Wholesaler · Cuxhaven, Germany · Member since 2016 · 23 posts · 11 votes
Hey everyone, two questions here. When your evaluating a wholesale deal, what should someone do if they don‘t how much to enter for the flippers profit, because they don‘t have a cash buyer yet? Is there a rule of thumb like 15K or 20K to insert.
The answer might be find buyer first then look for a deal, but I here so much confusion on that specific topic as well: What to look for first, buyer or deal? Some say find a buyer first so you have them ready to buy your deal. But others say you find buyers once you have the deal, because with a deal buyers will want to work with you, instead of you just asking them without a deal: "would you like to be on my buyers list?". If someone could clarify that would be awesome.
Investor · Phoenixville, PA · Member since 2015 · 74 posts · 31 votes
9y
Tons of people go around asking people to be on their buyers list. A small fraction of these people ever find a deal. The way you show you are serious is if you have a deal. Also, if you get a deal, you post it on zillow rental manager/Postlets or whatever it is this week and Craigslist and you will have buyers literally lining up at the door (I've seen it). In this market investors are having way more trouble finding deals than anything else. Bottom line: get a deal. If it's that great a deal and you can't find a buyer it's not a deal.
Investor · Phoenixville, PA · Member since 2015 · 74 posts · 31 votes
9y
Tons of people go around asking people to be on their buyers list. A small fraction of these people ever find a deal. The way you show you are serious is if you have a deal. Also, if you get a deal, you post it on zillow rental manager/Postlets or whatever it is this week and Craigslist and you will have buyers literally lining up at the door (I've seen it). In this market investors are having way more trouble finding deals than anything else. Bottom line: get a deal. If it's that great a deal and you can't find a buyer it's not a deal.
Real Estate Investor · Memphis, TN · Member since 2016 · 940 posts · 695 votes
9y
@Kenny BreezeI would assume that all flippers have a different gauge for measuring/assuming profit on a deal and only part of it is difffetenve beytweekn purchase and ARV. While I agree with @Erich Beyer, I'd also start networking with buyers at the same time; get their email and find out what they are looking for. You will learn a lot through that.
Rental Property Investor · Savannah, GA · Member since 2014 · 298 posts · 67 votes
9y
The answer is more simple than you think. You are an investor, and can buy a property in one of two ways, either deeply discounted for cash, or closer to full market value on terms. If buying for cash with the intention of wholesaling, you need to get the property for as low as the seller will go, in order for you to be able to flip it to an investor-buyer. If you stop focusing on analyzing, and just to get it as low as you can, or on terms, you can then offer it to an investor buyer, who can do his or her own inspections and analyzations. Good luck!
Wholesaler · Cuxhaven, Germany · Member since 2016 · 23 posts · 11 votes
9y
Hey, thanks for all the awesome answers. @Account Closed So if I understand correctly, I should focus on negotiating the deal down as far as possible and not focus on doing the analysis part, because the flipper/rehabber will do it himself. But how do Wholesalers then know if it‘s a good deal or not if we don‘t do our own evaluation? Don‘t we need the MAO so we know if it‘s a deal worth "selling" to our/a cash buyer?
Rental Property Investor · Savannah, GA · Member since 2014 · 298 posts · 67 votes
9y
Give yourself a guideline, and obviously I don't know your market, but try offering 60 percent of ARV on a 200 K or up house, 50 percent of ARV on a 76,000-200,000 house, and 30 percent of ARV on a 75,000 or less house. The whole point is to get lots of leads and quickly make lots of offers quickly. If you hem and haw, the seller can move on to a quicker offer from another investor. Get the properties under contract. Also, don't be afraid to make an offer and walk away. They may come back to you.
Investor · Madison, CT · Member since 2014 · 710 posts · 458 votes
9y
@Kenny Breeze - The flipper's profit is very simple: ARV - purchase price - rehab costs - holding costs. If you insert a random number when you shop deals around, you are going to lose credibility real quick.
To follow up on @Erich Beyer's point, When you wholesale, your profit is the difference between what you get the property under contract for and what you sell it for. In order to calculate that, you need to have a deal under contract before you have a buyer, even if you have confidence in your buyers to come through. In other words, you can't know the flippers profit until you know what you are paying for the property, and what you are going to sell it for. That has nothing to do with having a seller in place.