A wholesaler is someone who gets a distressed house under contract and then sells that contract to another investor who will do the rehab and either sell the finished product or sell it to a retail buyer. Wholesaling is the least risky part of the renovation business, but it’s still fairly easy to screw it up.
The easiest way to screw it up is to diss your intended buyer buy not understanding what they need. It’s okay to blast out an offering to a thousand potential buyers knowing that it won’t fit some of their buying criteria. It’s not okay to expect your potential buyers to do your work for you.
You know what a renovator who has six projects going right now doesn’t have a lot of?
If you said free capital, you might be right but probably not. The answer is time to research every wholesale offering that comes across their desk.
Offering a wholesale deal is a lot like applying for a job. The offer package is your résumé. The person looking at your offer is going to see 10-100 offers today. Just like when I screen job applicants, I spend less than a 30 seconds looking at wholesale package—unless something about them gets my attention. If you want to successfully wholesale a property, take the time to make your package look attractive and provide enough information to get my interest. It’s a lot easier for me to put your offering in the garbage than to do a full evaluation of it. That’s not me being rude. That’s just me (and anyone else with the capital to buy your offering) being busy.
So here’s the minimum of what I look for in a wholesale offering that I’ll actually spend the time to review:
- The address of the house
If you actually have the house under contract, you’re not risking your deal by telling me the address. If you don’t have it under contract, don’t waste my time pretending you have something to sell me when you don’t. That’s a quick way to get on an investor’s $hit list. And seriously, I can’t count the number of emails I get that don’t even say which town the property is located in. I mean, really?
- The offering price
You’d be surprised how many offerings I see where the wholesaler apparently doesn’t know what to ask for the house (other than a non-refundable fee). Give me a break. If you have the house under contract you know what you need out of it. If you don’t see the previous bullet. If you’re trying to start a bidding war, see the previous bullet. The other thing about price is that you want to deal with pros. I don’t care if you make $5- or $50-thousand on the wholesale. I only care that there is room for me to make money, too.
- An honest assessment of repairs needed
I’m not asking for a cost estimate here. Just a list. If it needs a new roof or foundation work, that’s not a deal breaker. But if it needs either of those big ticket items and you tell me “just carpet and paint,” you’re begging to get added to my junk senders list.
Not a lot of pictures, but one or two are always nice.
There are a couple of things I don’t need from you, too:
I have never known a wholesaler to get the after repair value of a house right. If you put it on your package, I’m going to assume it’s wrong.
- Repair costs
Repair costs depend on which contractor you hire (if any), the quality of materials you use, and the volume you do with the contractor and suppliers. Just tell me what you think needs to happen. I know what it will cost me.
If you want to be a wholesaler, you’re going to need ongoing relationships with one or more renovators. You might make a quick buck by hoodwinking a newbie, but you won’t be able to ever get free of your day job that way. Be honest. Be respectful. Be successful.Hermann says please like and share!