New To Wholesaling

Hello, I'm completly new to wholesaling. Can somone tell me what a good profit margin would be. For example, what would be a good margin for a home valued a 100k. Would 60k be a good margin or is that too much. Also, once you find a property and put under contract how do you avoid a double closing. As I understand there a lots of problems with the double closing these days. Any help would be greatly appreciated. thanks

Rns

Comments(12)

  • patrecejames29th September, 2004

    It sounds as if you don't have a good understanding of the wholesaling concept. Educate yourself and you will be able to understand your own question.
    [addsig]

  • Murphyj200029th September, 2004

    Patrece, there is no reason to be rude.....Hey man, you avoid double closings by assigning the contract, and yea, 60 is O.k.

    Murphy

  • REPrincess29th September, 2004

    Generally I have seen that the wholesellers want the house at 25% below FMV (Fair Market Value) as a minimum.

    My 2 cents

  • kenmax29th September, 2004

    actually pat is not being rude. just ststing fact. if some one can not determine a good profit margin in a deal they should continue their ed. before attemping to do a deal........km

  • ABW3930th September, 2004

    Correct me if I'm wrong, but I find that many times when a question is asked a comment is given about not being educated, well isn't that what the message board is all about? Getting different opinions, etc, etc. I know I don't know all there is to know about REI and I am always researching and studying but that is also the reason I joined this site, can a question be answered if you know the answer, plain and simple.

  • RnS30th September, 2004

    Thanks for the replies. ABW I totally agree with you. I think that some of these more seasoned investors forget that they too at one point was just starting out. I'm sure they asked the same "uneducated" questions of those who might help them along the way be it in seminars, web site, or mentor. People sometimes simply forget where they came from. You are absolutely correct this site was created to foster new ideas, and to share knowledge. Again thanks for all the replies and I'm going to buy the course that was suggested.

    rns

  • patrecejames30th September, 2004

    "Rns" Let me say that I was not trying to be rude and that I am not a seasoned investor, however, I have seen many newbie investors try to do deals that are beyond their understanding. There is a lot of great advice on this forum but to truly understand what you are doing, I believe everyone has to have some form of root in this type of business, remember we all have different markets and goals which will lead to different approaches. We are all here to help each other but at the same time to be truly honest and realistic. Thanks kenmax for interpreting correctly what I was trying to get accross. God Bless you all and good day.
    [addsig]

  • chakib17th October, 2004

    What form do you use to assign a contract to a wholesaler and do you use an option to purchase agreement to get the deal to begin with or do you use a regular purchase agreement.

  • patrecejames18th October, 2004

    Regular purchase agreement with the assignment clause.
    [addsig]

  • shamund20th October, 2004

    As far as profit margins go, Scott Rister recommends 3-5% of ARV. On the other hand, Ron LeGrand advises 10% of ARV.
    [addsig]

  • vexbyte22nd October, 2004

    Question regarding Purchase Agreement and an Option to Purchase then. Why do you suggest a purchase agreement rather than an option? I've been reading around and talking to a few people and it seems that a option might be the easier way for someone starting because it is just that, an option to purchase, you don't have to. A Purchase agreement just seems more of a hasle because you are pressed to find an investor to assign the agreement to, or you face 1 of 2 things 1.you either close the property or 2. with "weezle" clause get out of the deal but look bad in the process. I might be completely wrong but that is what I was lead to believe from the info I've gathered. Just seems an option with assignment clause and letting the seller know what it means seems less of a pain to deal with in the long wrong in case things don't go your way. Correct me if I'm wrong please, I'm all about learning. :-D

  • joemac124122nd October, 2004

    Hi RNS,

    It definitely depends on your market, but in general, the wholesalers will probably want 25-30% below market value so they can leave their customers a decent margin. If the house is going to sit longer on the market and need more in repairs, it needs more margin. If you are in a hot market and it is like new, maybe less will be okay.

    A deal might breakdown like this all along the way.

    100k market sale price
    13k rehabber expenses
    7k rehabber profit
    80k rehabber purchase price
    2k wholesale expenses
    3k wholesaler profit
    75k wholesaler purchase price
    3k finders fee
    72k finders contract price

    Everybody serves their purpose, and they get paid based on the value they bring and the risk they take. There are some companies that incorporate all of these roles and pick up all of the margin and reduce the expenses, but that takes cash and lots of it!

Add Comment

Login To Comment