I have rounded up a couple of “sweet” deals. I have viewed the homes, prepared detailed repair lists, done research at the courthouse for liens/what the homes previously sold for, retrieved extensive comps of homes in the area for sale and recently sold, average days on market…most of these homes are $300k+, fall into the 65-70% ARV, and should net profits of 150k+.
I spoke with a couple local investors yesterday, and they said "just shoot us the addresses, and if we buy, we’ll send you $500. I was kind of looking for a little more profit on each, like $2500 or so. They said that would be for a wholesaler. I don’t want to purchase, then assign (wholesaler, right?). I love doing all the due diligence, but I want to start out doing just the background work, then progress to buying/rehabing/reselling after a couple of months observing the process.
Any suggestions? Is $500 a good deal for the work I am doing?
The investors are right. With that said you are doing wholesale type of work and you should be getting these deals under contract then assigning them for 2.5K or even more depending on the deal. Your cutting yourself short. With nothing under agreement its hard for an investor to give you more than 500-1K for telling them an address. That’s what a birddog usually does. If you want more then get them under contract and wholesale the deal.
One outfit where I live pays $500 per close and all the door knockers do is introduce themselves and funnel the owner to their boss. Nothing else.
With the work you have done you should be getting the deed and negotiating the short sale with the lender. With the deed and the short sale packet you are in a far stronger position to go to an investor and demand a greater share of the profits. If there is, for example, a home in hand with $150,000 in equity that you created through your documentation and negotiation do you really think for one minute that someone isn’t going to be willing to toss you $50,000 when the property closes and pocket $100,000 for themselves?
I am sure that the local money would vastly prefer to pay you only $500 after you have done all the work, but you need to approach them from a position of strength and make it clear that you don’t give a damn whether they take the deal or not. With the deed in hand it is better for it to go to auction than to take only $500. You may make more than than in overage at the auction!
$500 for a referral is fair. $2500+ is for a wholesaler. You have to decide whether all that time is worth $500 if you aren’t going to take the next step and put it under contract yourself.
remember you dont have to actually purchase the property you just need the contract on the property so you can assign it to an investor. Ask your self how many times would you do all the leg work for only 500. Then ask your self how many time you would do all the leg work and sign a contract with 1000 earnest money (you already know its a good deal) and assign it an investor for 50,000.
Just food for thought.
Where’ve you been, Shadrick? Long time, no see…how’s it going down there?
Hi there Keith, Just thought I would drop in to see if anyone noticed I came by.
I did…hadn’t seen you in a long time. You doing OK??
doin good looking for investors in the Abeline TX area. Do you know of any?