Is it the same as flipping homes to an investor who will then sell that same property to someone else at retail price? We use the wholesale formula to get the our offer price to the seller. Then we flip property over to end buyer with enough spread in between for the wholesaler/flipper and end buyer to make a profit. That is if the end buyer is going to resell what I already sold them. Is it different with landlords? I am saying landlords should not be concerned with ARV/FMV if they are holding the properties for monthly cashflow. Should they? Landlords make their profit on a continuous basis, so that would be the same as an investor buying from wholesaler and reselling the property at retail. They both are making just as much profit but in a different way. So I shouldn’t be worried about figuring ARV/FMV for the sake of the lanlords if landlords are not going to resell property for profit because the landlord is making up the profit with rent money received each month. Right or wrong? If I am wrong on this part, tell me what I missed. I do have a cash buyer that is a landlord.
That is just one cash buyer I found so far. Should I go ahead and start looking for deals to flip to this one landlord, or should I hold off until I get a bigger buyers list? By the way, how big of a buyers list do I need to get me going? I am still contact more landlords to build up my list.
I would not try to put the landlord into a “box” with other Landlords. He is just a buyer! What needs to be done is to determine what his real estate needs and wants are, what is he looking to buy, how much money and how soon or motivate to purchase is he. All the standard prequalification questions apply.
It’s great you have an understanding of how he may make money and how he would value a property, but…concentrate on what he wants to purchase and then fill that order in a way that still puts food on your table. You found a buyer!! now go find a seller to supply what your buyer wants and get it the middle of it!..go now. Do not wait. You need only ONE buyer to get you going, once you find motivated sellers and have product to sell at a great price then buyers will find you!
He said he buys like 5-10 houses a month and he is a cash buyer from what he told me. Unlike some investors I knew, this person is open to anything I have. I just need to know how to structure my offer price to the landlord to make a decent profit. I was thinking I skip the wholesale formula all together and just purchase the house at the original asking price of the seller and add a little more to it as my assignment fee. I figure why not. It’s not like he is an investor who would be interested in home values and so forth. As long as the price is still within range of what the buyer/landlord wants to buy, I should be ok.
Back in the days when I flipped wholesale properties I would buy 5 or 10 or more properties per month and I was absolutely open to looking at other investors properties, but what I failed to explain to them was?
That I looked at 250 to 500 properties a month to select 5 or 10, so there were literally dozens of investors who had properties which did not meet in some way my buying criteria, so the long and short of it is; you want 250 buyers on your buyers list so someone wants your property because it fits their criteria!
So what the landlord is telling you is that he is a skilled buyer. He is not buying product at full retail unless he has more money than brains…could be though.
GR is right, you are not the landlords only supplier. He is looking at lots of property and picking the ones that work for him. Find out what works for him, put it in your notes and keep his needs in mind when you are looking for properties that can be purchased back of market value. When you locate one, tie it up add your fee/profit margin to it but you need to make sure that the final number is atractive to an investor. You will not be able to buy at retail, add a fee and expext to sell to this guy. Buy low sell low may be a strategy with this guy if he is experianced. Find out, study your buyer, and find another.
That’s a mighty big list to work with. I am still working on my buyers list. I am contacting and adding them to my list as much as possible but it is a long way off from 250.
I asked him what his buying criteria was such as price he wants to buy at and location of interest. He said, " I will look at mostly anything. Send me what you’ve got."
hey tbodley74 you do not need 250 buyers you’ll never get to that many in anyway… you only need a few thats really going to buy from you and yes still use the wholesale formula no matter what type of investing anybody does we all still like a good bargain and that is factored into his roi on the price he bought from you for… alot and 99% of landlords and anybody want to know how fast they can get theyre money back from the deal… if you get a home for the original price what did you really do to be a asset when he can do that himself… as wholesalers our greatest asset to a investor is that we bring discounted deals to them not full price… so for you get more information from him because people will say i’ll look at anything but in real life they have only certain areas in their head that they want to deal with… after you get the info like what area? how much are you willing to spend? how fast can you close? what type of repairs do you want to have if any? HOW MANY BEDROOMS? AND WHAT KIND OF HOUSE BRICK? FRAME? <—most important questions) then start looking for those that fit his criteria and still look for more buyers at the same time… NOW GET OUT THERE AND MAKE SOME MONEY!!! :beer
Nice… This is true. You don’t have to have a list that big. It wont hurt, but most people won’t even know what to do with a list this huge. SMS/text message marketing will be the only way to communicate with them. I have found sms is the most effective way to notify a list of a home for sale. They get it right there on there side piece/phone.
excellent topic as this is something that has given trouble in the past, deciding if landlords also go by the MAO formula (%70 off ARV including repairs and fee). In my experience some experience landlords do but a lot of them don’t. I actually just started paying attention to ROI (return on investment) but I am not sure what’s the minimum acceptable ROI by most landlords? If someone knows this , please tell us what it is. I know the ROI has many details involved , the biggest being if buyer is paying all cash.
Then you also have some landlords who buy turnkey properties and pay very close to retail price. Do these people go by any formula or they just stupid to pay full price? I wish most of these buyers were on my list but they are very few in between.
Is funny how in wholesaling everyone teaches about flipping these to rehabbers but not many gurus mention the differences when flipping to landlords. If anyone has more info on flipping to landlords, please share.