Relationship between Wholesaling and a Property's Location?

Question

Good Evening Everyone! I'm new to real estate investing, so I apologize for my ignorance. I'm curious about the relationship between a property's location and the affect it has on the potential/ability to wholesale that property. Based on my very limited experience and knowledge, I would think that location wouldn't necessarily matter provided that one actually finds a "good" deal. Is that statement accurate, or is it still really important to find a good deal in a good location?

I'm really looking forward to your thoughts on this. Thanks so much!

Don Cuffy · Answer

@Jacob McPherson it definitely matters here in Hampton Roads. You can have the slums right across the street from decent houses. You definitely want to drive by and around any property you get under contract. Also, in this area certain areas and cities are better for flips and others are better for renting. For instance if you get a property in Portsmouth you would need to look for someone who buy and holds and you would have to get the property at great price but Chesapeake and VA Beach are better for flipping and depending on the area investors will pay more for it.

Shawn Bowen · Answer

I’m in the Virginia Beach / Hampton roads area and I’m actively doing fix and flips as well as new builds and wholesaling. Let’s connect a see what we can do you get you that first deal?

Jacob McPherson · Answer

@John Thedford Thanks for the clarification. That's certainly good to know! haha I'll definitely stick to my own state for now, especially since I'm just starting out.

John Thedford · Answer

If you advertise properties in Florida and you are not the owner and are not licensed in Florida you're violating state law and committing a third degree felony

Jacob McPherson · Answer

@Andrew Johnson Thank you for the detailed response. I appreciate the fact that you are not a wholesaler actually. It's nice to get advice from other players, and I always appreciate a different perspective. You are correct to assume that I do not have a cash buyers list, yet. I am in the process of networking to obtain a list however. Perhaps you can give me some additional advice on this topic as well. My approach to creating this buyers list is mainly centered around meeting with buyers individually, via networking events, private meetings, etc. and asking them about their buying preferences. What are some key questions that I should be asking each of them? Also, what do you look for when you meet with a wholesaler? Are there specific things that you like to ask of us, or want to know prior to working with us? I am committed to creating a sound, ethical business in which everyone prospers. How can I best accomplish this? Any insight you have would be much appreciated! Thanks.

Jacob McPherson · Answer

Thanks for the response, John. Can you please elaborate?Also, I realize that I wasn't very clear, but I was referring to properties in various Asset Classes within a particular area such as Virginia Beach. Would it matter if the area in which the property was located was a lower income area with a weaker school system, etc., or would I still be able to wholesale the property? Are there any red flags based on the area, or things that I should be careful of when considering a wholesale property deal in a lesser area? Your other response intrigues me though, and I'd like to understand more about that as well.Thanks again!

Andrew Johnson · Answer

@Jacob McPherson I'm not a wholesaler so take this advice for the grain of salt that it is: It matters. Assuming you're not actually going to close on the property (different story all together) you only have a limited amount of time. Some cash-buyers that will buy anything, anywhere, as long as it's a good deal. However, most REI investors have a little patch (or two) where they visit, live, have a property manager, etc. Send me a deal to pay $50K for a fixer needing $10K of work and an ARV of $100K in West Texas, I'm going to pass. I don't know a thing about those towns, don't have a PM, don't know a property manager, etc. You *could* find someone who will be a taker from the list of cash-buyers that I don't think you have yet (not trying to be mean, but since you're new I assume you don't) but I doubt it. You also won't be able to sneak buyers in under the guise of "contractors" during the escrow period because you're not there and the buyer isn't there. Again, I'm sure you'll find some buyers that will buy without walking the property but it's a narrower group. So odds are you'll have something under contract that falls through and wastes everyone's time and creates one pissed off seller that got duped and furthers the hammering that the wholesale industry takes. And take @John Thedford's advice, don't mess around with things across state lines.

John Thedford · Answer

If you operate across state lines that States laws will dictate what you may or may not do