Why Buy From Wholesalers?

Wholesaling is finding properties, getting them under contract and selling them to other investors or buyers. I wholesale because I find several homes and can only fix up so many at a time. This is another reason I actively search for cash investors to partner up with. You can check out our Real Estate Consulting Services for more info on working with me.

Retailing is what you see on TV shows like “Flip This House” and “Property Ladder”. Retailing homes is where the bigger profits are made and it takes more time and effort. Right now the average day on the market is around 100 days. This limits the average flipper to around 4 properties per year if they’re using their own cash. Flippers using hard money are able to flip more homes and make more money.

Hard money is a high interest loan from a private investor. The interest rate usually runs between 12%-16% and the points can vary from 1 to 9 depending on the size of the loan. I use www.barksdalefinancial.instantlender.com and they charge 1.5 points with a 1 year 16% interest only mortgage. I recommend getting your money lined up first before you start looking at properties.

Why buy from wholesalers –  Time is money and the time it takes to locate, negotiate with the seller, and get an offer accepted, is time you could have rehabbing. In today’s market most of the good deals are REO properties and everyone is after them. Sometimes you have to put in 50 offers just to get one. This takes lots of research, driving around, time and patience. Today’s wholesaler is working for a fraction of what wholesalers were making a couple years ago. A major reason for this is most home owners have little equity, no equity or upside down.  So, this leaves us with the banks.  Right now banks are drawing multiple offers on all their properties making it even harder to buy below the asking price. This affects what wholesalers can charge their buyers. Wholesalers today are working with very little wiggle room when it comes to their prices. Often, buyer’s make the mistake of offering wholesalers less than what the wholesaler paid for the property.  This often causes buyers to miss out on great wholesale deals.

My best retail deal this year so far came from a home I picked up from another wholesaler. I received an email from another wholesaler who had a property near Valencia College. I had been searching for a buyer in that area who wanted a home already fixed up. After looking at the home I knew my buyer would go for it, so I called the wholesaler and told him I would take it. My buyer looked at the home a couple weeks before I finished the rehab and jumped all over it. The deal took 95 days and I made just over $65,000. To this day I have  know idea what the wholesaler made and do not care. I was not going to miss out on a good deal by trying to negotiate the wholesaler’s price down.  The wholesaler’s job was to get the price down and he did just that…had I offered less I may have missed this deal.