Wholesaling Houses is Harder Than You Think!

      Recently, I began flipping houses. Just like you see on tv I thought. Get in, make a home beautiful, get out with a lot of dough. My problem is lack of enough capital to really get going. Should I use private lenders? Most don't want to part with their hard earned money to someone just getting started. Hard money lenders? The ones I have found that are willing to lend to a newbie investor want 20% down from you, want you to have 6 months in reserves, charge you over $150 for every draw and that is AFTER you meet their credit criteria. Bye Bye profit! I decided to try my hand at wholesaling. I began watching youtube after youtube video trying to figure it out. Seems too easy I thought. Why isn't everyone doing this? After watching Phil tell me to shoot offers all over town and Demitri telling me to make sure I had my buyers list I decided to give it a whirl. I had a website, an appetite to get rich, and a plan. Or so I thought. I made up some bandit signs ( my favorite form of advertising), hit the streets with my sons to help hang up the signs, and made up a google adwords campaign. Boom, before I even got home I had a call!! Wow, that was super fast. CRAP, now what do I do? I met the man in his home the very next day and it was a mess. He was already packing to move and had boxes EVERYWHERE. The ceiling was stained with roof leaks galore, the hardwoods looked like every dog in the neighborhood and peed on them, and it reeked of cigarette smoke. The kitchen walls and ceiling used to be white I think, but now were a dingy yellow. I walked through his addition on the back of the house and felt like I was going to fall downhill. The floor must have sloped 2 inches from one side to the next. He had installed a header from where the exterior wall used to be. No doubt this was load bearing and was bowing BADLY and the drywall was cracked. I saw all of this and thought everything in here is fixable, but how much does he want for this property? I had done the comps for his area and determined most houses sold for about 50- 60 K. His was a little larger due to his "addition" but was no where near as nice as the ones recently sold. When he told me 70K I just couldn't believe it. He also had two mortgages totally almost $68,000. He said that price is firm and there will be no negotiations. I told him I would crunch some numbers and got out of there. I was planning on offering 40K but thought to myself I would NEVER be able to assign that contract. My next call I got was for a really rundown little house by Churchill Downs. The comps in the area run about 45-70 K and I knew it was in a great location. He gave me the code to get in which eased my mind a little. I like being able to go in and look around without someone trying to sell me on the property. It was a total shell. But VERY fixable! I called him right away and shot him an offer for $7500 thinking he would counter offer. HE ACCEPTED! His asking price had been 12,000 and I thought I had no chance landing it for that. I got the sale agreement signed and thought I would place it on Craigslist just to see what would happen. Within an hour a man was at the house looking in the windows. I met him there and he wanted the house bad. Like start renovations next week bad. He had his GC with him and they were already drawing up a floor plan. I couldn't believe it! I had made $4500 profit without doing much but mow the lawn and pick up the garbage around the house. He took the assignment contract and I haven't been in touch with him since. That was a month ago. No response to phone calls or emails. Bummer. After that I've had offers to trade for a houseboat, I've had a guy want to buy it from Pakistan and wire me the money( sounds like a scam to me), and I've had someone want to look at it next month. What next? Do I take out a home equity loan and fix it up myself? Do I buy the house and let it sit until I have the funds to fix it up? Meanwhile the seller is patiently waiting for us to close. It's enough to give me an ulcer. People think that wholesaling is easy and that you don't earn your money. Pardon my french but I call BULLSHIT. There is definitely an art to it and you better have everything lined up just perfectly before you get going. I'm going to make this work and I will make a profit. It's just taking a little longer than my "plan" called for!

By Greg Hammond ( We Buy Houses Louisville/ Eagle Thirteen Properties LLC)