OfflineSeveral RBBP Mentors/DG veterans state very plainly that SoCal is a really tough market for wholesalers.
Carol Stinson herself suggests that finding a property at 60-65% of ARV in SoCal is a rare, amazing find. She says that a typical purchase for investors is closer to 75 to 80%. (Carol, please correct any of this and I will promptly update). She did mention that auctions give better discounts (closer to 50%), but they're very difficult to access or even find. She has been building a power team out in CA for over 7 months! Ultimately, she suggested that it might be easier to find another market. Even Chad Merrihew said that SoCal/Inland Empire was a very very difficult market to find and create deals. Apparently, he's moved on to the Midwest to further his investing. Is it that hard in SoCal?
Especially after hearing case studies from DG vets, the take home message seems to be that finding wholesale deals at 40-50% of ARV is a matter of dialing in the correct strategy and using some serious elbow grease. Still, many DG vets suggest that SoCal might be a rare but glaring exception. I am more than willing to work hard. I also want to work smart. I certainly don't want to be putting in aggressive offers (40-50% of ARV) if they are WAY WAY WAY off base in the SoCal marketplace.
For those who have EXPERIENCE and SUCCESS in this unique market, please give some insight into what your numbers look like in SoCal. What are some amazing deals you've created and where? Please, brag and boast and give some of us SoCal DGers a sense of what is and isn't currently possible in the SoCal marketplace. I'm sure there are better areas to pursue deals; what and where are they please? At what percentage discount do you consider a SoCal purchase an AMAZING deal worthy of wholesaling?
Please feel free to PM and trade notes as well. Thanks for the read and any advice.
Your friend,
SHINE
I too am in SoCal and will be watching this thread for whatever glimpses of wisdom may be left here. I have been watching REO's listed (and selling) at 75% - 80% of ARV. Perhaps Cali is more of a fix/flip market rather than a wholesale market? But if investors are buying at 80%, and it costs 15% to sell, that leaves only 5% of *full* value for rehab/holding and profit. How are they doing it? In my personal opinion, not that I am in any way qualified to have one, the market in the majority of areas in SoCal have not hit bottom... so I would not be holding anything at current ARV... so what are the investors doing with it?
Altho it may be more challenging to be an investor in CA, this is where I plan to make it happen... one way or another.
So I'm with Shine... anyone with experience, please do share...
Aniko
70% of ARV minus repairs is a home run here.
Yes, buyers are paying 75-85% all day long. The wholesalers have dropped dramatically due to the high competition here. I have also found big players with lots of cash, are buying in volume & as long as they are turning a bunch of properties, they don't care about making small profits, leaving it very tough for the newbie investors who would have a lot of costs to do a deal & the numbers don't make much since for them.
For me, After getting killed out there all of 2009-2010 on the MLS & making hundreds of solid offers, Short Sales have been the avenue for me. tons of them out there & once you have one under contract, it's just you & the bank. No bidding wars.
I Recommend going to your local REI clubs & networking your butt off with the big players.
Jason S.
San Diego, CA.
**All CASH House Buyer!**
Refer Us To Neighbors, Friends & Family, Earn $1,000
LIKE my FB page http://www.facebook.com/JandBHouseSolutions
I think I realized pretty early on that the numbers in SoCal might be telling me something different. I've invested in other markets prior to coming to SoCal, and those numbers are inspiring. When I applied those deal guidelines here, rude awakening!! And it wasn't just realtors who "didn't get it" b/c some of them were very aggressive, savvy folks who know their market and understand creative techniques.
How have you guys applied this knowledge to adjust your approach and strategies?
Your friend,
SHINE
For me it has been marketing to home owners looking to short sale & connecting & partnering with Investors who have been in the game for a long time, who already have Realtor relationships, & since they are known for closing on properties, they are getting pitched the deals first.
Jason S.
San Diego, CA.
**All CASH House Buyer!**
Refer Us To Neighbors, Friends & Family, Earn $1,000
LIKE my FB page http://www.facebook.com/JandBHouseSolutions
Yes, it's true...There are deals to find here in So-Cal, just need to be willing to run a bunch of properties and look at all the numbers to see if they are going to be a good fit for either you and or an investor. Forget 60ish ARV, you'll be wasting your time...how do I know, because I am a licensed realtor as well as an investor here in So-cal. I have a hand-full of investors that I am currently working with and none of them are getting close to 60-65% ARV...that's reality here in So-Cal!
If you don't mind sharing, what kind if numbers have you seen working in CA?
Aniko
$18/hr cash and I was J.O.B.
The Plus Side- It's expensive there! Suddenly, your $5000 fee on a $700,000 house at any % FMV is WAY below the 6% agent commission. And probably way below the closing costs too.
That seems easy, I should have stayed in SD.
2 things...
1 - Carol mentioned that she charges a 4% fee... so $5000 would be way too low for a $700,000 property!
2 - Don't forget, you don't have to live here to work here...
Hello there! I have a deal under contract right now and am wholesaling it for $345K in Burbank. CA is FULL of wholesale opportunities and investors here are looking more for a certain set amount in profit spread, not necessarily a % off of ARV. That's pretty tough here, but its because there are so many investors and so much competition.
The property I have for under contract needs $27-32K in rehab and has an ARV of about $470-495K. The deals are out there, but you will have to put in at least 30 offers and have a very patient RE Agent. 
Hope this helps some!
Buying and holding and fix and flipping is very hard here because there isn't a hard money lender around that doesn't want 20% of the purchase price 'skin in the game'. In other states, you can get TRUE no money down deals that cover rehab, points, interest, and fees, and purchase price. NOT so in CA! And getting traditional loans here is no picnic either! LOL
So, is it doable, yes. It takes a lot of work and dedication though, like everything else!
~Tammy
So Tammy,
Are you saying that you are buying around 70% to 75% of ARV and you are selling to investors at 80% ARV?
I have been scared to make offers with those kind of numbers, much less deal with properties over 300K, but if the investors are buying at 80% on the higher valued properties, I will start making offers!
Thanks for the info,
Aniko
Is anyone doing much with lease options? Wholesaling looks very tough, and the entry point is a little high for those of us getting started. Foreclosures are everywhere, but it looks like people succeed at what they enjoy doing and are good at. Tammy had success with a wholesale deal, and Jason is working short sales with some success. Anyone doing anything other than these kinds of deals? Thanks.
1- Don't forget, I lived there. I left, and long distance attempts at investing have gone poorly for me...anywhere. Good luck to all in the Wonky State!
2- If Carol is making a 4% wholesale fee on $700k houses in CA ? Hey, good for her, Thats huge! But,are you saying you wouldn't wholesale the same house for $5k ? I would be all over that if I was still in CA.
I'm just a little fish,
But I've found that I can be a big fish by swimming in a small pond.
"Zig while others zag." -Zig Ziglar
I haven't tried long distance investing yet, so I will concede that it may be more difficult than it sounds, especially in an admittedly difficult market.
I don't know of any of Carols specific deals, in CA or otherwise, but she mentioned on her call that she has a set wholesaling fee, and I assumed that was nationwide.
I have heard it said "don't leave money on the table" many a time, but yes, I would take the $5000...
Has anyone tried a short sale to wholesale? If so what was the process exactly? Step by ste if possible.