All Forum Posts by: Maurice Smith

This is what @Kevin Hunter was referencing. It's about finding the ARV. You can really use this method with any source, but I go into how to use Propstream to do it.

If you have Propstream, you have a very powerful tool at your disposal. I use it for my business. Enter the address of the subject property. On the detail page, note the # of Bedrooms, Baths, and square footage. On the lower third area of the page, click on comparables. By default, it will return all sales transacted in the last year (emphasis on the previous 90 days). You have three primary options to select, cash sales only, MLS only, or both. I'd recommend the MLS option because it will let you know what people are buying at retail, and it will have the pictures submitted with the listing. Once you have done this, take these steps:

1. Adjust your distance filter to 0.5 miles

Note: Ideally, you want homes sold on the same street or very close in that neighborhood. You have a map that indicates where the comps are, so be mindful of major highways, roadways, etc., that may serve as boundaries for the neighborhood. Also, certain areas will require you to expand the distance a bit (e.g., rural areas), but try to keep it tight as possible.

2. Set your max beds and baths to the same as your subject property

Note: This will ensure your returns are structurally pretty close. If you have many comps that are different configurations, the Comp analysis will still allow you to examine Price/SqFt.

3. Next, sort your comps by sale price and examine the list more thoroughly.

Note: If you select MLS only (my recommendation), you will have images. Look for the ones staged for showings or new hardwoods, updated kitchens, updated bathrooms, etc. Exclude the ones that were sold on MLS that may be fixer-uppers, for example, a SFH sold at 40K, because that doesn't represent what a comp would sell for after repair.

4. Refine further if needed.

Note: You want to have 5-10 comps available, if possible.

5. Click Save Comps

After this, run a Comparative Market Analysis and Comp Report. It will generate a PDF with all the Comps you selected, photos, and will provide a breakdown of key metrics, including, but not limited to, an estimated ARV based upon the Average Sale Price/SqFt, which is multiplied by the square footage of your subject property.

Two other recommendations:

I'd recommend reviewing the market analysis of the neighborhood/zip code, including the sales trends. They are informative and provide a lot of insight, such as how long the average property stays on MLSbefore it is sold in that area.

Additionally, get familiar with the Real Estate cycle, for example, whether it's a buyer's market or seller's market, and how local factors affect sales prices. It can help you with decisions on slight adjustments to ARV. Furthermore, if you network with RE Agents in your local market, such as your local REIA or Hard Money lenders, you can bounce your estimated ARV off of them. In my experience, both types are very happy to share their expertise and experience and to help you learn. The local REIA is where you find individuals like this because that's what the REIA is about—bringing people with various sets of expertise and experience together to add value to one another's RE business.

As far as repair costs, network with a local contractor and get a rough idea about what common fixes cost (kitchen, floors, bathroom, etc.), including what a full rehab would be. I have used a tiered method for some homes, such as light, moderate, heavy rehab, and used an estimated price per SqFt for others. I also occasionally use a guide that a contractor put together for RE investor, which is way more detailed and complex. You don’t really have the time to do that much analysis, though, and can’t unless you are walking the property. So, get good at estimating repairs and add 5K (depending on how it looks) as a reserve because you don’t know what you will find. If your offer is accepted and you are under contract, use your due-diligence period to have a contractor/professional assess the repairs needed, and concur or challenge your estimate. Use your best comp as a guide for your SOW. Also, know that an experienced end buyer will also do their own diligence, so you just need to be close, not perfect. The better you get though, the more professional respect you'll generate amongst your cash buyers.

Some other recommended steps, based on my personal experience:

1. Connect with your local Real Estate Investors Association or REIA as soon as possible. You will meet many great people who occupy different spaces in the Real Estate Investment community; fix and flippers, rental property investors, financers, agents, wholesalers, and more. Learn from them, network, discuss your goals and find ways to add value to their businesses.

2. Read a book(s) of fix and flipping rehab properties. If you understand your customer’s needs, you can tailor your services to add value to their business. A well-established rehabber may be managing multiple projects at the same time. They already have to function as a PM and do not always have time to search for inventory, negotiate with sellers, etc. That’s where you can provide a service.

3. Use the same $1,000 as startup capital for your business entity. Most state incorporation fees are somewhere between $100-$500. If you have some additional funds, tuck some away for operating expenses, EMDs, at least three months of data services, such as Propstream (about $97 a month), and critically to cover an hour or two with a RE attorney.

Note: Take your time learning and developing a strong set of questions, areas where legal counsel will close gaps for you, then when you consult with the attorney, get all the answers you need to feel confident you are operating legally.

4. Begin building your cash buyer list and developing relationships. You can do that on here (lots solid investors on here), at the local REIA, and you can use data services like Propstream to find cash buyers as well (I will post the method I use).

5. Practice estimating ARV and bounce your estimates off of seasoned investors, such as agents (at your local REIA) or Hard Money lenders (some will do free deal analysis and provide feedback on properties for you). If your ARV is close in line with the folks that are funding deals, or investors and agents, you'll feel very confident in running your numbers.

6. Reach out to a few investor-friendly title companies/agents and ask them if they have closed wholesale deals in the past. If they have, ask them if they have standard contracts for Purchase and Sale and Assignment. Every one of the title companies/attorneys that we work with was able to provide contracts that are very effective for our needs.

This list is not exhaustive, nor must it be done in order, but these are very important things to do.

@Kevin Hunter Thanks! @Bri Webster I’ll try to share some information with you that I hope is helpful.

I wholeheartedly agree with those that recommended not spending thousands on a course, at least not right away. What I mean by that is – there is more than enough information out there to grasp the concept without a course. Most of the courses put it all together for you in a pretty package, but sometimes not, and that is the risk when you are just starting out, so here is my contribution:

The basic premise of wholesaling is, one (the wholesaler) reaches an agreement with an individual who would like to sell their property. An agreed-upon sale price that, 1. is fair and acceptable to the seller, and 2. is at least 65-70% of the estimated After-Repair-Value or ARV, less the estimated repair costs, and one's assignment fee (keep this one reasonable).

After entering the contract to purchase the property, one would (and should) place an Earnest Money Deposit or EMD with a reputable Closing Attorney, Title Agency, or Escrow Agent (which depends on the state). The contract should have a due-diligence period, typically 10-14 days, which allows one time to inspect the property before determining whether to continue with the purchase. During this period, a wholesaler would want to do two things, inspect the property or pay "boots on the ground" to do so, and contact one's network of cash buyers to find an end buyer to whom the rights from the purchase contract can be assigned (for an assignment fee).

So simply put, one would use two contracts to execute this deal:

Purchase and Sale Contract: A (Seller) --> B (Wholesaler), then

Assignment Contract: B (Wholesaler) --> C (End Buyer)

Note: There are also a few other closing solutions that one may want to discuss with a Real Estate/Closing Attorney to determine the best approach. Namely, Double-Closing, which may be accomplished using Transactional Funding.

I appreciate that and you know @Steve Yoo, you are absolutely right. There are definitely some serial contributors who, 1. aren't wholesalers, and 2. vehemently proclaim they will not do business with wholesalers; therefore, they are not cash buyers. Yet, for some odd reason, they insist on posting their opinions about wholesaling while often failing to answer the original poster's actual question.

It's rather disappointing, because it's often a young person or those who are new to investing, with a desire to start something that may impact their lives. All too often, when "wholesaling" is mentioned in the posting, their first exposure to this community is someone replying with snarky and somewhat belittling remarks.

I'm on here to network, learn, and grow, not to tear someone else down. If I can share something I know or add value to the conversation, I will speak up. Otherwise, I'll do what my parents taught me if I don't have anything nice to say, I'll be quiet.

Thank you for your post and all the other investors that kept it positive and brought some great perspectives and solutions for the original poster.

@Kelsey Gabhart This is a perfect example of what I was referring to. Thanks @Philip Gephardt for bringing the end buyer's perspective. Building confidence amongst your cash buyers is critical to successfully wholesaling. Also, get to know what they are looking for and find good deals that meet that criteria.

@Kelsey Gabhart Reach out any time. Also, join the FB page for Propstream, they do a weekly training session (no charge) that shows you exactly how to use their tools and there are many. There is an overview and also a detailed tool by tool instruction each week. I’ll PM you as well.

@Kelsey Gabhart If you have Propstream, you have a very powerful tool at your disposal. I use it for my business. Enter the address of the subject property. On the detail page, note the # of Bedrooms, Baths, and square footage. On the lower third area of the page, click on comparables. By default, it will return all sales transacted in the last year (emphasis on the previous 90 days). You have three primary options to select, cash sales only, MLS only, or both. I'd recommend the MLS option because it will let you know what people are buying at retail, and it will have the pictures submitted with the listing. Once you have done this, take these steps:

1. Adjust your distance filter to 0.5 miles

Note: Ideally, you want homes sold on the same street or very close in that neighborhood. You have a map that indicates where the comps are, so be mindful of major highways, roadways, etc., that may serve as boundaries for the neighborhood. Also, certain areas will require you to expand the distance a bit (e.g., rural areas), but try to keep it tight as possible.

2. Set your max beds and baths to the same as your subject property

Note: This will ensure your returns are structurally pretty close. If you have many comps that are different configurations, the Comp analysis will still allow you to examine Price/SqFt.

3. Next, sort your comps by sale price and examine the list more thoroughly.

Note: If you select MLS only (my recommendation), you will have images. Look for the ones staged for showings or new hardwoods, updated kitchens, updated bathrooms, etc. Exclude the ones that were sold on MLS that may be fixer-uppers, for example, a SFH sold at 40K, because that doesn't represent what a comp would sell for after repair.

4. Refine further if needed.

Note: You want to have 5-10 comps available, if possible.

5. Click Save Comps

After this, run a Comparative Market Analysis and Comp Report. It will generate a PDF with all the Comps you selected, photos, and will provide a breakdown of key metrics, including, but not limited to, an estimated ARV based upon the Average Sale Price/SqFt, which is multiplied by the square footage of your subject property.

Two other recommendations:

I'd recommend reviewing the market analysis of the neighborhood/zip code, including the sales trends. They are informative and provide a lot of insight, such as how long the average property stays on MLS before it is sold in that area.

Additionally, get familiar with the Real Estate cycle, for example, whether it's a buyer's market or seller's market, and how local factors affect sales prices. It can help you with decisions on slight adjustments to ARV. Furthermore, if you network with RE Agents in your local market, such as your local REIA or Hard Money lenders, you can bounce your estimated ARV off of them. In my experience, both types are very happy to share their expertise and experience and to help you learn. The local REIA is where you find individuals like this because that's what the REIA is about—bringing people with various sets of expertise and experience together to add value to one another's RE business.

As far as repair costs, network with a local contractor and get a rough idea about what common fixes cost (kitchen, floors, bathroom, etc.), including what a full rehab would be. I have used a tiered method for some homes, such as light, moderate, heavy rehab, and used an estimated price per SqFt for others. I also occasionally use a guide that a contractor put together for RE investor, which is way more detailed and complex. You don’t really have the time to do that much analysis, though, and can’t unless you are walking the property. So, get good at estimating repairs and add 5K (depending on how it looks) as a reserve because you don’t know what you will find. If your offer is accepted and you are under contract, use your due-diligence period to have a contractor/professional assess the repairs needed, and concur or challenge your estimate. Use your best comp as a guide for your SOW. Also, know that an experienced end buyer will also do their own diligence, so you just need to be close, not perfect. The better you get though, the more professional respect you'll generate amongst your cash buyers.

Hope that helps!

@Tyshawn Willis Try https://www.truepeoplesearch.c... I experienced the same with REISkip, but then another investor suggested this site. I immediately saw a dramatic improvement with accurate numbers returned. This a free publicly accessible site.

@Morgan Tyler Generally two. The initial Real Estate Purchase Contract, which should have an assignment clause (if legal in your state), and then the Assignment of Contract to your end buyer. A --> B and B --> C. At the closing table, the seller (A) completes the transaction with the Cash buyer (C).

@Jessica James I PM’d you as well...And good for you! There are several individuals that parachute into the Wholesaling forum with “its illegal in almost every state,” if that were the case, why would RE attorneys continue to produce contracts for use in wholesaling; why do title agencies close on these deals? I never understood why those who don’t wholesale come onto the Wholesale forum to discourage and spew venom, particularly at those just getting started. However, I think that is their intent. If they really wanted to help, they would offer words of wisdom, guide, and be professional. Those that desire to become investors should not be met by disgruntled persons with an ax grind.