Author Topic: Buy wholesale,. Sell retail? Is it a stupid idea?  (Read 3446 times)

Kroaler

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Buy wholesale,. Sell retail? Is it a stupid idea?
« on: July 16, 2016, 11:23:05 AM »
Is anyone on here doing this? Buying wholesale at foreclosure prices and selling at retail?    Either with flipping, or buying properties that only need to be readied for sale?

Every third article on this forum is about buying rentals so I'm wondering if there is a big drawback to wealth building with buying wholesale and flipping. 

Thoughts,. Opinions?

Would love everyones ideas on buy low, sell high with real estate. 

waltworks

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #1 on: July 16, 2016, 03:53:56 PM »
Great strategy if you fire up the Delorean and head back to 2009 or so.

Not so great now, though I'm sure there are places you still find distressed properties worth flipping.

Really, what you are describing is a job, though. If it's a job you think you'd like, go for it. If you already have a good job and want passive income/investment... not so much. Hence the focus here on rentals.

-Walt

Kroaler

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #2 on: July 16, 2016, 04:31:46 PM »
Passive vs active.  That makes sense now why I don't see that option used much here.

Blindsquirrel

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #3 on: July 16, 2016, 06:14:21 PM »
 Yes, we flip houses to fund rentals. The ones we have good numbers on to rent we fix and rent, the ones we have good numbers on to flip, we flip. Some flips are sold on 1031s so there is no tax on the gain. In the wilds of SW Oh it is not too hard but good deals are getting a bit tougher to find. You should never, ever pay retail for a house in any event. Many  foreclosures are cash only deals though.

NoNonsenseLandlord

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #4 on: July 16, 2016, 10:22:54 PM »
Virtually every rental I purchased was a foreclosure.  Some I bought mortgages, some I bought the contract for deed, short sales, Sheriff Sale, etc.

That is the ONLY way to buy if you want to make money.

Kroaler

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #5 on: July 17, 2016, 08:25:43 AM »
Yes, we flip houses to fund rentals. The ones we have good numbers on to rent we fix and rent, the ones we have good numbers on to flip, we flip. Some flips are sold on 1031s so there is no tax on the gain. In the wilds of SW Oh it is not too hard but good deals are getting a bit tougher to find. You should never, ever pay retail for a house in any event. Many  foreclosures are cash only deals though.
.       

This is what I was thinking.   Doing some active work to fund my passive portfolio.   

Glad to see someone else doing this.  My area still has lots of wholesale properties even though the 2008 crash is long gone.   

I also should clarify.   I plan to do some flips to get my overall cash up before going for the long term investments.   
« Last Edit: July 17, 2016, 10:36:29 AM by Kroaler »

Blindsquirrel

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #6 on: July 17, 2016, 07:26:41 PM »
 Have at it! My advice is find a decent contractor and treat them well. If they are doing the work and you are still making money, A. You bought wisely, and B. You will grow much faster as you work your day job while they work on the houses. C. Will take you awhile to find someone like that as there are more drunk idiots and stoners who think they are contractors than you can shake a stick at.

Metric Mouse

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #7 on: July 17, 2016, 07:31:10 PM »
Another alternative, with less work, is fronting the cash for some of these projects.  Sometimes cash offers are king, and bankrolling some flipper/real estate buyer can be pretty lucrative, with less work on your part. (Once you find a partner you trust)

Kroaler

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #8 on: July 18, 2016, 03:45:57 AM »
Thanks so much for the answers everyone!

I've *almost* saved up enough cash to start purchasing all cash at sheriff's sales.  I've been to a couple, and I believe some good deals are present, I don't believe my area is as competitive as some large metro areas.     Also open to short sales and buying bank owned.

Definitely plan to find a good contractor ASAP.   I make more at my day job than I ever could swinging a hammer and diy,ing labor intensive house work.

Being a hard money lender at some point would also be cool.

Don't know if 1031 exchange will ever apply to me, but I will keep it in my toolbox.

Again, thanks everyone for ides and input. I was a little afraid that "flipping" was frowned upon in the mmm community.

arebelspy

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #9 on: July 18, 2016, 05:52:21 AM »
"Buy wholesale,. Sell retail?"

Sounds like you've been reading something someone's trying to sell you.  That's a pretty common pitch/tagline among the RE courses/blogs/etc.

Of course you should try to find the best deals possible when you buy, whatever your exit strategy is. And of course you should try and maximize your sales price when you sell.

Yes, I've done flips (always as the money partner).  It's a fine way to make cash, but it is a job.  The money partner at least much less of a job, but still much more work than rentals.

We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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Kroaler

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #10 on: July 18, 2016, 10:18:53 AM »
No sales pitch.  After going to a few sheriff's sales, it appears money is being left on the table. 

Kroaler

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #11 on: July 18, 2016, 10:24:50 AM »
As an example,  this property sold for 130K PER BANK BIDDING instructions at the last sheriff sale.
 
http://www.zillow.com/homedetails/517-Laurel-Meadows-Pkwy-Greenville-SC-29607/63664702_zpid/

For 1 dollar more ( the banks max bid instruction was 130k) it appears a well capitalized investor could have grabbed it and made a few bucks with some new paint and carpet.  ( see notes at bottom)



Am I missing something huge in my shortly summarized logic? 

Property is clear of all liens and I went there in person, was in good shape.  No apparent malicious acts from the foreclosure.

(Update: 9/16/16 : After reading all the books, I realize that many people have fallen into the "It just needs paint and carpet" trap. It appears that I was also of that belief)
« Last Edit: September 16, 2016, 01:38:36 PM by Kroaler »

waltworks

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #12 on: July 18, 2016, 10:37:02 AM »
I'd say the bank knows what they're doing. The days of fire sales are long over. But you never know!

What are you basing your value estimate on, and what would be your costs to actually flip (repairs, closing costs at both ends, costs to hold/market the property, taxes, etc) it?

The Zestimate is worth zero, btw. Don't even look at it. Go do a real CMA of some kind and see what stuff sells for in the neighborhood, then come back and figure out what it's worth to you.

-Walt

arebelspy

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #13 on: July 18, 2016, 01:13:39 PM »
The Zestimate is worth zero, btw. Don't even look at it. Go do a real CMA of some kind and see what stuff sells for in the neighborhood, then come back and figure out what it's worth to you.

+1.

And even IF the Zestimate was right, this doesn't even meet a standard 70% rule for flipping if minbid was 130k.  That's not wholesale.  Pass.

Am I missing something huge in my shortly summarized logic? 

Flipping math.  Check out J Scott's BiggerPockets book on flipping.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Kroaler

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #14 on: July 18, 2016, 02:19:00 PM »
Thanks for book link.   I'll try and check it out and maybe some of the forum sticky books at my local library.

Kroaler

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #15 on: September 16, 2016, 01:35:04 PM »
The Zestimate is worth zero, btw. Don't even look at it. Go do a real CMA of some kind and see what stuff sells for in the neighborhood, then come back and figure out what it's worth to you.

+1.

And even IF the Zestimate was right, this doesn't even meet a standard 70% rule for flipping if minbid was 130k.  That's not wholesale.  Pass.

Am I missing something huge in my shortly summarized logic? 

Flipping math.  Check out J Scott's BiggerPockets book on flipping.

Okay thanks for suggesting a book, since my last post I took the time to fully read and understand the following books from my local library:

1.) Building wealth 1 house at a time - John Schaub
2.) The millionaire real estate investor - Gary Keller
3.) Investing in Real estate - Gary Eldred
4.) FLIP - Part of the millionaire real estate investor trilogy
5.) HOLD -   "       "     "              "         "          "           "
6.) The book on flipping houses -           J Scott of bigger pockets
7.) The book on Estimating rehab cost (More of a reference manual...- J Scott

Probably saved me a ton of money in the long run, so again, thanks for the book suggestion.

bpleshek

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #16 on: September 16, 2016, 02:46:21 PM »
Following and for the book list.

Brian

arebelspy

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Re: Buy wholesale,. Sell retail? Is it a stupid idea?
« Reply #17 on: September 16, 2016, 05:13:59 PM »
Okay thanks for suggesting a book, since my last post I took the time to fully read and understand the following books from my local library

Awesome, good for you!  Many don't get that far.

Now, with the knowledge you have, you're ready to proceed, cautiously.  There will still be lots of mistakes, and knowledge you can only get from experience, not books, but a solid foundation is really important to make sure you don't make the huge mistakes to start.  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.