What are the most important questions to ask investors?

Question

Hello, I am a wholesaler in California and I have a deal under contract in San Diego myself and am also working with a realtor to close a few of his off market deals. What are some of the best strategies to find these investors? And when I do talk to these investors what are the best questions I should ask to 1 ensure that I am not being toyed around with if you would, 2 Show my seriousness and my knowledge of wholesaling, 3 To get them to want to work with me and create a good relationship with these investors. Right now I am relying on third party sites to advertise the deals that I am trying to close. What are some effective ways I can locate these people because if I don't close these deals that the Realtor basically gave me with no EMD at all then someone else definitely will I am doing the best I can and then some to act fast. I also paid for a list of 1,000 cash buyers who have bought more than 3 properties in the last 4 months with there contact info and am going to start calling all of them as soon as the holiday is up.Or is it ok to call on Thanksgiving IDK I'm fairly new to this game and I think it might be a bit rude to be calling on a holiday such is Thanksgiving but I also do recognize this is one of the busiest times of the years to be closing these types of deals any help would be greatly appreciated THANKS!!.

Barry Pekin · Answer

@Christian Jackson,Good to hear. Now go read the book I recommended... Oh, wait... I forgot about that.I give this book a B+. As with anything, it's a good source, but it's not the bible of wholesaling. Still, it will teach you a lot. It's called "If you can't wholesale after this... I've got nothing for you."Good luck!

Christian Jackson · Answer

@Barry PekinHey well where am I going to get if I cant take somewhat harsh reality criticism. I’m aware that I have a whole lot to learn and I’m not going to cry and run to mommy when someone points out the obvious truth. I would rather ask questions and have you guys chew me out on here then go back to my investors look like a total idiot and have nobody reply to me and me not know why. I appreciate you breaking it down for me now I know and I can keep learning everyday. Thank you LOTS!

Barry Pekin · Answer

@Christian Jackson,I'm a guy who tries to be very nice but also direct.If you don't know what "60-70% of ARV minus repairs" means, then you don't have the depth of knowledge and understanding of wholesaling that you think you have. I learned this formula on the first day I was introduced to wholesaling, and I hear it all of the time in books, podcasts, and at REI meetings where they are teaching wholesaling. ARV is the estimated value of a property after the repairs are completed. You get this by doing comps. Let's say you find that one of these properties has an ARV of $250,000. You check out the property, and you come up with an estimate for repair costs to bring the property up to snuff, and you come up with $35,000. Using 70% (70% is kind of standard, but it can vary by area, investor, and value of the property), that means that the investor is willing to pay ($250,000 x 70%) - $35,000, or $140,000.As for calling people on Thanksgiving, I personally wouldn't do it. I think it's ok to call during the day 7 days/week, but I would avoid the major holidays. Others may or may not agree. If I got a call on a holiday, I would probably cut them short and schedule a time to talk if it was something I was interested in. If I were currently gobbling turkey with the family, I wouldn't answer.As for these properties, have you done any analysis on them? First, there are the numbers. If you're trying to pass them on to a rehabber, you need to see if the numbers work using the formula above - adding in the realtor's commissions, which we don't normally do since we don't normally work through a realtor. If you can't get them for a price that works for your investors, then there's no deal. Second, there are the owners. As wholesalers, we need to assess their level of motivation. Are they looking to sell quickly? Are they willing to sell at a discount to make this happen? What is their motivation? If these deals are coming through a realtor, and they are off-market, that makes wonder. They have a contract to sell them, but they're not on the market?I look at it this way. We don't make deals when there's no deal to be made. We can't force it. If there is a deal, there should be no problem moving it, as long as you've been constantly working on your buyers list. There are a lot of ways to do this. FB and BP (which is this site, Bigger Pockets) are good ways, but there are a lot of others. I strongly recommend regularly attending local REI meetings. Network with investors to build that list. And, it's true. When you have a good deal, they won't be a hard sell.Good luck!

Christian Jackson · Answer

@Lee Ripma Thank you so much for replying super quickly. With the response I'm getting from the investors I can understand fully what you mean when you said you won't be phoning these investors. They just want the numbers which is TOTALLY understandable. A few more questions I know FB is facebook but what is BP. Also I am talking to a potential investor currently and he told me his sweet spot is 60-70% of ARV minus repairs. I know me asking this is completely elementary but I know if I respond asking what he means by that I'm going to look like a total newbie and he probably won't even respond so I have to ask elsewhere. Does that mean that he is looking to make a 60% profit from investment or what. Could you break it down for me when you get the chance. I'm very new sorry to be so basic lol. Thanks again for even taking the time to reply!! Happy Thanksgiving!

Lee Ripma · Answer

@Christian JacksonIf you’ve got good deals you’ll easily find buyers. There are usually local FB groups called some version of “city x investors and wholesalers” You’re probably not going to actually call investors on the phone, you’ll put up adds on FB BP etc and they will call you. I often see people advertising get on my buyers list. I don’t do it anymore because there are usually only a few folks in every market who are around to stay. The rest are fly by night folks who have “deals” worse than what I can buy on the market.