When you are qualifying your cash buyers, you will be gathering their investment criteria. You will be asking your cash buyers what profit they are looking to make on each deal. They will respond in one of the following ways:If they are a rehabber, they are a cash buyer who will be looking for a fixer upper property to rehab and resale to a retail buyer. They might have one of three ways that they will say they need to profit from each property.
- a percentage of After Repair Value
- a percentage of After Repair Value minus repairs
- a net profit dollar range amount
If they are a landlord, they are a cash buyer who will buy the property and hold onto it as a rental property with a tenant who is willing to rent it for a period of time. They are typically looking for tax benefits and cash flow over time on this property. They might say that they require the following types of profit.
- net dollare amount of cashflow per month
- % return on cash invested
If you can gather this information, you can run the numbers for the wholesale deals you are passing onto them in the correct manner and make sure you have their desired profit built in. The fact is this, if your deal does not meet their criteria, they will not buy it. It is a business decision. It is not emotional. Bring the cash buyers what they want and they will buy from you again and again.