I am compiling data for my business plan. I am beginning a business where by I will wholesale properties to investors and traditional homebuyers alike. In my business homes will be sold below market to every customer.
My questions are:
What kinds of things would you create an enjoyable business experience?
What sorts of things would make you not want to buy homes from me?
Would you appreciate access to a team of experts (lawyer, mortgage broker, CPA, etc…) at a reduced price throughout the purchase?
What bad experiences have you had in buying wholesale property in the past?
I simply ask that you take a moment of your time to answer these questions as best you can. Any and all help would be very helpful.
Those are all great questions. I could sit here and answer them for you however I could I suggest another idea. The way I learned answers was to talk to investors with a live deal. If you have a 70% FMV that’s in new condition you can get almost any investor to share there heart and soul with you. Why is this? They have motivation to help you because they want what you have. With that said I would highly suggest getting out there find deals and create solutions for sellers rather then worrying about the other side, right now! You will have to worry about it soon enough but always let the horse lead the cart and have a carrot to move it along.
The only thing that would matter to me is that the value of the property is at 70% or less.
Everything else I am going to check on my own anyway.
One piece of advice is to not give comps or repair costs when wholesaling early in your career so you do not get a rep as someone trying to sell houses too high. I get emails from some that I totally disregard now because they never send out good deals.
I’m going to disagree with hutch on a couple of main points. I believe that you do need to provide the comparable ARV and estimated costs in your wholesale deals. The key though, is to provide a conservative estimate of ARV and a generous estimate of repair.
I too, if the numbers interest me, will check out the property to verify the figures (always do your own due diligence), but it’s good to have some $$$ figures in order to save a little time in determing if it’s a deal or not. Unless you’re intimately familiar with the area the property is in, it’ going to be tough determing if there is a potential deal there if all you get is “Wholesale deal, $55K” without doing alot of legwork upfront. I simply don’t have the time for that.
Like hutch, I too disregard most of the “wholesale” deals supplied to me by others because they provide a generous ARV and a conservative repair estimate. By doing the opposite, you will gain a reputation for leaving more $$$ on the table for the investor/buyer, which is a good thing for wholesalers. In fact, when I wholesale a deal, the potential buyer gets a ARV quote, an estimate of repair, what I am selling the property for, and what I paid for the property, so they know exactly how much profit I am making. There is nothing hidden from the buyer.