Wholesaling RE (by Roy [AL]) Feb 26, 2010 7:24 PM|
Wholesaling RE (by reid [KS]) Feb 26, 2010 7:45 PM
Wholesaling RE (by Jason PA [PA]) Feb 26, 2010 8:08 PM
Wholesaling RE (by Andy [MO]) Feb 26, 2010 8:08 PM
Wholesaling RE (by Janet [IA]) Feb 26, 2010 8:09 PM
Wholesaling RE (by reid [KS]) Feb 26, 2010 9:44 PM
Wholesaling RE (by Mariah [SD]) Feb 26, 2010 10:40 PM
Wholesaling RE (by RR [WA]) Feb 27, 2010 12:24 AM
Wholesaling RE (by Dan [FL]) Feb 27, 2010 4:01 AM
Wholesaling RE (by Roy [AL]) Feb 27, 2010 4:31 AM
Wholesaling RE (by jguthrie [AL]) Feb 27, 2010 5:14 AM
Wholesaling RE (by Roy [AL]) Feb 27, 2010 5:54 AM
Wholesaling RE (by Andy [MO]) Feb 27, 2010 8:02 AM
Wholesaling RE (by RR [WA]) Feb 27, 2010 9:51 AM
Wholesaling RE (by jguthrie [AL]) Feb 27, 2010 11:36 AM
Wholesaling RE (by K-Indy [IN]) Feb 27, 2010 5:40 PM
Wholesaling RE (by Roy [AL]) Feb 27, 2010 6:48 PM
Wholesaling RE (by 574-Brad [IN]) Feb 27, 2010 7:55 PM
Wholesaling RE (by Roy [AL]) Posted on: Feb 26, 2010 7:24 PM
In one of my other posts, I confessed to being a RE wholesaler. Some people replied asking me what a Wholesaler actually is? I will try to explain here what goes on in one segment of the wholesale RE market. In a nutshell, wholesaling is simply paying wholesale prices for RE and not retail prices. Like a lot of things in life, wholesaling requires practice to get really good at it. I have been wholesaling for 4 years and I still only consider myself a "seasoned amatuer". I still have a lot more to learn.
First of all, to understand wholesaling, you need to understand that everything bought and sold in America has both a Wholesale and Retail Price attached to it. Even brand new houses. Generally speaking, whatever it cost a homebuilder to build a new house is the wholesale price of that house plus the cost of the land. When that builder adds in his profit margin (whatever the market will bear) that becomes the asking retail price of that new house. If the builder can sell the house at his asking retail price, he usually makes a very sweet profit off building that one house. In a good appreciating RE market, home builders can get rich quickly building and selling new houses as long as they can turn-over the houses quickly and sell at near full retail prices. However, when the RE market crashes, it can be a whole different story. When builders have a ton of unsold new houses costing them money every day and they need to be bailed-out to cut their losses, wholesalers come to their rescue and buy them out for whatever the market will bear. Good top of the line wholesalers will buy 20 or more houses at one time. A lot of wholesalers will attend RE auctions where multiples of houses (some are new and some are foreclosed dumps) are sold in "package deals". Once a wholesaler has the houses, he can turn around re-sell them individually or in multiples to other investors or just hold on to them for future appreciation.
The above paragraph just explains what one segment of the wholesaling RE market consist of. I have attended the auctions but I am not in this league of buyers. I am still buying SFH's one at a time from individual sellers but I am buying at low wholesale pricing, not retail.
I am basically a 'buy and hold' type of investor even though I have sold one house back when the market was ripe for selling. This was a small house I bought wholesale at $18K, I rented it for 1.5 years at $550/month and then sold it to my tenant for $36K (it appraised at $37K). In hindsight, I wish I had never sold that house. The 'rent to value' ratio on that house was unbelieveable but my tenant twisted my arm to sell him the house and I gave in to him if he could produce the cash. He did!
This post has gone on long enough and will end shortly. Speaking as a small-time wholesale investor, wholesaling is something that requires your full attention, it is time-consuming and I would not recommend it for the occasional RE buyer. You have to know your buying market backwards, forwards, inside and out (due dligence). Being able to negotiate 'win-win' deals with a variety of sellers (without getting emotional) is also paramount to suceeding in this market. Cash is always King but Leaverage can be just as sweet if negotiated as win-win for all parties involved.
I am done now. I did not mean to preach a sermon here.
Wholesaling RE (by reid [KS]) Posted on: Feb 26, 2010 7:45 PM
OK so basically it's Buy Low Sell high . Makes sense to me . :-) --70.244.xxx.xx
Wholesaling RE (by Jason PA [PA]) Posted on: Feb 26, 2010 8:08 PM
Most of the wholesalers in my area are very dishonest.
Not at all saying you are but they will say and do anything to get a quick $$ with little or nothing to risk. --98.111.xxx.xxx
Wholesaling RE (by Andy [MO]) Posted on: Feb 26, 2010 8:08 PM
How many of these wholesale purchase have you made?
Where are you finding your deals? Short sales? Foreclosures? Burnt out landlords with equity?
Would you wholesale a property if it did not cash flow but you knew you could sell it retail and make a profit? --173.30.xxx.xxx
Wholesaling RE (by Janet [IA]) Posted on: Feb 26, 2010 8:09 PM
I recently bought a house at an online auction with "no reserve" The seller from Florida must have been a wholesaler selling off the houses. I had watched the site before but all the houses were in different states. This house was just 30min from us so I took a big gulp and bid....and won. Even though it will need A LOT of work, my winning bid was only $750 for the house and 1 lot. There were 2 other bidders. Other houses (in better shape) in the neighbor hood are in the $25-30,000. The house was lived in by an elderly gentleman who "liked to collect junk". It will take MANY dumpsters and many, many rubber gloves to get it cleaned out but I'm anticipating a great treasure hunt :) According to the tax records, the bank sold it off and the seller bought it for around $3,000. --4.227.xxx.xxx
Wholesaling RE (by reid [KS]) Posted on: Feb 26, 2010 9:44 PM
janet don't get in too big a hurry to throw everything away. you'd be surprised what'll sell on Ebay --70.244.xxx.xx
Wholesaling RE (by Mariah [SD]) Posted on: Feb 26, 2010 10:40 PM
Please share details. How do you get sellers to sell to you at so far below retail if you're not buying in bulk like the pros? --98.232.xxx.xxx
Wholesaling RE (by RR [WA]) Posted on: Feb 27, 2010 12:24 AM
while somewhat like you are describing, my definition of wholesaling around this area is : getting deals under contract and then assigning them to an investor or end buyer.
Perhaps there is a distinction between "wholesaling" and "buying wholesale"
Wholesaling RE (by Dan [FL]) Posted on: Feb 27, 2010 4:01 AM
I agree with RR nothing new about wholesaling,been doing it for years.It is when you buy cheap and sell cheap right away to your end user.You should always buy way below market if you are holding as a LL or wholesaling. --71.98.xxx.xxx
Wholesaling RE (by Roy [AL]) Posted on: Feb 27, 2010 4:31 AM
"Most of the wholesalers in my area are very dishonest".
Wholesaling is a high stakes game of buying and selling RE. It is not for the 'faint of heart' type person. Unfortunately, this business has its share of dishonest people in it and I call them vultures,...buyers who prey on the dead looking for an easy meal.
Also, read Janet in IA reply about buying RE online. Janet gave a good example of how the Internet is playing a larger role now in wholesaling RE. There are many online auctions that go daily for wholesaling purposes. The old fashioned auction with the auctioneer at a podium and wholesalers in the audience is still practiced today in every state but is slowly becoming a relic of the past.
I would advise anyone interesting in wholesaling to attend one these RE auctions and observe how once multi-million dollar houses or large tracts of vacant land change ownership for 1/3 of their asking prices within a matter of minutes. It is quite amazing and educational to be in the audience when the bidding starts. --76.18.xxx.xxx
Wholesaling RE (by jguthrie [AL]) Posted on: Feb 27, 2010 5:14 AM
Another interesting post by our friend Roy.
There are as many layers to wholesaling RE as their are buyers and sellers. Every deal I have done has been different. Knowing what to look for makes all the diff. A little luck is good too.
Example of luck: About three years ago I went to an auction held near my day job during lunch. I had no plans to buy anything. Just looking for lunchtime entertainment. The free hotdogs helped also. There was a builder there that I know who added two lots to the sale at the last minute with NO reserve. These lots were selling for around $30K before the crash. I wound up getting one of the lots for $4,450. I had just a few minutes to rush to the bank to get the $500 cash to seal the contract. I called my realtor, told her to spend no money, just put it on MLS and stick up a sign for 3% commission. The first time I went to the lot was after I purchased (risky practice there). I never went back. I sold the lot for $7,500 a couple of months later to the family next door. Now granted this is not a big money deal. But, it was just dropped in my lap. There was little risk involved. I made a contact with a new auction company that now sends auction notices to me regularly. Another benefit was the free hotdogs..
I watched my dad do this kind of thing 40 years ago. It still happens every day all over the U.S. and in any economic condition. What makes finding these easier is contacts, market knowledge, luck, building knowledge, dedication, patience, right place / right time, and most importantly, CASH IS KING. --199.248.xxx.xx
Wholesaling RE (by Roy [AL]) Posted on: Feb 27, 2010 5:54 AM
J Guthrie in AL said,
"There are as many layers to wholesaling RE as their are buyers and sellers. Every deal I have done has been different. Knowing what to look for makes all the diff. A little luck is good too".
Thanks J - You hit the nail right on the head. I could not have said it better myself.
Buying RE at auctions is just one of many layers of wholesaling. Those free hot-dogs are the Auction company's best investment to bring in new bidders,..LOL.
In a future post (maybe Wholesaling-Part 2) I will explain in more detail some of the tactics I have to used to buy single houses at wholesale prices. Most of the houses I have in inventory were bought at 1/2 of their original asking prices. I have bought from other investors as well as homeowners.
It is Saturday morning and my 75 year old Dad is calling me to come be his slave for the day. He said he needs my chainsaw and you know what that means.
Wholesaling RE (by Andy [MO]) Posted on: Feb 27, 2010 8:02 AM
"In a future post (maybe Wholesaling-Part 2) I will explain in more detail some of the tactics I have to used to buy single houses at wholesale prices."
I'd be interested in seeing this post. --173.30.xxx.xxx
Wholesaling RE (by RR [WA]) Posted on: Feb 27, 2010 9:51 AM
yup Roy, keep the great posts coming. Well, when you are done with the chainsaw. RENT ON! --97.126.x.xx
Wholesaling RE (by jguthrie [AL]) Posted on: Feb 27, 2010 11:36 AM
I got a few trees in the yard that must go this year.
I bring beer, you bring saw. K ??? --199.248.xxx.xx
Wholesaling RE (by K-Indy [IN]) Posted on: Feb 27, 2010 5:40 PM
Didn't know that was what it was called but I guess I've been a wholesaler for 19 years.
How do you make any money on real estate if you buy at market? I thought all landlords bought way below market, aka wholesale. --99.163.xxx.xx
Wholesaling RE (by Roy [AL]) Posted on: Feb 27, 2010 6:48 PM
K Indy in IN said,
"How do you make any money on real estate if you buy at market?".
People who use real estate agents to lead them around to buy property in many cases pay retail or near retail. There is nothing wrong with this strategy as long as time is on your side and your property is in appreciating market. Appreciation, even at 3-4% a year will bail most people out of paying retail at the initial purchase.
With investment or income property, appreciation does not always happen like it does in the better neighborhoods. When you can't depend on appreciation to bail you out, you have to buy at wholesale and lock in your profits when you buy,..like you have been doing for 19 years. Good luck to you.
Wholesaling RE (by 574-Brad [IN]) Posted on: Feb 27, 2010 7:55 PM
I agree with K... make your money when you BUY!