesalers through BP for Cary, NC you can simply petition one of the Big Three wholesalers, to start a campaign for you in your neighborhood.  Give them the low down on the neighborhoods to target, and let them do what they do.

If that doesn't work, then try reverse marketing.  Assume you are a distressed home owner.  What would you do?  Respond to a bandit sign?  Look it up on Craigslist, or the yellow pages?  Follow the ads to the "cash buyers", who we happen to know are simply wholesalers.  Once you have them on the line, ask what they have for you as a buyer.

How to discern a good deal from a wholesaler is the same as discerning a good deal from the MLS.  The first step, is to know your market, criteria, and costs.  You have to be able to dissect any project to know if you can make money on it.  Wholesalers want to sell to the highest bidder in most cases.  Who wouldn't?  So be prepared to take a little hit in the beginning to make it to the top of their Rolodex.  Once you make that relationship, then you can settle out on costs in exchange for continued business.

Good Luck

Chris Martin · Answer

Depending on your property characteristics, there may not be much inventory. There are several market dynamics, and one is the buying pattern of the larger hedge funds playing in the Wake county market. See also http://www.biggerpockets.com/forums/311/topics/86191-the-modus-operandi-of-the-mass-buyer---a-case-study  for details on one buyer who is still closing at a 1 per day pace.

As for the "big three" wholesalers... @Matt Huneycutt can you elaborate on these? Even Homevestors is not in Raleigh, although I do see a 11/24/14 press release where they signed a new franchise here this quarter. Historically they have not done much here.

I have expressed my opinion of 'wholesalers' in my area elsewhere on BP. Ping, I am not surprised you can't find one.

Luis Lopez · Answer

Hi Ping. I'm a new wholesaler (so I'm not "reputable" just yet). But I hope I can provide some insight anyway.

If you're representing several buyers, then you probably have no specific set of criteria regarding the properties you're looking for. With that said, it's probably best to sign up to a few wholesalers buyers list. Just google wholesale deals in your area and you'll find plenty squeeze pages to sign up for.  You'll then receive several emails consistently with the properties they have under contract (beware of those who are just marketing listed properties).  You're HW would be to determine the quality of those deals and in essence that wholesaler.

Also, and often recommended here, you can network at local reias.

But now I would wonder if having both a wholesaler and a realtor in the mix kills the deal. It would have to be a hell of an acquisition by the wholesaler for it to be a great deal by the time it reaches the end buyer. Unless the wholesaler has a hard time moving it on his own, which probably means its not a great deal to begin with.

just some thoughts...

Joseph Ball · Answer

Most wholesalers attend local REIA,

Paul Timmins · Answer

@Ping Chen

Several different REIA clubs should provide all you need. You might call the chapter president in advance and ask for wholesaler referrals.

Good read The Real Estate Agent’s Ultimate Guide to Working with Investors http://www.biggerpockets.com/renewsblog/2013/08/24/real-estate-agents-working-with-investors/

Paul

Jaime Penix · Answer

@Luis Lopez There is some truth in what you are saying and I will admit that I don't follow up with them. I just look at there for sale sheets that they usually forward to you at the meetings or emailed. The majority of the time I don't like the structure itself. Then the numbers don't look great. I usually can find better deals offer Zillow, hudstore, home steps, homepath, realtor.com. I am not an expert project estimator but I have done fairly well thus far at estimating repair costs. I am realistic and conservative with all my estimates so I don't think I am overestimating repair costs. But you are right, I don't follow up with them because the deals didnt seem worth the effort in my opinion. Maybe I should just reach out to them every once in a while. Thank you.

Luis Lopez · Answer

@Jaime Penix No offense taken at all.  I'm a new wholesaler who takes my part-time wholesaling business (and all my businesses) VERY serious.  I do agree that there are a ton of wholesalers trying to hit home runs on every deal at the expense of the end buyer.  However, there are those that really do try hard to find and feed the best deals possible. But you have to keep in mind that the latter have to go through a learning curve in properly calculating the ARV and rehab costs (and all other costs incurred the end buyer). With that said, have you thought about discussing the incorrect numbers to those wholesalers who seem to be legit (not an easy task itself, I would agree)?

The reason I ask is because on my very first contract I obtained, I truly thought I had great numbers, ones that buyers would jump on in minutes.  However, after not getting any serious offers, I reached out to those who were initially interested to learn what was wrong with the deal (I put all pride aside and wanted to see it from their eyes).  Every single one moved on without a beep.  Why not carry a serious newbie under your wing...you'd in essence have a personal wholesaler feeding great tailored deals to your taste and getting them before anyone else. BTW, not directing these thoughts directly to you but to end-buyers in general.

In that particular deal, I later realized that although I was using prior sales within the last MONTH and within .5 miles of the subject property, one simple street (and not a real busy one) made all the difference in the world.  That street was a block away from my property totally skewing my ARV. I had to learn that on my own after revisiting the property and my comps several times.  Not complaining bc that was great learning experience but I think you get my point.

Jaime Penix · Answer

Not to offend anyone but I have yet to come across a whole seller that have actually offered wholesales. Maybe I am not a big enough fish to break into these circles, but I see a lot of inflated ARVs and very conservative renovation estimates assigned to dated properties. Maybe wholesaling is not that great right now in Florida, I don't know.

Matt Huneycutt · Answer

Chris,

Good call. When I say big three, I don't mean companies, I mean cities. If you can't find wholesalers in Cary, look for them in adjacent major cities such as Raleigh, Durham, Charlotte, Winston Salem, Greensboro, wherever there is a strong market presence. If there is no demand, then there is no point marketing a location. Let them know you are buying and see if they can work for you.

Ping,

Looks like you made some friends on BP. Good work!

As cash buyers, where and how can we find good wholesalers?

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