Better Wholesaling Strategy

[Account Closed]

I am not a wholesaler or a beginner investor but I do think i have abetter strategy for wholesaling and would like your input.

I am very familiar how wholesaling works, I have never wholesale but I have purchase deals from wholesalers. This strategy implies to the New York and New Jersey Market, every market is different and these two are the only ones i know and can speak off. You do need capital to make this work but loans can also be done. 

SOLUTION: Why not just purchase the deal yourself and sell it after close? post it up on the MLS for a one time fee (On my flip properties I paid that one time MLS fee and saved 3% by eliminating the listing agent) the MLS will get you max exposure bidding wars which would maximize your profit in comparing to just selling to a group of buyers in a buyers list. This method would have you close on the property in 1-2 weeks max rather than 30 days if your buyer has to use a hard money loan or going through the re-assigning contracts of other investors.

Wholesaling is not an easy job and alot of drama and games are played behind the scene and many deals have falling apart because of it. I believe that if a wholesaler purchases the off market deal or even an auction deal, he/she could eliminated all the stress and games involve and just re-sell fast. Technically this is consider flipping but your not doing any renovation so I call it hybrid flipping. The flaw you have to pay closing cost and capital gains but the better profit makes up for it and wholesalers do pay self employment tax because they get issue a 1099-tax form so its almost even.

Whats your opinion on this?

[Kim Tucker]

@Account Closed says, there are cash buying investors who have agents scouring the MLS for them daily. If we don't have a cash buyer on the hook with in 48 hours, we open it up to the MLS - for the other 500 or so cash buyers that are not on my list, but on some Realtor's cash buyer list.

We just closed one of these deals last Thursday. Bought December 23rd with private money. Started marketing December 23rd. Let the phone ring over the 23rd, 24th and 25th. Investors started actually looking at it the 26th - had 3 offers the end of the day. Had a couple of cash offers on the 27th, put it under contract with the best cash offer on the 28th and closed it January 5th and paid off the private lender and put our profit in the bank. This one did not go in MLS, but we had 4 or 5 Realtors reach out who wanted to sell it to their cash buyer on their list and ADD their commission on top of our price.

Sometimes we will double close these too, but we don't have many title companies that will do this anymore in Kansas City.

4.  The houses that are more retail houses, don't need much and the potential wholesale profit is about the same as a realtor commission - we just list those.  Generally these are rented rental property or owner occupant buyer houses.

Other than the Owner Occupant Buyer Houses and sometimes  even those might have an interest for the landlord who wants a better rental . . . all get marketed to our investor buyer list.

Not all wholesalers only assign the contract . . there are many out there that actually buy them . . . most HomeVestor's buy them and then sell them.

I wholesale in Kansas City - all of the above work well here . . . the thing is finding the good deal and knowing what a deal is. Because there is very limited inventory on MLS, a good deal, even a marginal deal goes fast. But it's always been that way - at least for the past 17 years. A good deal, is a good deal, is a good deal and a cash buyer is ready to buy it tomorrow if you can get it front of him. If it's not my cash buyer in 48 hours, I would love to pay a buyers agent 3% to get me a cash buyer who can close in 5 days - we have even paid more than 3% on our low end houses - sometimes $2,000 or $3,000 might be way more than 3%. But it's fast, I get my cash, and we go on down the road to the next dea.