Dallas-Fort Worth Real Estate Investor Club

Just a quick word on this... I haven't comp'd this house, but, if we assume the other numbers given are accurate, the profit potential is going to be less than $55K due to closing costs, realtor fees, holding costs (taxes, insurance, utilities, debt service...), etc.  I know we're still in a seller's market, but we mustn't forget the basics.

David, its just very misleading to post like there are no other known fees, especially to new people that are not as versed in the costs to do the deal as Robin points out.  Certain websites do this as well as pretty much all wholesalers. Just running quick numbers on a 12%/2 point hard money loan, it could be close to $10k or more to close, holding costs could be $3-3500k a month, then commission & such selling costs could drop your profit down to $15-20k making you 7-10%. Not going to make you rich, and that does not factor any expenses higher than $30k. 

In order to make a nice return, MAO in this case is a purchase of $173,000.00. Buying at $205,000.00 eliminates great profits, FYI...  

DFW REI Club has always been a place of safety for newbies.  As God is my witness, in every property I've ever wholesaled, I've always subtracted costs in my profit estimates, given honest (not optimistic) ARV estimates, and given accurate repair estimates to the best of my ability.  One of the ways inexperienced investors learn and hopefully avoid the hard lessons to which you referred is taking the time to participate in this Discussion Forum.  Condemning inexperienced investors to simply learn the hard way from their mistakes seems a little terse to me.  Please tell me I misunderstood your last reply.

Thanks,

Robin

Great conversation with knowledgeable and spot on replies! The unfortunate news is that this game has changed so much since I entered 7 yrs ago.... Investors are here from all over the country in many different forms, entities and corporations, buying group etc. Many with highly sophisticated marketing and cold calling tactics. Wholesalers today are getting buyers with the numbers shown as many large entity investors flocking the DFW these days don't play to basic old rule of 70% of ARV less repairs. They are paying top dollar and hedging on appreciation and/or decent annual returns of 8% or more....So the 70%  minus ARV is no longer in play with wholesalers. Wholesalers know this and they are killing it! Their target market are the investors that look at the purchase very much differently that a rehabber/flippers. Flippers/rehabbers can no longer anticipate finding deals or doing business with wholesalers. If they choose to do so they should anticipate minimal margins. This doesn't mean that flippers/rehabbers can't survive, it simply means that flipper/rehabbers cannot and should not rely on wholesalers but must find their own deals. The old days are gone! Maybe forever. 

  Wholesalers pitching inflated numbers is inevitable, really. Think about it. Who wholesales as their primary strategy? Newbies who have no cash, credit, or experience; and people working for wholesale companies that prey on newbies with little to no experience but with some cash and/or decent credit. They're just following that company's training. Please understand that is a general blanket statement which applies to the majority. I have ran across people new to the industry who began wholesaling and actually gave accurate, legit, well researched numbers, and I am sure there are those individuals at wholesale firms who strive to do the same. David may very well be one of them. Those type people have proven to be the exception though, not the rule. Which sheds a bad light on all those who wholesale.

  Wholesaling should not be your main strategy, but rather incorporated into a suite of strategies for you to use where appropriate. You can bet a wholesale deal coming from an investor who owns properties and has multiple other properties under contract with the intent to purchase them will look a lot different, and generally be more accurate, than a one coming from someone working at a wholesale firm or trying to get started in real estate investing.

  ...Just my two cents.