Investor · Los Angeles, CA · Member since 2015 · 7 posts · 5 votes
I'm an active multi-family commercial real estate agent here in LA for the past 9 years and I have gotten into heated discussions with smart people regarding this topic. My question (more like frustration 😤) is around why it's practically impossible to build a successful and scaleable system around wholesaling commercial property here in LA. I've seen guys in my office have success wholesaling residential around the country and I just get frustrated because it doesn't translate into Commercial. Then they tell me that they could do it in commercial if they wanted to but haven't tried (and thats where the heated discussion takes place because everyone keeps saying that its possible in theory but nobody is doing it successfully) I feel like I'm missing something.
I dont mean to sound like a pessimist or a jerk, I actually want to be proven wrong which is why I'm posting this.
Well, here are my thoughts. Most commercial properties are owned by investors and investors don't get to that point in their career by being ignorant or foolish. Investors are the buyers and sellers of these properties and therefore would likely not be foolish enough to lock up their property to some middle man with exit clauses to the contract. They want to deal with the actual investor buyer and agents listing their property will bring it maximum exposure for that buyer. So these property owners are likely not going to be interested in a wholesaler with an assignment and weasel clause locking up their deal.
Could it be done on a 4 plex or something small, certainly, but few are far between would be my guess.
Well, here are my thoughts. Most commercial properties are owned by investors and investors don't get to that point in their career by being ignorant or foolish. Investors are the buyers and sellers of these properties and therefore would likely not be foolish enough to lock up their property to some middle man with exit clauses to the contract. They want to deal with the actual investor buyer and agents listing their property will bring it maximum exposure for that buyer. So these property owners are likely not going to be interested in a wholesaler with an assignment and weasel clause locking up their deal.
Could it be done on a 4 plex or something small, certainly, but few are far between would be my guess.
I know a man who “wholesale” all sorts of commercial properties and he uses the power of contracts to keep him the middle man. So, it’s definitely doable.
@Edward Caballero you and I know each other, and you know I'm a land broker, but I don't think you know I have a wholesaling company, too, that focuses on Texas and the Inland Empire. I think you can wholesale multifamily, but probably more in "B" parts of the nation. It's going to be almost impossible to do in Southern California, since landlords are pretty savvy and want their deals to sell at a low cap. And commercial properties, same thing. SFR's are good for wholesaling since individuals find themselves in situations where they basically need to take their house to the pawn shop (w/out the option to buy back, of course). Sometimes it's their own fault (i.e. laziness and deferred maintenance) and sometimes they are just a victim of circumstance (life changes). But SFR's in SoCal are harder to wholesale since many people want top dollar, but when you find one, it can be a pretty decent assignment fee.
Hi Edward. We're local multifamily investors in LA and recently purchased a commercial (5+ unit) multifamily property which was brought to us by a wholesaler - a great deal. The owner wanted an easy closing and no brokers.
I think if you mean wholesaling in the sense of putting it under contract and flipping the contract, this can be tough for a wholesaler to pull off unless they have a lot of capital available and can show liquid assets. Hard to get sellers to take you seriously otherwise in a place like LA. If you have that much capital and the deal is good, you'd probably keep it for yourself as an investor.
If you mean wholesaling in the sense of bringing deals to investors and having a strong contract to get compensation for doing so, I think that is possible. We paid this guy well for bringing us the deal.
@Will Barnard That’s exactly what I’m sayin’. I have a client right now that will fight tooth and nail before the bank takes her property. She owes over $300k and keeps pushing the foreclosure. Every time I talk to her she’s cool as a cucumber. I have one of her multifamily listed and she won’t budge - even though she really needs the money. She stands the line.
@Rena Lopez What area does this man specialize in?
@Bryant Brislin That’s right I remember you mentioning that! What asset are you wholesaling in the Inland empire & Texas?
@Shiva Bhaskar He successfully assigned the contract to you? What type of DD was this wholesaler able to get you? I guess you’re right in terms of being able to back up the offer with capital. Most people might not be able to do that, but if you are, I suspect it will help tremendously.
@Shiva Bhaskar He successfully assigned the contract to you? What type of DD was this wholesaler able to get you? I guess you’re right in terms of being able to back up the offer with capital. Most people might not be able to do that, but if you are, I suspect it will help tremendously.
He did not assign to us. He basically found the deal, introduced us to the seller, and we paid him after we closed. He did not have the kind of capital needed to get this deal under contract, but we paid a nice finder's fee.
We would happily buy a deal from a wholesaler if it hit our return criteria. However, my experience is most don't have the capital to get a commercial offer accepted.