What Comes 1st, Finding the Cash or Finding the Deal?

Posted on May 6, 2013 by

When it comes to Wholesaling properties, I see the question asked frequently:  “Where should I start?  Marketing for Motivated Sellers?  Or Marketing for Cash Buyers?”

We are somewhat biased when it comes to this subject, because in most of the materials we went thru when we were first getting started out all said to start with Marketing for Motivated Sellers.  The theory is that if you find a Hot Deal, meaning a property under contract that is WAY below market value, if you have that then the Cash Buyers will find you.  So just get out there and go find a Hot Deal and the Cash Buyers will come to you.  On a side note, same principle applies when it comes to finding Private Money.  If you find the Hot Deal, the Money will find you.  Not, go find a Private Lender then go look for a Hot Deal.  I always like to have the Ace up my sleeve – when you have the Hot Deal, you have control.

I am somewhat intrigued by the theory of building your Cash Buyers List first though.  The theory with that one is that if you go out and build a big buyers list, then you can just wholesale other Wholesalers deals.  So you  have lined up “Buyer Bob” and he wants to spend $100K this week on some cheapo rental houses, but you have nothing under contract.  You don’t tell him you have nothing, you say “let me check with my people”, then you call your Wholesaler buddies and see if you can Joint Venture on some deals that they have under contract and split the profits.  I can see this as a viable strategy now (since I have now done it – haha!).

So back to the question of where do you start if you are just starting out?  Start with Motivated Sellers, or start with a Cash Buyers list?  The answer is BOTH!!  Naturally, why not do BOTH???!!!  Market for Motivated Sellers, get the Hot Deal, sell it yourself because the Buyers will find YOU if you have a Hot Deal and you can keep all of the profit.  AND also market for Cash Buyers, and if you find a hot Cash Buyer that wants to work with you and is ready to spend some Cashola, help him spend it!  Make friends with some other Wholesalers and ask “if I bring you the buyer on these deals here, can you cut me in on the profits?”  Most will say YES, because half of something is better than 100% of nothing.  And you will probably get less than half at 1st, but as your alliances grow you can negotiate your value up.  And there will be times when you have the Hot Deal and another Wholesaler has the Buyer, so play nice and scratch each other’s backs.  Reciprocate.  Be cool to people and people will be cool to you.

BUT BUT BUT….if you find the HOT DEAL yourself AND you have the Buyers, then you have full control and you need to maximize your profits.  That is the ideal situation, so go out there and market for Motivated Sellers and get the Hot Deals.  And go out there and market for Cash Buyers.  Put the two together and you will be making some Fat Cash my friend.

Now get out there and do it!

Matt LarsenMatt Larsen started buying and selling real estate in October 2012. In the last few months, he and his wife Courtney have done over 25 wholesale deals with no prior real estate investing experience, very little cash and none of their own credit. Now they are both full time real estate investors, work on their own schedule and report only to each other.

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