The Creative Investor - Wholesaling Ethics

Ok, well not only am I looking to wholesale within the next week with my marketing plan going in effect, but I have also dealt with a couple wholesalers in my area. Now when I think about wholesaling and what my profits will be.. i think 3k-5k, I know for a fact that some of these guys that I deal with are trying to bring in profits up to 13k at least per deal.

I'm not trying to hate on them, I mean hey if you can pull those numbers and everybody's happy...well then why not?

The problem is, I think the people that the people these guys are dealing with are newbie guys looking to get into re investing and they're not doing the math for themselves. So they are buying wholesales that aren't bringing in the profits that they may have expected. For example, I was wheeling

and dealing at a property with an ARV of $80k he wanted $67k needed 5k in repairs. I didn't end up buying it, actually I just wanted to get out and meet an actual wholesaler and see how it works I also am working on rehab rentals so I thought maybe I'd find a good deal also. Well after he saw that I had a little experience and he didn't think he would have to hold my hand, the price dropped to 60k and then eventually to 59k. Now I can't guarnatee he was trying to get 13k, but I am guessing he didn't want to go below 5k in his pocket...fair enough.

My point is, once I get out there and I have some deals available, and when newbie rehabbers who have no idea what they're doing all they know is they just want to buy a house fix it and sell it...how ethical is it to charge almost double the fee you normally charge (not telling them of course) in exchange to "hold their hand" and show them how it works? I know when I am looking to rehab and hold, I don't want to pay any more than 65% LTV (including repairs), infact I want to get a better deal than that.

I'm just as greedy as anyone, but I really don't think I could do that, I'm far from being a seasoned investor, but I know with being new myself I wouldn't want something like to happen to me...where someone is willing to give up $8k before negotiation begins but if I didn't really understand how things work (well...in this case I wouldn't be negotiating until I learned, but pretending I was just jumping in something because I heard it's easy and a great thing to do) then the seller would let me do the deal without feeling like he could give me a break.

Ok, lol, anyways my point is...I feel like if someone is new and they are motivated, it would inspire ME to be able to help them do a great first deal, show them a thing or two, and have the potential probablility of a repeat buyer, rather than do one deal with this guy and he ends up not making what he thought he would, get discouraged and never tries again. If someone is new and hasn't put any effort in learning just something about what they're about to get themselves in...well I think (and these are the ways i want to work), I should just tell them "Look go buy this book, or go talk to this guy....and when you think you know a little more and will be comfortable with taking this step give me a call"

I'm no saint, lol, but I just thought making a point (my point) about this might help some people out.

I believe in the long run, if you use some ethics in your wholesaling, all those potential 10k deals that you let go for 3 or 4 because you wanted to help someone out...will be the one's coming back to you every couple weeks wanting more making you $$$$ on a consistant basis, rather than a one time deal.

Besides I love to talk about real estate, and it's one thing that when I learn something new, I like to let everyone around me know about it because I'm excited.

But point made...Good Ethics= Return Buyers = Consistant Paydays.

JB