Designer searching for wholesale strategy. What are your ideas?

Question

Hi all, first post here and looking for your advice. I'm an interior design and home staging consultant in the Aspen valley of Colorado. I'm hired by realtors to help their sellers get properties ready for market. Paint, new carpet, furniture rearrangement, remodeling, etc. I work with the seller and tell them exactly what needs to be done to make their home look its best to sell fast, for top-dollar. Realtors love this service because I am the 'bad guy' who can tell the seller the truth about the way their home looks and what HAS to be done.

I see a lot of fix and flip opportunity but I don't want to take on that amount of risk. Homes are $900k+ And, by the time I'm called to a home to consult, the Realtor is already contracted to take on the listing.

I'm new to wholesaling, but my idea is to find a property that needs updated and create a renovation design plan with all materials/costs listed. I'd wholesale it to a flipper with my design plan included.

Two questions:

1. Is it worth my time to work with these MLS deals that the realtors I work with are bringing to me or do I need to find properties before the seller solicits a realtor?

2. If it's a deal through a Realtor, in today's market, how do I get the property under contract to wholesale rather than the seller wanting to put it on the market and have (potentially) multiple offers and a higher sale price?

Barry Pekin · Answer

@Alicia Herring,I think I heard a statistic that over 95% of people who sell their house do so by listing with a realtor. I would also say that the higher the value of the house, the more that number goes up. Based on that, the likelihood of finding a wholesale deal (let alone consistent deals) in this market is extremely low. I think the way that you would be the front-runner to close up a wholesale deal in this market would be to be known by the owners.Remember, there are many ways to make money in real estate. You have a nice gig going. The owners in this market should know you and what you have to offer. If I were sending them a mailing, I would market your current services as well as letting them know that you can also help them if they find themselves in a difficult situation where they need to sell fast (of course, better words would be... better).If I were in your shoes, having the entrepreneurial spirit, a good business model, and looking to expand, I would look for ways to expand my market (can you offer these services to a broader market?) and grow my business (can you hire people to help with administration, marketing, etc.?)I would also take the opportunity to look for more lucrative ventures, like wholesaling. If you want to go this path, how can you work on it without negatively impacting your current business? If you're out driving a fair bit, learn to D4D (drive for deals). Keep an eye out for the right type of property that might be a good wholesale opportunity. As you work with other RE professionals and investors, let them know what you're doing. Build your network.Thinking of those properties, they sound like good vacation rentals. I don't know the area, of course, and that's something that would require owning the property, but it's something to consider. Perhaps partnering with someone who has the funds where you can take on the decorating and stuff.It's all about creative thinking.Good luck!

Alicia Herring · Answer

@Barry Pekin Thank you for your response. I've identified a certain type of property - river front, 1990 or older, $1-3M value pre-renovation. There are fewer than 200 properties that fit this description in the area I'm looking. It would be a matter of mailing these property owners to let them know when they're thinking of selling, call me.Agreed that the renovation plan can't be too specific, just show the proposed post-renovation value and a line item outline of which items to be updated. I'd stay away from properties needing structural changes.Do you know of any other way to make a profit from improvements to this type of property either without owning it or having little of my money in it?

Barry Pekin · Answer

@Alicia HerringFor wholesale deals, you really need to be sourcing them yourselves. Houses that are under contract with an agent are near impossible to wholesale. That said, some of your Realtor connections might come across properties that they don't want to list. This might be because they are in too much distress, or the owner isn't willing/able to do the work to fix it up. Ask your Realtors to let you know when they come across anything like that.I think your skills are great! Many wholesalers struggle with coming up with good repair estimates, so you definitely have a leg up in that area. Keep in mind, though, that your buyer may want to do things differently. They might have their own ideas, people, visions for how to fix up a property. This is also going to vary based on their exist strategy. They might want to flip it, or they might want to hold onto it as a rental property. Flippers are usually looking to make the houses much nicer than landlords. As for finding properties, there are all kinds of ways to do this. I suggest doing some research on that topic. How you approach this depends greatly on what you're willing to do. There's direct mail advertising, online, driving for dollars, etc. They all cost some combination of time, effort, and money.