The Mindset of the Wholesale Buyer

This is a touchy subject, and it will get into relationship building, so bear with me. When you deal with investors during wholesale transactions it is imperative to build a relationship. As wholesalers, you have to be the eyes and ears on the street for the investors that you supply property to. That being said, you have to have some knowledge of the market so that you can supply the necessary information for your investors to make educated decisions about buying investment property. You become the “go to” for their real estate needs in the investment business. So the natural progression in this type of a situation is for you to get to know your buyers. I always call this “order taking”. For example if I talk to “Joe Investor” on Monday and he tells me that he is looking for a house in West Mobile and he wants it to be a 3/2 that needs paint and carpet. On Tuesday I go on a lead on a house in West Mobile that is 3/2 and needs cosmetic updates, so I call Joe when I back out of the driveway with the contract in hand. I tell him about the house and the details and name my price. At this point there is a good chance I will sell the house to Joe because I have superior knowledge about what he is looking for. That is a very different situation than if I blast an email out to every single investor that I have ever met not knowing anything about what they want. That being said, there are many issues when dealing with investors in these types of situations;What is the area that the investor buys in? Most of your investors will have areas that they like and areas that they do not. Most of them need education in this areas as well, by having rentals of your own, you can give them some personal experience regarding good areas. What type of houses do they like? Brick only, wood ok, siding etc.What type of rehab is acceptable for the investor? Some investors are intimidated by certain types of rehab like roofing or foundation. What is the pricing that is acceptable for your investor? As cheap as possible is not the right answer here. How do they get their money? With lending being what it is nowadays this could be the most important part of your questions. A cash buyer will normally demand a better price than other investors, and there are certain lenders that have LTV(loan to value) limitations that will determine the price that you can charge that particular investor. Cash questions are imperative in the rehab projects, your buyer will need a certain amount of cash to start the rehab even if they have a loan, so this question, although touchy, is necessary. So in all of this you will build a relationship with your investors, it is good to know what their goals and aspirations are when approaching them about property. if they want to do 1 rehab then when it sells they will do another, then you can keep in touch and talk to them about what is going on and you will know when they need another property. All of this being said it is good to remember that your investors are like a book of business, and you must take care of them, so that they will buy from you repeatedly, not just once. You do this by building the trust that they have in you, and by being able to help them achieve their goals. This is not a one sale and go on down the road, this is a service after the sale situation if there ever was one. Whatever your average per deal is, times the number of houses each of your investors will buy becomes your potential profit and that "book of business", so stay in the deal with your buyers. Wow, three nights in a row and I keep thinking of more stuff that I haven't covered yet, so I guess this may keep on going for awhile.