@Heaven Boswell First of all, You have the RIGHT mindset about creating an HONEST wholesale company. There are far too many people trying to wholesale bad deals, and they give the industry a bad name. DON'T get to depressed and drop out. The investor community needs more people JUST LIKE YOU! It sounds like it's time to take a deep breath, gather your thoughts, re-evaluate what you're doing, then move forward FULL STEAM AHEAD!
That being said, here's a little help for you.
For starters congratulate yourself. You did a deal that worked. That's FAR better than a lot of new wholesalers do. Pat yourself on the back for a job well done, and if you won't, I will. CONGRATULATIONS ON A JOB WELL DONE!!!!
It's time to do another GOOD deal. Since you've gotten a number of other properties under contract, I'd say that either your comps are wrong, your estimates for the repair of the property is wrong, your formula for what you can get the property under contract to you is wrong, or your selling formula is wrong. Don't get upset by the "wrongs" in this paragraph. Everyone has a learning curve. Here's some help with each of those.
Your comps to determine after repair value. You need good comps to determine the after repair value and the best place to get these is from the MLS. The question most ask is "how do I get access to the MLS if I'm not an agent?". There's a simple way to get them. First of all, get to know a Realtor, and have them on your power team. Now, you're not going to constantly ask your Realtor friend to pull comps for you. It grows old quickly for them. You need access to the MLS in exchange for something, and it doesn't sound like you can afford to pay for that access, but you can if you "take it out in trade". What I mean is you refer your NON-motivated seller leads to your Realtor friend in exchange for access to the MLS. If I'm not mistaken (and I don't believe I am, as I used to be a Realtor in Dallas) every agent who's a member of the MLS is allowed to have 2 non licensed assistants. Since you'll be referring the leads to the agent, it gives them a legitimate reason to consider you an assistant and they can give you MLS in exchange for those leads. HINT: Find an investor friendly Realtor. If you need help finding one, PM me and I will give you some referrals. I can't guarantee that they will work with you, but it's worth the shot. If they don't, you keep looking until you get the MLS access you need.
Now that you have access to the MLS, you need to know how to pull comps properly. You want to find at least 3 comps for each property you're trying to get under contract. But what comps do you pull? First of all, DO EVERYTHING YOU CAN TO KEEP THEM IN THE SAME SUBDIVISION AS THE SUBJECT PROPERTY. This will give you the most accurate comps. Try to keep them within 20% of the subject property, with the same number of bedrooms and baths, and the same number of garage spaces if at all possible. They should be no older than 6 months if you can, 3 months is better. It is OK to go outside of the subdivision if you're not getting enough comps, but keep them very close to the subject property; no more than a mile and preferably a lot closer than that! Different builders build in different grades. A D.R. Horton home will sell for more than a K.B. Home; so keep an eye on quality. You want to compare apples to apples, not apples to bananas.
Calculate what the SELLING COST PER SQUARE FOOT of each of your comps was (as opposed to the listing price per square foot), then multiply the square footage of your subject property by the AVERAGE cost per square foot of the comps. Some will say use the highest comp, but if you want to build a great reputation, use the average. Let the investor you sell the property to use the highest if they want, but in the meantime you're ensuring that you're giving them a good deal. This will give you your ARV.
Now you need to estimate repairs. This can be tricky, and you only get better at it with practice. It took me about 4 deals before I got very good at this. Your results may vary. I take a notebook and start at the curb describing the house (you'll want to show these notes to the investor you sell it to as well....helps build your credentials). My descriptions usually start like this "The subject property is a 1200 square foot house per tax records. The home is located in the Oh So Good subdivision, and is surrounded by homes of approximately the same age and size. The subject property's landscaping is in average shape for the neighborhood, minor improvements such as flowers in the beds near the front and new mulch will add to the curb appeal. Roof appears to be in good condition with no shingles missing. Fence to the right of the home needs repair and is missing 2 slats." etc. Keep going around the entire exterior of the house like this describing everything you see WITHOUT PUFFING IT (making it sound better than it actually is). Be brutally honest in your description. Then continue the description, room by room, on the interior. Later you'll be using these notes to estimate your repairs BUT NOT UNTIL YOU HAVE THE PROPERTY UNDER CONTRACT. ALWAYS GET THE PROPERTY UNDER CONTRACT FIRST! It's always easier to go back and renegotiate. Now, go to Lowe's or Home Depot, or contact that INVESTOR FRIENDLY CONTRACTOR you heard about, and get this estimate based on your notes. Be prepared for some "I don't do that", but keep negotiating with him/her. Tell them that you'll be passing on their information to your end buyer, and they may get the job out of your work. They'll start working with you. Everyone loves getting free marketing via networking!
Another note about repairs/renovations. Make sure you're not estimating to over or under-improve the subject property. Estimate to make the property as nice as the HIGHEST comp, but no more and no less. This will keep your estimates in line.
Now that you have your ARV and estimated repairs, it's time to determine what you REALLY need to have that property under contract for. Since you'll be wholesaling the property you want to go for 50% to 60% of the ARV, then subtract the repairs. Your local REIA is telling investors who buy and hold, or flip not to pay more than 70% of ARV less repairs, and that's what you want to sell the house to your investor for. 50%-60% will leave enough meat on the bone for you to get some money too. (I know this because I have gone to a number of the Dallas REIA meetings over the past few months, as well as Houston, Austin and San Antonio (all these REIAs are owned by the same people, Phil and Shenoah Grove).
Now you may need to go back to your seller and renegotiate ASAP, preferably within 24 - 48 hours of first getting the property under contract if your numbers were previously off. You'll get pushback from the seller, but keep negotiating for as long as it takes to get the price to where YOU need it to make a profit. This is going to take more than 5 minutes, so be prepared. DO NOT GIVE UP. If it's truly a no-go, back out now and save your reputation. Your reputation is worth more than any 1 deal.
Now, I'm assuming you have buyers list of investors you'll try to sell to. If not, try these:
1. Go to the REIA meeting as a visitor if you're not a member. A lot of people here on BP will say not to join the REIA, I disagree. I use it for marketing. In Dallas, it's $100 for 6 months. When you get there, don't sit in the big hall listening to the presentation. Stay in the lobby and look for nametags with the RED DOT on them. These are the big dog investors that paid $20,000 minimum to join the big dog program. They are there looking for deals! NETWORK WITH THEM.
2. Contact hard money lenders in the area. Just google search for hard money in Dallas and you'll find them. If you bring good deals to them, they will know the buyers who are looking for them, and they'll go over the deal too as they won't want to lend on a bad deal. Take the help where you can find it, especially when it doesn't cost you anything!
3. LIfestyles Unlimited has an office in Irving, and they have an open event once a month. GO! Mingle, get to know not only the members but the agents there as well. All are looking for good deals. Get to know a couple of the agents, and pitch your deals to them. They will go over the numbers too. DO NOT ALLOW THEM TO TAKE COMMISSION OUT OF YOUR PROFITS. Ask them to get their commission from the buyer. Most of their buyers are willing to pay that little extra to get a good house to buy and hold ESPECIALLY IN A HOT MARKET.
Now you know where to find your end buyers. What about your deal. How do you put it in front of them after you've begun networking. I like to make a more "professional" presentation. Take a plastic presentation folder with the 3 ring clasps inside. It doesn't need to be expensive, usually under $1.00. These usually have a clear plastic cover for the front page, and the rest is a colored plastic. Your first paper page should be a colored CONSTRUCTION paper. It's thick enough so others can't see what you have in the folder. The rest of the pages are typical white computer paper with information. I like to have them in this order:
a. Construction paper (I like to match the exterior plastic, but your choice).
b. A photo of the subject property, with address, number of bedrooms, number of baths, number of garage spaces or covered parking spaces.
c. The information from the Tax roles about the property. Comes right off the internet from the appraisal district.
d. A page that just says "comps"
e. A full print out of each of your comps (may be up to 10 pages depending if you have 3 or 5 comps, allowing 2 pages per comp)
f. Your notes about the property condition, neatly typed.
g. Your estimate for repairs based on your conversation with the contractor AND A PLUG for the contractor's business. Include his business card stapled to the page, or scanned and printed on the page.
h.. A page that just says "Evaluation"
i. The evaluation of the property (Property addresses of the comps, number of bedrooms, baths, and garage spaces of each comp. The selling price, the cost per square foot, and at the bottom the low, high, and average cost per square foot. The calculations based on square footage of the subject property using average cost per square foot, etc. Basically, all the math AND WHAT YOU WILL SELL THE CONTRACT FOR
j. If you're going to make less than $10,000 on selling the contract, include as the last page your assignment of contract. If you're going to make more than $10,000 have a blank contract ready to go and do a double close.
All that is to build your reputation as a professional. You'll stand out from the crowd who can only talk about a deal, YOU will be able to show them the deal and the supporting documents/numbers.
OK. I think I've given away the candy store; so I leave you with the following:
It starts with the mindset. Keep the mindset positive. This is a tough business and it gets everyone down every now and then. Don't stay down.
Your network is your net worth! Network like crazy with people I mentioned above, and post your deals here on BP as well. If you have a good deal, a good investor will notice. You will make money.
Also try posting on "MyHoustDeals.com" for more exposure to more investors. Though if you do the above, you probably won't need to.
And last but not least, DON'T FORGET US WHEN YOU'RE RICH!
I wish you only the best! If I need to clarify anything, feel free to PM me.
