All Forum Posts by: Steven Mitchell

@Nathan Cron

Your foundation was 10k off and your ARV was gotten using comps from a neighborhood that sells for much higher per square footage. We only lose $$ with wholesalers, we make nice margins otherwise but thank you for the advice.

I understand about due diligence (now, lol. Back then not so much). We bought from you when we were first starting, after your guys sold us on them knowing their business. IE not making up foundation bids and not pulling a CMA out of thin air. The property was turned down by two private lenders in town who only lend to rehabbers. We were laughed at and warned about you. We thought we knew better than them so we went forward anyway.

On another property, I asked your man Gabriel to walk me through the numbers and let me know where the value lie.  He wrote me a very salesmany 4 paragraph essay that ended up with the conclusion that he couldnt see the value anywhere.   It was amazing how hard he tried though, I will give him credit.   Getting him to admit it was like pulling teeth.  Your people are SALESMAN, they arent investment advisors who know VALUE like they advertise.   It was obvious he knew how the numbers go together but was trying to gloss over the meat by throwing in fancy math.  I believe he ended with the conclusion that if all the stars aligned, the subject property would make 1-3k.  LOL

I personally analyzed a good 100 of your properties from your email blasts, hoping to find a good wholesaler finally in the area.  Nothing added up.  We were excited to finally do this one with you because we just assumed we were missing something.  That our RE agent and fellow flippers we were running this all across were all missing something.  We were not.  

The MLS we put out all information on the property so whomever we sold it to was knowing exactly what they were getting. The inherited foundation issues. What the smart ARV would be. We didn't want someone else to pay for our mistake. See how that goes? We know what the smart play is. We know how you would have done it. We choose not to operate that way. We took the big loss ourselves instead of passing it on to the next guy.

New western was given the opportunity to make things right.  They did not.  They were all about caveat emptor.  Its fine, we now know better.  Please dont pretend....everything your diatribe just tried to pretend. 

I was never going to publish my experience on the internet, but if youre going to come here and write that crap, Ill be sure to keep responding.  Your gall is astounding.

LOL new western.  They took advantage of my team and I last year.  We trusted their judgement and took our first loss of 19.5k.  Please, stay away.  They are not interested in long term relationships, just selling to out of country investors.  I would also stay away from net worth, we have done 6 properties with them and havent made one dollar.  

We are based in San Antonio. 

Theoretically a wholesaler is fantastic.  Realistically, theyre hard to find.  In fact, we have gone through six now and none of them have made us money.  If we found a reliable one we would do 20 deals a year.  Instead, we limp along at 3-4.  

Theyre selling at the 90% rule to suckers or people with much different metrics. DO NOT, as I did, rush in and buy because you think youre missing something and the math must work, since other people are doing it.  

My only regret when starting flipping a year ago is not adhering to the 70% rule.  Its a rule for a reason.  It gives you plenty of room to miss the rehab, the arv, and the appraisal and not lose your A$$.  If you cant source the properties at 70-75% then move on to another aspect of real estate, or to a different market.  It will save you sleepless nights and stress.  

@Stefon Bostick  I think everyone here is pulling their punches.  Youre only going to make it wholesaling if you can source properties at a steep discount, and that entails creating a marketing machine.  Direct mail, internet, website, networking, all of that.  There is no brokerage firm in existence that mass sells wholesales at an appropriate discount.  If there were, they would quickly get swamped by rehabbers.  The bottleneck in our business is sourcing houses at an appropriate price.  If the firm you keep mentioning did exist, there would be no room in the business model for you.  The rehabbers would go straight to the firm.  

All these tips are exactly what I would have written.  My advice - dont buy it unless its a screaming deal.  Youre going to spend more on the rehab, youre going to sell for less than arv, and  youre going to hold for longer than planned.  

i assume they backed out because now they think its an area with crime.  thanks for the suggestions guys, we will start installing security systems on our projects.  Its just one more line item to take away from our already thin margins :(

and so our buyers backed out, a 290k house.

This is the second time we have been jacked (last time was a different property) and had a sale fall through.  How do you guys handle this?

Money.  The only thing separating myself and my employees is my ability to lay out the capital.  They are much more knowledgeable than myself in RE.  

a 60k rehab in a month is astounding, that takes us 2-3 months

We are somewhat new like yourself.  We started last november and just broke ground on our 10th project today so I was right where you were.

We tried doing our own marketing campaign with the yellowletters, lists etc.  We failed miserably.  Our area is so saturated with wholesalers and their marketing campaigns we just couldnt make it work. 

So 80% of our stuff now comes from wholesalers. In our short experience, they have all been snakes. Sold us a property in flood zones without a heads up, tried selling us one with an encroachment but luckily we caught that one. Using comps they shouldnt be using (that was before we had access to the MLS and could do our own CMA....yes we were buying before we had that capability. We were so stupid). We have been screwed 3 ways from sunday and havent made money on some projects but we simply do not have a solid avenue as of yet. Most of this was from our naivety and inexperience combined with their lack of scruples. Real estate truly is Caveat Emptor.

These guys arent selling you a quality product, theyre sole motivator is making money on the next deal without caring about a long term relationship (though the first thing out of their mouths will be thats what they want.)  You have got to keep that thought foremost in your mind when dealing with them.  Some of them dont run any numbers, they just come across properties and put them out there hoping someone will bite.  I have had 3 now stop talking to me once they figured out we finally reached a basic level of sophistication.  

Im really not sure how you can protect yourselves from them without just going through the process and making note of how they take advantage of you, and then protecting yourself on the next one.  There are too many little things that can take the 10k of profit right out of a deal.  This is compounded by your not being able to get an inspection before closing which really is critical during the buying process.  Or at least they tell you you cant.  We insist now and we dont purchase without one.  This one little detail....is your most effective protection.  We were so naive we just took their word for it. Oh to be young again (six months ago, lol)

After six months we are just now getting to the point where we are comfortable buying from a WS without losing money.  We are making it now and breaking even at worst.  

They are some of the worst people Ive ever worked with.   Goodluck.  

ps.  you have got to expand your network.  yes its a hassle and time consuming but it will bear fruit.  The deals we pick up from out network are the best, hands down.  

pss.  we have had more success dealing with larger projects instead of the smaller ones.  More wiggle room for unknowns.