All Forum Posts by: William Johnson

Mindset, networking, persistence, grit and tenacity are the way you will get deals. This is a business like any others except the product that you are seeking is exceedingly hard to obtain and not always easy to sell either. 

The fact is that out of all of the people interested in wholesaling who have contacted me on bigger pockets I have personally not seen one of them come close to succeeding. As a matter of fact I have only seen one of them even make one offer on a property. If I was talking to a younger version of myself I would strongly advise myself to invest in buy and hold properties after having saved up money and built my credit to get traditional financing. You will get to financial freedom faster, easier on my opinion. 

I know this will come across as cynical but if you really want to make money in wholesaling then I would recommend you do what most self professed gurus out there do: copy and paste their courses. Make advertising and tell real estate novices how easy it is to make money at it and take their money. 

I am just saying that there are way better ways to make money on real estate than wholesaling. 

Also they can write off all of this can they not? Another thing that comes to my mind is that for some businesses lost revenue is much greater than overpaying for real estate. I don't know if that is applicable in this particular situation however. 

 Wow! Are there any resources that you would point me towards where I can learn more about this?  When it is a non-exclusive option and you come up with the money to buy it and they have no accepted offer does that mean that you can buy it and they have to accept that?

 @Doug Pretorius I totally agree with you however I would hypothesize that there are some powerful persuasive dynamics that are present when negotiating an offer to purchase that are lacking in an option to purchase.  I do not have any concrete experience with the option to purchase to back up that theory though.

At the very heart of it wholesaling is simple:

1. Find somebody who is Real Estate Savvy who has a lot of money and ask him if he would be willing to partner with you if you find a good deal.

2. Find a property and make an offer that, if accepted is a no brainer great deal with proof of funds as a condition.

3. After 50 to 300 offers you should get one accepted.

4.  Try to sell that deal before or after you show proof of funds for as much as possible.  

5.  If you do not sell it than you buy it and flip it with your private investor.

Wholesaling is very hard to do, it is completely possible but can only be ethically and legally accomplished if you combine it as a part of another strategy whereby you actually have the means to buy a house.  It is illegal to enter into a legally binding contract to purchase a property if you never have the intention of purchasing it, only to sell it to somebody else.  If you enter into the contract with the intention to purchase it (even if it is as a last resort) and then you try to sell the contract than you can never be accused of entering into a contract in bad faith (never having ever intended to buy it). 

I love wholesaling and it is possible but, more than anything else it makes a lot of money for slimy teachers who know nothing about investing.

I have also had success in wholesaling although I would highly recommend just becoming an agent who specializes in locating properties and negotiating them for cash buyers.  

It is important to remember that a wholesaler traditionally sells their promise to purchase to another person...this means that you have entered into a contract to purchase a property. If you have no intention or chance of ever purchasing that property than you are entering into that contract in bad faith.  

The solution to this is to have hard money lenders willing to lend you the money or partner up with you so that you can buy it if you cannot sell the promise to purchase.  

This means that you need to:

1. Know how to evaluate the After Renovation Value.

2. Estimate the renovation figures accurately

3. Network to find reliably people who know real estate and are comfortable investing in high risk deals such as the ones you are going to be bringing them.

4. Make sure that the price that you are offering is a guaranteed deal if it is accepted by the seller, there can be no doubt in anybody's mind about this...otherwise you are exposing yourself to a lot of risk on a lot of different fronts.

I would also advise complete transparency with the seller.

 Thank you Ken but you are from the US and Canada is much different the investors who do have these forms normally don't advertise and a lot of our agreements are custom agreements with sellers.  I hope I don't come across as condescending because that is not how I feel, it is just that what I am looking for is a suggestion for how much would be fair to share as a percentage of our profit for a short term agreement limited by time. 

 This is far from my first deal and I really do trust this lawyer, in reality she would most likely accept whatever profit sharing percentage that we proposed but we are looking to build long term relationships and we want to be fair.  That is why I am asking on BiggerPockets, because I am trying to benchmark from what other people have done.