Hey, what’s going on guys? It’s Nathan Payne over here, just going to show you guys today in this video, the basics of what makes a good wholesale deal. You know, it’s hard when you first start knowing what’s a good use of your time and what’s not. And, you know, maybe you’re looking at a property of yours, not sure if it’s a good deal. But, you know, this is just the basics, we’re going to review real quick, what makes a good deal and what usually doesn’t make a good deal. Now every deal is different.
But we’re going to kind of go over the, the basics, right. So what makes a good wholesale deal. So first, the things things that make a good wholesale deal is location, location, location, you know, we’ve come across so many deals, wholesaling over the last couple years where, you know, to edit, discounted price that the Seller is motivated, and it’s just the location was bad, it everything made sense, it was, you know, lower percent of it was below ARV, were able to have enough spread. But you know, nobody wanted it for specific reasons. So what makes a good wholesale deal is location.
You also next point is, you know, you got to have a good spread for flipper to make money. Most flippers, depending on the price range of where they buy a home, they want to make 15 $30,000 On the flip where it’s not worth their time. So they got it, you got to have a spread in there. Now I know there’s a rule that they teach it’s 70% of ARV minus repairs, minus your wholesale fee is what you need it for, we don’t really follow that rule, because it’s, it’s every market, since we wholesale nationwide, every market is different, you know, maybe in Denver, or Salt Lake City, Utah, people are willing to pay 85% Minus repairs, minus wholesale fees.
So we don’t use just a generic rule, we break down the deal, and we kind of understand what holes investors are paying in the area. So you got to have enough spread for flagger to make money. And we’re gonna go into analyzing the deal and using the the calculator that we have to kind of understand what’s a good price to get a property for does a property property needs repairs or needs to be updated, that’s what makes a good deal.
So a flipper most of the time is not going to buy a turnkey property, and then just relist it, you know, that’s that’s, that’s called wholesaling. And that’s something that we can do. If we have a property that’s like pretty good shape, and we, the person just wants to sell it, and then we can just relist it. But from our experience, if the property looks like in good condition, and there’s really nothing to be done. Most most flippers won’t want, you won’t be able to wholesale, that is easy.
Now, if you get a great deal that and it’s in great condition and the seller themselves like why why are they selling that to you like there’s got to be a reason why they’re willing to sell at a discount if the house is in great shape. And they need to move in a week. Yes, happen sometimes. But usually, property needs repairs. So that kind of this next bullet point to is the value that someone can add to it’s gotta be able to have some something that someone can add value to, or it’s gonna be hard for them to want to take it on. Sellers motivated has a problem you can solve.
Sorry about that. So most, I would say 90% of the deals we’ve done, probably the sellers had a problem, whether you know, they’re in probate, and they inherited a property, pre foreclosure, you know, they have a bad tenant, they inherited a property that they don’t, you know, needs a ton of work. We rarely get deals where people were like, Oh, I’m looking to get a bigger home, I just want to sell right my house fast. And it’s like, you know, they usually would end up listing it or selling themselves or doing something else. But you got to understand as a wholesaler, you serve a niche part of the market.
And those are people who have a distressed property, distressed situation like a problem, or they want convenience and speed. And that’s where you know, the property might not need a lot, but they just want the speed and convenience. Next one is the rents are high in the area. So that means you know a lot of buyers look to investors look to buy properties as rentals. So if the rents are high, and it’s a good rental, that’s probably a good opportunity. So real quick, I’m gonna go over what usually deters investors from wanting a wholesale deal that you have.
So if it’s next to a railroad, people don’t usually want that if it’s on a busy street or main road, you know, we’ve had a couple problems with that where we have a really good deal but it’s on a main road and it makes the value of the property drop down compared to the comps in the area. So it’s on the main street busy street or main road that could be difficult to sell it next to a commercial building. We’ve had some homes where you know, it’s a home in the middle of like an industrial park and it’s It’s just weird. It’s zoned weird. So those are harder. So, next to the highway, tendons are not cooperative let you walk it, those are kind of difficult. If you can’t walk in or do showing the property, those are kind of difficult. Sellers not motivated, there’s no motivation, it’s going to be hard to get a wholesale deal. If the ARV is less than 50k, it’s going to be difficult. So if the after repair value is less than 50,000, those are harder.
I don’t think we’ve done a lot of deals if the ARV has been less than 50k, there’s just not a lot of spread to make money on those. So we kind of don’t work those as much. But we are in markets, we try to focus on markets that have higher ARV, because that means you can make more money properties located in the small cities with a smaller population. So we’ve been wholesaling nationwide now for a couple of like a year. So we’ve used to just do Salt Lake City, but now we’re going nationwide, and when we first started, we would get a lot of motivated properties in the middle of nowhere.
And we they’re very, very hard to sell now some of them, you can, but it’s, it’s, it’s pretty difficult. So that will present a problem. You know, if you get a property, it’s located in a really small town of like 5000 10,000 people or in the middle of nowhere. Property doesn’t have a lot of flippers in the area, if that’s who we’re selling our properties to or flippers, or buy and hold investors. So there’s not a lot of flippers in the area, it’s gonna be hard to do your deal. And if the house needs too much work, so let’s say this house is worth 50k and it needs $40,000 of work and the seller wants 20,000 There’s just no money for anyone to you know, there’s no room for anyone to make any money.
So you know it is possible at homes need too much work and it’s not worth it to anyone to go into it. And if the house is already listed on the MLS, unless the seller is like super motivated. These are difficult because once it’s on the MLS everyone’s seen it the buyers have seen it that buy from you. So that’s gonna be hard to move. So this is just a little and I’ll add these as we go, you know might have changed from you know, when this video is made, but we’re always looking to figure out ways that we can find good deals. So if you’re new, these are some bullet points that will help you decide okay, I’m working with a potentially a good deal. All right. Thanks, guys.