Wholesaling with conventional financing

[Justin Van Riper]

Is it possible to do a wholesale deal when your buyer is just looking for a handyman special (for their primary residence) and is going to using conventional financing? Here's an article explaining what I'm talking about:

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Is this still possible today? It seems like you would be able to do a lot more deals if this was the case. Rehabbers are looking for properties at about 50% of ARV. I would think an average Joe would be happy paying 80% of ARV, opening up the possibility of taking deals you otherwise wouldn't do with a cash buyer.

Can someone please explain if this strategy is still possible and if so, why it's not utilized more?

[Jerry Puckett]

Sounds like two different issues going on here. On the one hand, you want to be able to widen your pool of buyers for great deals, as per the article. Here's the thing: there is no shortage of cash buyers for legitimately great deals. Rather, there is a shortage of legitimately great deals.

On the other hand, all of us have come across "deals" that are not good enough for wholesale, but better than retail. The problem, as stated, is that it's not a good enough return on the cash layout. It's a fantastic deal for Joe Retail, but touching the retail market is HARD. The only way I have found to do it is with the use of option contracts.

It is generally a fall back position for me as I wrote in this thread: http://www.biggerpockets.com/forums/93/topics/70322
But when using one, I stipulate clearly that once a buyer is found, the parties will enter into a standard contract, which get's my name out of it.

The only other big problem with conventional financing is whether or not the property will meet the lenders standards with no improvement.

Here's a thread where I went through something similar last year. Pay close attention to Bill Gulley's response: http://www.biggerpockets.com/forums/312/topics/61711-somewhere-between-wholesale-and-retail-#

Keep digging.