I don't know where the original poster lives, but it works by me and I live in Florida where properties have come way down in value.
For someone starting out, you may not do two back to back. But I'm not saying back to back.
My average wholesale deal is $10k but I usually make $15k - $20k per flip. If I'm only going to make 4 grand, I usually don't mess with it. Most of the Legit Wholesalers around here do the same. There's a few guys that play around and act as a bird dog that are willing to make 3 or 4 grand, but for the most part $10k is the going rate.
I have good relationships with my buyers. I'm totally open with them (I have to be, they'll see the contract that I'm assigning to them). If I'm making $20k or above, I usually go for the double close..
You bring up a good point...marketing does cost some $$ and $200 doesn't go far with gas expenses, but if that's all you got..you've gotta start somewhere. I was assuming that this guy had some kind of money coming in other than JUST 200 bucks.
I still think his money would be well spent on bandit signs...:)
As far as doing $20k wholesales on very limited funds, I'll write up a step by step response of exactly how I did my first deals when I was BROKE (with copies of the checks and hud) sometime this weekend. I really don't think I spent more than a few hundred dollars though. Obviously now my budget is higher.
Originally posted by "Wheatie":
Now I really have to ask, how realistic is it to 1) wholesale a property and net $20K off the deal, and 2) do two of those in a short period?
Let me just consider this for the local area. I get mails from several local wholesalers. A typical property is $80-100K. A few are larger, some less. Many of them are completely up front about their fees. They list a "under contract at" and "net to us" numbers. I know one of these guys is full time. I see his list every week, so I see property's come and go. I'd say he turns three or four a month, at $4K or so per deal.
What kind of deals net the wholesaler $20K? Half million dollar houses? $200K houses that get bought for $120K and need no rehab?
Most of the deals I see aren't deals at all. At best, the price is 70-75% of ARV and they need significant rehab. After rehab, you're into them for 85% of ARV. These mostly seem to be newbies selling to other newbies.
In cases where I see deals in my farm area, the ARVs are always high. Usually not outrageous, but often 10% over what I consider the ARV to be. In my area I've looked inside and out at a lot of houses, looked at a lot of sold listings, and driven up and down every street multiple times.
Finding these deals takes work. You have to market to get sellers. That means money for some form of marketing. Even if you're ferreting NODs out of the public records yourself and writing to them, you have to pay for paper and postage. Everyone who talks about that says response rates are low and multiple mailings are needed. $200 doesn't go too far ar 42cents/letter, 5 letters per prospect, and a response rate of 1%. That gets you one person to talk to. What's the odds of that being a deal.
Cripes, it takes $50 bucks to fill up a car with gas these days. Doesn't take much driving around to burn a tank of gas.
I'm with Mike. In this business, or pretty much any business, you need cash. If you don't have it, get a job and save up some money.
If this (flipping two houses for $40K profit with less than $200 cash spent) really can be done, I'd really like to see a detailed account of it. How did you get the leads? How did you make contact? What did you spend, both money and time, to do it?
