What does it take to be a good wholesaler

Question

Hey BP what's going on.What are investors,rehabbers, and contractors looking for in a wholesaler.Basically I'm trying to find out what qualities or actions would make me an excellent wholesaler. One that would make investors want my deals and sellers tell friends and family about me. Thanks any help or assistance will greatly be appreciated.....

Brian Feltz · Answer

Donte S. Be honest.  Bring REAL deals.  Dont be in it just for yourself.  Creating Win-Win-Win situations may not be the most profitable for you, but will build the best relationships which in turn grows your profit potential.

Brian Feltz · Answer

Stan Butler To what extent is a wholesaler supposed to determine holding and rehab costs?  It is not know how long the property will be held before sale or how the buyer will sell (if you have worked with the buyer before, yes you probably know if he sells with a realtor or by other means).

I can give buyers the taxes and the average monthly utility costs for them to determine their holding cost. I can not factor in the cost of their financing because I dont know how much their money costs them.

Typically I will give a list of any rehab that will be needed and any rehab that would be nice. The buyer has better means to figure those costs than I do.  I mean, I could give estimates of what I could get them repaired for, but my estimates will be way higher than someone who has their own crew or who rehabs in quantity because I am sure I am not getting the absolute BEST rate quoted.

Lamar Cannon · Answer

Donte,

I am buy no means an expert yet, but here's what we found works best:

1. Know EXACTLY what your buyers want.  When getting a property under contract you should have a couple of buyers in mind that the property is perfect for.  Its not impossible to move them otherwise, it will just take a little longer.

2. Developing trust with your buyers. Even if you have a smoking deal, your buyers won't touch it if you have unreal comps or you underestimate repairs.

3. Consistent Marketing. Leads must be coming in daily. Know your law of averages. X leads = X deals.

4. Be systematic.  If it is not written it is not a system. 
No systems = temporary business

Sean Brennan · Answer

If you start to get serious about it you should definitely meet with some rehabbers to find out their criteria before you begin.

Stan Butler · Answer

Hey Brian Feltz, thats a fair point about the holding costs.  A lot of it would be buyer specific.  I always budget in 4 months worth of taxes, insurance and utilities for my flips.  You really couldnt budget in financing costs for the reason you mention.  In my case thats always ZERO anyway since we use cash.

As for rehab costs, I would list out the repair items and materials that you think are needed.  With the detail provided, the rehabber can run their own estimates of the cost.  I am always going to inspect the property myself anyway, but its nice to know if its going to be worth my time beforehand.

Just some suggestions.

Brian Feltz · Answer

Stan Butler Im just asking because I am trying to be one of the "good" wholesalers. So many people think of wholesalers as people trying to pull a fast one on others.  I try to be open and honest and completely transparent, which is why I have been rejected by 2 real estate agents lately trying to get a list of expireds and recent cash transactions.  I told them I was currently a wholesaler with plans to hold or flip in the future.  They said they do not work with wholesalers.  Now, I couldve told them I was a real estate investor and I am looking to purchase multiple properties in the near future... but that wouldnt have been completely honest.  They probably wouldve worked with me, but that didnt seem right.

Mike Nelson · Answer

I totally agree with Brian Feltz. Make sure everybody wins in the situation. Be sure you are not just providing a solution and catering to the needs of your Buyers but to your Sellers, as well. Everybody wants to make money but if you do it with passion and you're honest in the way you do business, it will surely follow. Be good in doing your transactions by trying to establish that relationship with all parties involved. You'll see how you'll generate repeat business if you do.

Will Barnard · Answer

Read "The Real Truth About Wholesaling" here on BP, plenty of examples of what to do and what not to do.

Donte S. · Answer

Once again thanks for all the good advice to help me become a great wholesaler.

Stan Butler · Answer

As a rehabber, here is what I would look for:

* Your package should include an accurate detailed analysis of the deal, including all acquisition, rehab, holding, and closing cost estimates.  I cannot tell you how many times I get a package from a wholesaler that completely ignores holding and selling costs.  These are not trivial.

* If your buyers include both flippers and rental owners then you might want to include a rental analysis with cash flow and yield projections.

* Package should include multiple comps in the same neighborhood or general area within the last 90-180 days.  In Georgia, school districts make an enormous difference so I want to make sure comps are in the same district.  Too often I get ARV estimates that are 25% higher than anything that has sold in the area.  This destroys credibility.

* Communication is another key ingredient that cannot be overlooked.  Be honest with your potential buyers and do not represent deals that you do not have under your control.  I do not want to negotiate with someone that is 3 or 4 levels removed from the deal.

* Make sure the deal meets your buyers criteria.  You need to collect information such as geographic area, bedrooms, bathrooms, year built, pool, neighborhood, garage, %ARV requirements just to name some off the top of my head.  I think most wholesalers just blanket their whole list with every deal they come across.

If I could find a wholesaler like this, I would buy a property every month from them.  Unfortunately, I cannot find one in my area....

What does it take to be a good wholesaler

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