Looking for Wholesalers

March 9, 2009 · 7 comments

I’ve had a few people who read my blog and live in Atlanta, who have approached me about wholesaling deals to me. First, let me say that I’m always interested in purchasing good deals — as far as I’m concerned, if both sides can make a nice profit, it’s win/win all around.

For the sake of other wholesalers who are interested in providing me wholesale deals in the future, I wanted to give some feedback on the types of deals I’m looking for, my purchase criteria, and some thoughts I have about purchasing wholesale deals…

– Most importantly, as I mentioned above, I’m always interested in having others bring me deals. I’m looking to buy about 20 more properties before the end of the year, and need all the help I can get to find great deals.

– I mainly invest in Cobb County, GA, specifically in the cities of Smyrna, Marietta, Mableton, and Austell. I’m always looking for great flip properties or rentals.

– I know that a lot of wholesalers are focusing on REO deals these days. To be honest, I have a pretty good handle on the REO market around here (my wife is an agent and we’re friends with a couple of the big REO listing agents), so if there are good REO deals, I’ve probably seen them. That said, other investors might come across something I missed or be able to negotiate a better deal, so I’m always happy to look at any deals (REO or otherwise) that are sent my way.

– My rule is that the first person to bring me a deal is the one I’ll work with on that deal. If several people point me at the same property, I’ll work with the first person who sent it to me. In general, I’m on the MLS first thing every morning, so if you bring me something on the MLS, don’t be surprised if I tell you that I already know about it. That said, if you bring me an MLS deal that I saw but that I purposely chose not to look at, and then look at it based upon your recommendation, I’m happy it to buy it through you if I’m interested. I’ll always be immediately upfront about whether I’ve seen a deal before or not.

– In general, here are some basic property attributes I’m interested in these days:

  • Good neighborhoods
  • Built after 1965
  • Houses under $100K
  • Minimum 3 bed, 2 bath
  • Brick is better than other siding, but will consider others

– Here are my financial requirements for houses:

  • If I plan to rent it out, my maximum purchase price is (generally) as follows:

    Rental Purchase Price = ((Rent / 2 – $100) * 150) – Repair Costs

    As an example, if a house will realistically rent for $1000/month and needs $10,000 to get it into rental shape, I’ll pay at most:

    (($1000 / 2 – 100) * 150) – $10,000 = $50,000

  • If I plan to flip it, basically my maximum purchase price is:

    Flip Purchase Price = ARV – $40,000 – Repair Costs

    As an example, a house that will realistically resale for $120,000 after getting $30,000 in repairs, I’d be willing to pay up to $50,000.

– I tend to be very conservative with rental comps and resale comps – I don’t look at what’s on the market now (those probably aren’t priced correctly), only what’s sold/rented within the past 4 months within the subdivision (or within about half a mile radius).

Again, if you’re a wholesaler in this area, feel free to shoot me an email, and let’s grab lunch…

7 responses to “Looking for Wholesalers”

  1. Bilgefisher says:

    Have you come across any resources that may get you in contact with wholesalers in your area?

    I’m looking to do the same thing in Denver in the next 2-3 months.

  2. J Scott says:

    Actually, the two best resources I’ve found for finding wholesalers are:

    1) My blog. I get about one email a week from local people who are looking to start wholesaling or bird-dogging, and want to know if they can help me out. I always say yes, yet most of them fail to follow-up.

    2) Craigslist. The one ad I put on CL for my duplex actually generated quite a few calls from people looking for investors. They wanted to find out what other properties I had and if I was looking to acquire additional properties.

  3. Bilgefisher says:

    That’s good to know. I’ll have to fine tune my blog as I start to ramp things up. Have you used backspace? Its like craigslist, but allows you to put your posting in several cities at once.

    Thanks for the reply.

  4. ezrau says:

    I have a bridge I’m looking to sell wholesale. Any interest?

  5. trang says:

    These formulas you came up with would you adjust it if the market was hotter?

  6. J Scott says:

    Hi Trang –

    Certainly if the market is appreciating rapidly, it’s okay to be a little bit less conservative with these formulas, because there’s a good chance the property will be worth more when you’re done fixing it up than it was when you started. That said, I’m pretty conservative, so I don’t think I would change the formulas too much.

    The other big thing that could influence these formulas is interest rates. Because holding costs increase rapidly as interest rates increase, it’s important to be even more conservative when you’re paying more to borrow money. So, in a couple years, when interest rates start to rise again, be aware that you might want to be even more conservative!

  7. Corey says:

    I know it was a long time ago but could you explain the rent formula a little for me? I get the rent/2 part (50% rule, right?) But I don’t understand the reason for the minus 100 and *150. I’m sure you’ve heard it a million times but this website is awesome and I think it’s great how much you help others, hopefully one day I can do the same. Thanks

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