22 Nov 2013
A full year’s salary in one wholesale deal
Prime Holdings and Management is a real estate investment company focused on providing investors with the best cash return on their investment. The company aims to find great deals for their investors by buying investment properties at wholesale discounts and/or at great terms and reselling them for a substantial profit.
Company: Prime Holdings and Management
Agent: Kora Sadler
Location: Mooresville, NC
Years of experience: 15+
Number of properties sold through wholesaling: 75+
How did you get started wholesaling?
I was introduced to the real estate industry when I wanted to buy my own bed and breakfast, and got started in wholesaling by accident. In 1993, I was working a temporary employment position with a title company where my job was to go to the courthouse and retrieve information from old plat maps.
One day, I was in the courthouse and someone asked me how to find a property deed. While searching for the owners of the property, we noticed that the house had been foreclosed and was now owned by the bank. On behalf of my new friend, I made a few phone calls, got ahold of the REO department and made a really low offer to the bank.
To my surprise, they accepted my offer. I couldn’t believe it, so I made a few more offers and they were also accepted. Once they were all closed on, I received a fee for doing what investors now call “due diligence.” My first fee was $13,000 which was my normal salary for the year. I just kept saying wow, I really need to do this again so I did, and it worked.
What do you look for in a property to wholesale?
Some of the things I look for are houses that are vacant or boarded up, broken windows, have overgrown grass in the yard, “For Sale by Owner” or “For Rent” signs or houses that look run-down in a nice neighborhood.
I also look for properties associated with bankruptcy, foreclosure, death, probate, inherited properties, divorce, evictions, job loss, complaining neighbors or anything that requires a quick sale.
What do you look for first – the property or the buyer?
I buy properties based on principle and I never buy anything I wouldn’t want to live in myself. This keeps me conscious of what not to buy. The best property criteria is a single family residence with 3 bedrooms and plenty of room for growing families. If it’s a good property with potential and great equity, it’s a good deal for any investor.
How do you finance your investments?
I finance my investments using OPM, or other people’s money by using a combination of cash investors, transitional funding and hard money loans just to name a few.
Do you have a budget when looking for a property to wholesale?
Yes I do have a budget. Since I am a nationwide wholesaler, some properties may be priced higher or lower depending on the economic conditions of that region. For instance, I may acquire a property in Cleveland, Ohio for $35K and that same type of property may price at $125K in Los Angeles, California.
My price point is quite simple and my mantra is,
“Buy low, sell low, and leave the buyer in a great equity position.”
How do you find buyers to purchase the property you are wholesaling?
I do what is called a “blind ad” where I locate the property and buyer at the same time. I do this by posting the criteria for my property without an address in the classifieds and on all social media, which gets the investors contacting me.
Once they have gotten in touch with me, the investors will explain what they are looking to buy. I always ask if I can add them to my buyer’s list as I am always locating different properties and will contact them as soon as I find one that meets their needs. On average, 6 out of 10 callers will say yes.
I also join online investor groups where there is basically a pool of cash investors who are waiting for a great deal to appear. This gives you massive buying power to sell your property.
How long does it typically take for you to sell a property?
It normally takes me around 10-15 days to sell a property. I use a lot of social media and online real estate investor groups to locate my buyers. I also have a VIP buyers list that I created from posting properties on Craigslist.
How much do you typically make when you wholesale a property?
If I am assisting another wholesale on their project, I typically make up to 2% on a deal. However, when I acquire the property myself, I will add a 10-15% wholesaling fee into the selling price.
Have you lost money from a wholesale investment?
Yes, I have lost money on a property before. Unfortunately, I left “money on the table” when I used the MLS comps which means that more money went into the seller’s pocket than into mine. This is not a good position when you are wholesaling and want to sell your property to another buyer. Now I make sure everything is covered from acquisition to closing costs.
What are some tips to avoid losing money?
My advice on how to avoid losing money is to know your numbers.
The most common ways people lose money is by not knowing what the property is really worth.
There are basically 2 comps: MLS comps and CRS comps. The difference is what you don’t pocket. When you acquire an MLS comp, it’s based on how many properties a realtor sold. When you get a CRS (Courthouse) comp, it’s based on how many properties were sold privately and by realtors.
Not every investor uses a realtor to buy and sell properties, therefore these closings only appear in courthouse filings. I use Zillow.com and turn on it’s filter to find how many properties were sold in the area.
For MLS comps, I use the “By Agent” filter. This gives me a general idea about what a particular house will sell for in any area. You only need 3-4 good comps to get an estimated idea of how much a property is worth.
How would you recommend those who are just starting find properties to wholesale?
I would recommend people get started by first becoming a “bird-dogger.” As you learn to locate properties you will learn many new ways investors buy properties. This will lead you into different areas such as wholesaling, rehabbing, or becoming an investor yourself and holding the properties for income.
Most importantly, do your due diligence. You should educate yourself and never stop learning as the real estate industry is constantly changing with new laws.
Not sure what wholesaling real estate is? Read our article The ins and outs of wholesaling to learn more!