Wholesaling dead in Northern Nevada?

Question

I am new to wholesaling and am about to make my first order of signs and leads. Today, I spoke with the host of the local REI club, who is a realtor, and he all but told me not to bother. He said that our area has been so ravaged by the recession that finding a seller with equity is just not going to happen. I asked how this was different than any other cities and he said the Reno area was just hit harder than most. Despite being a very nice guy I got the feeling he was looking down his nose a bit at me and my naiveté.

This news took the wind out of my sails a bit. Before I invest $$ in marketing tools I was hoping to hear from any of you that have been successfully wholesaling in this market. Thanks for your replies!!

Account Closed · Answer

Go to listsource and sign up for a free account. Start playing with the "make your own" list function. The are so many variables that you can sort by. Start with Geography. Then select Property Type. After that, the variables are endless. Properties with equity. Properties over a certain value. Owner occupied or non owner occupied. Last market sale. Year built. In foreclosure. It goes on and on. You'll get counts for each search and you'll start to get a feel for what the list service can provide. You can go to "buy list" to see the cost. You can also see a sample for that particular list (3 leads). Don't buy a list until you're comfortable with the count and price. Have fun!

Account Closed · Answer

"Finding a seller with equity is just not going to happen"..... I really hate these kinds of comments from agents and I'm sorry that you had to hear that. A quick look at Reno stats could be interpreted differently. Reno has 60K+ SFHs. 25K of them have 50% equity or more. Do you think maybe you could reach a few of the 25K with equity? Add in Sparks and the surrounding rural areas. Add in duplexes. There's plenty of people with equity. There's also plenty of competition. IMO, the challenge isn't lack of equity sellers. There are "straight" sales on the MLS everyday. Fewer than in the previous years, but there are always people that need to sell. The problem is reaching them with the right message.

Account Closed · Answer

I see now that you listed what you call "inventory of active foreclosures". Are they inventory, as in REOs? Or are they props with NODs and/or NOTS? Properties in foreclosure are definitely not readily available.

Account Closed · Answer

I know where to look. Although I never buy off the MLS. My question was how many are "readily available". Listings that are pending and short sales listings are not properties that are readily available. If you take out pendings and short sales from the Sacramento listings, how many do you have left. :)

Account Closed · Answer

I don't know about your market, but all the ones I'm familiar with do not have an ample supply of readily available inventory. Inventory is down and competition is fierce for REOs. Foreclosure sales require cash, have serious risks and are not for the novice investor. Short sales is most of the activity but still has a high failure to close rate. Where are these markets where all the inventory is readily available? I think there are many active investors on this site who would like to know. :)

Tyler Carson · Answer

Finding those sellers is my main concern for the immediate future. Since I am so new I have to rely on the advice of others and go with the bandit signs and a letter campaign as my initial method of locating sellers. I am certainly not expecting the 10% conversion rate that is often sold but I am curious to see what type of response I get.

John Stevenson · Answer

Michael Lauther · Answer

Tyler Carson wholesaling is never as easy as some make it out to be. The key is to find a motivated seller and to bring value to the table. I am not a wholesaler nor do I invest in your market but If I did I would Look to the segment of the market that has at least some equity and search for distressed situation caused by divorce, death or some other factor that necessitates a sale. You also need to determine who your buyer might be and begin to establish a list of investors who would be interested.

John Stevenson · Answer

If you decide that the market cannot support wholesaling right now, I would like to offer another option. I personally would recommend investing in discounted single family residences. Here is why I think it works in this economy. 1. Distressed properties (Foreclosures, short sales, REO etc) are readily available and are being sold for cheap. 2. Because of the restrictive lending requirements, loans are hard to get forcing many people into renting. If given the choice, people like renting homes more than apartments. 3. As the economy improves and lending requirements relax a little, these renters are going to want to buy. In fact, rent to own or land contracts are become more and more attractive. 4. As demand increases and the economy improves, so will real estate prices. My research indicates that if done properly, the yields will be between 15 - 20%. I estimate the holding period to be no longer than 5 years.

Mike H. · Answer

Do you necessarily have to find owners with equity to wholesale? I don't wholesale so I'm not really sure all the tricks of that strategy. But I would assume you could just as easily wholesale a short sale deal as you could anything else. Well, maybe not as easily since I'm sure short sales and bank owned stuff is a lot more difficult to wholesale. But with double closings and other wholesale strategies, I would think there would still be some opportunities. That would be the market I would target if the houses are as under water as that guy suggested. Negotiate some killer short sale deals and if you can get the banks to accept some of your offers, I would think an investor would love to take a bank-approved deal off your hands provided the price is right.