Do you ever take an assignment? - Posted by Greg NY

Posted by Greg NY on March 06, 2001 at 13:54:26:


Do you ever take an assignment? - Posted by Greg NY

Posted by Greg NY on March 06, 2001 at 08:59:49:


Something bugs me about this whole wholesaling business.

WHY is it that rehabbers won’t take an assignment?

They want to give PENNY FINDER FEES. I DON’T look or smell like a bird dog. I DON’T have feathers and a wet nose. I put together great deals. I package them in a proffesional manner.
30%-40% of FMV!
Most repairs are cosmetic!
I even go as far as to get bids from contractors and handymen!

What gives? Do rehabbers THINK they are the only ones that can HUSSLE?

I guess my question is, all of you who rehab your houses. How many of you ACTUALLY buy from a wholesaler?

Thank you,

Greg NY

Re: Do you ever take an assignment? - Posted by Surfdog

Posted by Surfdog on March 07, 2001 at 21:37:23:

Greg-I am a rehabber, & I strive to make $20k on a deal. This is fair for investing tens of thousands of dollars and months of time for something that is not guaranteed. If I can make my profit from the deal you offer me, I am more than happy to pay you for your initiative in putting together the deal. I also do wholesaling to other rehabbers. I closed one this morning-bought for $10k, sold for $15K. But, I left plenty of meat on the bone: the contractor will put $20-25K into it (including holding costs) and sell it for $60K. Fair for him, and fair for me. The trick is to not be greedy and build your rep for the long haul.


I’d love to buy from a wholesaler - Posted by Ron (MD)

Posted by Ron (MD) on March 06, 2001 at 22:12:52:


I’m a rehabber and I try to buy one or two houses every month. In three years, I’ve never bought one from a wholesaler.

Believe me when I say that I’d love to buy my properties from wholesalers. My job has three basic parts – I buy houses, fix them and sell them. None of it’s easy and I’d like somebody to make any piece of it easier.

I’ve sought out deals from wholesalers in a couple of ways…I have called classified ads and distributed flyers at investor club meetings.

I don’t mind someone else making a couple thousand dollars to bring me a decent deal. I won’t, however, pay a wholesaler $10k or $15k to bring me a mediocre or lousy deal.

I usually buy my houses off MLS and average pretty close to a $20k profit on each one. If a wholesaler can bring me the same kind of deals, he can take whatever fee he wants (although I might have to grit my teeth a bit).

The deals wholesalers bring me, though, are usually a joke. I regularly get calls from someone trying to flip to me a house still listed on MLS for $10k, and the wholesaler wants $18k. The bizarre thing is that these properties have often been sitting on the market for months, meaning that even the $10k list price is too high.

Greg, I don’t know about where you are, but I can’t imagine knowledgeable, solvent investors turning their noses up at truly good deals.

Somebody posted a msg earlier today (it wasn’t you, was it?) wondering if this was a good deal for an investor: He was going to buy it for $2k, flip it to an investor for $20k, the investor had to put $15k into repairs to be able to sell it for $45k. Deals like that are great…for the wholesaler, but they stink for the rehabber.

In this business, they say “find great deals and the money will come”. On the other hand, if you find mediocre or poor deals, you’ll probably have to work real hard to find the money.

Ron Guy

Re: Do you ever take an assignment? - Posted by Brad S

Posted by Brad S on March 06, 2001 at 15:19:06:

Why don’t you do some retailing then. Either find some financial backers and fix up the house and sell it and make MORE profit then just wholesaling or find a contractor that is willing to put in the work and split the profits. That way you can bypass the wholesaling part on some deals.

Re: Do you ever take an assignment? - Posted by Nate

Posted by Nate on March 06, 2001 at 10:26:06:

Greg -

What kind of fees are you trying to get out of your wholesale buyers? I assume you do not mean pennies literally.

What I would consider paying depends on how much profit is in the deal, but if I can make a good profit I would have no problem compensating somebody up to $2,000 or so, depending on the circumstances.

One thing to keep in mind is that, although you are doing a lot of leg work, you are not taking any financial or construction risk. That is really what I expect to be compensated for as a rehabber, which is why I expect most of the profit to go to me. I am perfectly capable of getting the “leg work” done myself, and having someone else do that for me does not add a lot of value for me.

I’ll just share with you an example of a deal I saw recently where the wholesaler was trying to get more than reasonable, and why I didn’t do it.

This was a row house in a neighborhood I know pretty well. All of the houses are basically identical and once repaired can retail for about $90K.

I can pick up foreclosures in this neighborhood that need $10-$15K in repairs for about $40K. Just put one under contract last week. There was also another one in the same price range a few weeks earlier that I lost (didn’t move fast enough).

This guy found a house that was totally trashed. All the windows were broken, everything of value had been removed from the kitchens and bathrooms, most of the drywall was missing, and so on…this guy had it under contract for 28K (it was a VA property - this was public information) and was trying to sell it for 45K. As far as I could tell he didn’t intend to do anything more than remove some of the garbage.

I offered him $30K and he turned it down, stating he had already rejected an offer of $40K!! (who was dumb enough to make that offer?!)

that, to me, is an example of trying to get too much profit as a wholesaler.

Good luck!

Re: I’d love to buy from a wholesaler - Posted by Greg NY

Posted by Greg NY on March 06, 2001 at 22:49:31:

I saw the post you were referring to, no that wasn’t me.
I’ve learn from reading that the wholesaler has his place.

Low RISK, low PAY.

I don’t mind that for now. If I want the big chunks then I will rehab. But for now, I’m happy flipping (or trying to).

Greg NY

Re: I could do that but… - Posted by Greg NY

Posted by Greg NY on March 06, 2001 at 15:27:59:

If I just started playing bsketball yesterday, can I be a coach today?

I want to learn the game from the bottom. I feel if I become an excellent wholesaler, I will be an excellent retailer.

Does that make sense?

Greg NY

Re: Do you ever take an assignment? - Posted by Michael (tejas)

Posted by Michael (tejas) on March 06, 2001 at 22:00:05:

While you’re certainly free to do business any way you
see fit, to only pay a wholesaler up to two grand,
irrespective of the deal, is an emotional decision,
not a business one.

Unless you have all the business you can handle,
and do not wish to expand, you are cutting your nose off despite your face.


Re: Do you ever take an assignment? - Posted by Greg NY

Posted by Greg NY on March 06, 2001 at 10:43:52:


Thanks for responding.
“I package great deals”, meaning, I take my $2K-$3K and leave the $15K-$20K for the end buyer. Greedy for the money, no. Greedy for the business, yes. I’ve found something that I like to do. I love the challenge of buying a property dirt cheap. I’ve done this in some form or fashion my whole life. I was born to do this but the end buyers are not very cooperative. I find better deals than most. But the thing is, they are buying and basically FMV and selling $20K more with seller financing, then selling note at table. They see that its EASIER to buy at retail (duh) and jack the price.


I live in a neighborhood that some may call a “warzone”, I don’t I call it home. Anyways, the FMV for a 3 br, 1.5 Bath will run you about $40K. A few investors that I know are buying these things at FMV, throwing some paint and house numbers on them and lease optioning for $60K-$70K.

This is what I have to deal with. They don’t want to spend the time on the little junkers that will make the same amount of money as the ones they are buying.

Is this happening in other places?

Greg NY

Re: I’d love to buy from a wholesaler - Posted by Ron (MD)

Posted by Ron (MD) on March 06, 2001 at 23:06:30:


I look at it this way…I can make a pretty good living if I buy one house, fix one house, and sell one house every month.

I suppose if I was a full-time wholesaler, and I didn’t have to fix or sell houses (to retail buyers), I would strive to find and flip a deal per week. If you can make a minimum of $2k per deal, that’s a good living with essentially no investment and very little risk.

Doesn’t sound so bad (or so hard) to me. The trick is to find attractive deals.

Ron Guy

Re: sure it makes sense - Posted by Brad S

Posted by Brad S on March 06, 2001 at 16:39:26:

Sure it makes sense and I hope you didn’t take any offense to what I wrote. I don’t pretend to be an expert, but I do have a little experience here and there. I too am trying to learn and grow in this business to continually increase my skills.

But there is also another side to this, by retailing a house you may find something that may have hindered you selling the house to a retailer for some reason. Maybe it would bring up other issues that were not thought of. Kinda putting yourself in their shoes, so to speak. If I could find a house in an area I invest in, that fit my criteria and was less expensive, there is no reason why I wouldn’t be interested. SO, maybe there is something that doesn’t meet your retailer’s criteria.

Another comment: In my mind, if these retailers are buying at the retail price, and making money then there seems little reason why they wouldn’t want to make more money by buying a house from you. Maybe they don’t feel it is as good of a deal as they want or maybe, for some reason, they are not aware of the deal. Maybe the way you are marketing them needs to be examined closer.

Re: Do you ever take an assignment? - Posted by Nate

Posted by Nate on March 07, 2001 at 12:22:37:

Well, like I said, I do it on a case by case basis, and it depends on the amount of profit in the deal for me. If I can make more than my usual $15K-$20K profit, then I can certainly afford to compensate someone more than $2K. But on a plain vanilla deal where there is, say $18K in profit TOTAL to be split between me and the wholesaler, I would not give them more than about $3K because the deal isn’t worth it for me on the back end.


Re: Do you ever take an assignment? - Posted by Nate

Posted by Nate on March 06, 2001 at 13:36:22:


It sounds to me like your problem is that these people are not rehabbers. Rehabbers want to fix up property. These people you have talked to evidently do not.

I’m also a little unclear on the numbers you have presented. You say FMV is $40K. Minus $20K profit for the rehabber, minus $5K profit for you is $15K. Does that mean that you can buy these houses for $15K minus the cost to repair? What is the cost to repair, $0?