How to Wholesale Pre-Foreclosure Properties Successfully

David Fredenberg (00:00)
I think it’s ⁓ it’s value that you bring to them. ⁓ you know, there’s ⁓ a lot of people that will look at people in these distressed situations as a means to an end. ⁓ we like to look at it a little bit differently, ⁓ approach people with a lot of compassion, ⁓ and empathy. And ⁓ you know, we also like to give them different value ads that we can help them transition into this next chapter of their life. ⁓

Some of the biggest things being helping them find rentals. I mean, we do everything from searching, speaking with different property management companies, ⁓ leveraging different relationships that we have with ⁓ other investors that have larger rental portfolios, whatever that may look like, to applying to them ourselves on their behalf.

I guess each situation’s obviously different and it’s under s it’s truly just understanding where they’re at and meeting them there.

Dylan Silver (02:23)
Hey folks, welcome back to the show. Today we’re joined by David Fredenberg, an investor and wholesaler, co owner of Atlas Residential based in the Charlotte, North Carolina market. David, thanks for taking the time today.

David Fredenberg (02:35)
No, thank you.

Dylan Silver (02:36)
Now, when we talk about acquisitions in the wholesale space, there’s so many different situations that you’re going to encounter. Is there any one specific type of distress or motivation that you’ve seen a lot recently?

David Fredenberg (02:51)
⁓ definitely a slight rise in just pre foreclosures in general. obviously with how difficult the market has been for a lot of folks. obviously that trend always we we tend to see more ⁓ pre foreclosures. ⁓ you know, us internally we we do a lot of probate estate work as well. ⁓ those are a pretty constant flow. but I would say in general.

It’s typically or at least as of right now, it’s ⁓ a little bit more of a rise in pre foreclosures.

Dylan Silver (03:21)
Now, pre foreclosure specifically has its own hurdles, right? Because if they’re on a pre foreclosure list, there’s a lot of people who are reaching out to them. How do you differentiate yourself when there might be a lot of other folks who are in contact with them?

David Fredenberg (03:35)
I think it’s ⁓ it’s value that you bring to them. ⁓ you know, there’s ⁓ a lot of people that will look at people in these distressed situations as a means to an end. ⁓ we like to look at it a little bit differently, ⁓ approach people with a lot of compassion, ⁓ and empathy. And ⁓ you know, we also like to give them different value ads that we can help them transition into this next chapter of their life. ⁓

Some of the biggest things being helping them find rentals. I mean, we do everything from searching, speaking with different property management companies, ⁓ leveraging different relationships that we have with ⁓ other investors that have larger rental portfolios, whatever that may look like, to applying to them ourselves on their behalf.

you know, we’ve done anything from

I guess each situation’s obviously different and it’s under s it’s truly just understanding where they’re at and meeting them there.

⁓ how you can help them and again just transition into that next chapter. ⁓ we’ve I’ve bought people cars before. ⁓ they’ve needed a reliable source of transportation, ⁓ helping them with storage units, movers, you know, really whatever we can do to best set them up for this this next chapter.

Dylan Silver (04:48)
there’s a lot of coordination that comes along with a successful wholesale deal from the cradle to the grave. It sometimes people can feel like they’re, you know, almost family triage coordinators, right? Bringing together ⁓ you know, ⁓ the the next of kin in a probate situation or just people who have to agree on what’s gonna happen with this home. And that doesn’t get into what happens if there’s a move, right? And so being able to go to the mat effectively for your sellers is really a a

Differentiator for sure, right?

David Fredenberg (05:19)
Absolutely. ⁓ you know, especially bringing up ⁓ you know, state properties where you’re dealing with I couldn’t tell you how many times we’ve dealt with, well, you know, one brother hates the rest of the family, vice versa, however those situations go. ⁓ again, it’s really trying to understand them and really come with ⁓ with the empathy to sit back and listen and and hear what their concerns are and you know, figure out what that

best solution to move forward is to get everyone on the same page. And, you know, sometimes it’s hey, well, everyone wants you know, Uncle Bobby to get, you know, smaller portion. ⁓ and if you’re able to work all of that out, that’s that’s really what it boils down to.

Dylan Silver (06:47)
Now we were talking in the green room, you’re involved in the dispositions side of of this as well, which is a totally different animal. And there’s been ⁓ markets where it’s felt like dispositions does it itself, and then there’s markets where you have to have a really skilled dispositions team and have a great process because deals can sit. What has been your approach recently to getting these deals sold?

David Fredenberg (07:09)
⁓ I think a lot of it boils down to you know the marketing, the campaigns that we send out, ⁓ really trying to structure them to show people who might look twice over ⁓ a property, you know, highlighting what value others may potentially be missing. you know, as we were also talking about there’s ⁓ you know, one of the

Cool things about what we do, and my job in particular is ⁓ working with so many different types of investors. You know, the it’s endless the amount of ideas that people have when they’re they’re looking at a property. I mean, the amount of times that I’ve been in a house showing it, and you know, you have someone that is like, I don’t understand how you’re gonna sell this house, David. And then there’s other people who are like, I’m gonna knock this wall down, I’m gonna open this up, I’m gonna change this.

And so a lot of it really, you know, in in general, it’s trying to help people see the dream and what could be in any given property. those are the things that I’ve really try to highlight, especially in times like right now, because things are on the market moving slower and that’s no secret to anyone. ⁓ but at the same time, obviously there’s there’s plenty of us out there still getting it and ⁓ you know, making money doing it. So

cre creativity’s really the the one thing I try to to highlight in in my marketing campaigns that I do send out to investors and real estate agents and just help people picture what could be

Dylan Silver (08:37)
Dispositions has gone from being something that you you could almost figure out after you’ve got the property under contract, and some people would say, get the property under contract, you’ll find buyers, to then over the last, you know, several months and years even, you really have to have it dialed in because I’ve seen it where people can have this literally the same property locked up at the same amount.

But because they’re handling their brand and dispositions differently, an investor said, yeah, I saw that property, but so and so sent it to me. I didn’t think anything of it. You sent it to me, I’m gonna take another look at it.

David Fredenberg (09:11)
Yeah, and I I think there’s something to be said about being the expert, ⁓ you know, as a disposition manager. And you know, when you can prove to people time and time again that, hey, my, you know, my numbers are in point of how much money I think that you as the investor flipping a property are gonna make, ⁓ you know, what the ARV is.

You know, as people see that and they see the consistency that you bring to the table, it starts making you more reliable and trustworthy to, you know, because anyone can say an ARV is anything, or hey, this is how much it’s gonna cost you to fix a property. you know, for us internally, we we do flip a decent bit also. So we’re very in touch with how much certain things cost to to do.

⁓ you know, and I think that’s where some people may fall short is they’re just throwing generalized numbers. Well, it you know, it’s only gonna cost this to replace the roof and it’s gonna cost this to do that. And, you know, the more ⁓ more in depth analysis you can provide to other people, especially, you know, running comps and being spot on with your renovation costs. ⁓ you know, I think that really separates you as a true expert knowing what you’re talking about and

You know, going back to what you just said, it’s it is that needs that’s something that, you know, any great disposition manager needs to be very in touch with is making sure their numbers are right. And we’re all people, there’s times that we get it wrong or we may miss something. but it’s just constantly learning from you know, any any mistakes or problems that you have to overcome and you know, hopeful hopefully you don’t you don’t make them a second time.

Dylan Silver (10:47)
⁓ do you also do ⁓ creative ⁓ finance deals and you know loan assumption deals subject to or is it all cash offer?

David Fredenberg (11:30)
⁓ no, it depends on you know the the situation. ⁓ we used to do a good bit of innovation deals. ⁓ and then here in North Carolina that’s slowly changed as different ⁓ you know, laws have been passed. we also work a little bit in the South Carolina market as well. really just York County, South Carolina, but ⁓ you know, that that door

has been shut in South Carolina. And it’s, you know, we can definitely see the writing on the wall, talking to a lot of our partners and you know, attorneys, different consultants. ⁓ so we’ve switched more into deals that we would typically pitch Novation for. We’re actually pitching sub two, ⁓ explaining to them what the benefits of that actually look like. So we have a few properties on the market right now, a few under contract and a couple getting ready to go.

that are they’re actually just true sub two deals. ⁓ you know, instead of going the traditional ovation route.

Dylan Silver (12:26)
one of the things that I’ve ⁓ heard from many folks in the show is everyone has their own definition of novation, right? So in the term that you’re using it in, the way that you’re using it in, how does this typically, you know, manifest w once you’ve had a deal under contract?

David Fredenberg (12:40)
⁓ as far I mean it it’s similar but a little different again. I I’ve heard the same. I’ve heard mul multiple definitions of what innovation actually is. for us, obviously a novation contract and what the benefit is over Sub two is that ⁓ you know I’m not I’m not having to come out of pocket at all. I don’t actually take any ownership of the property at any point. it is more of like a

you know, assignment of contract at the at the final closing. but to to us it’s you know we we have obviously it’s spelled out in the language on our purchase agreement that ⁓ you know we have the right to market it. They know that we’re gonna be putting it on the on the MLS and listing the property and you know we work with them l almost it like a real estate agent in a way. ⁓ just helping, you know

push things along and ⁓ you know w one of the things too that we ⁓ have a pretty good grasp on is we work with a lot of different real estate agents ⁓ in our area. ⁓ and so a lot of times we’ll also we’ll send them out almost like an off market deal, ⁓ letting them ⁓ hey, we got this property on market. We’re offering, you know, three percent buyer agent commission. Obviously I’m I’m not a real estate agent. So me saying those things, I’d

You know, I don’t I don’t have to live by the same rules and regulations that a real estate agent does. So it puts you a little bit more I guess in a gray area, but not at the same time. ⁓ you know, it’s again, it’s more like, you know, buying selling houses for yourself.

Dylan Silver (14:14)
Now working with agents, you know, as opposed to working against them, right? This is something that I’ve seen a lot of wholesalers struggle with, right? Because they might not have the best ⁓ relationship with realtors, especially if they have gone out and maybe haven’t been able to transact or, you know, a deal has been fumbled here and there. So what has been your approach to to nurturing those relationships with ⁓ realtors in your market?

David Fredenberg (14:40)
⁓ we you know, it was one of those things I remember being more skeptical about working with agents. A lot of there’s you know, real estate agents are typically either super familiar with off market deals or not. and those that aren’t can be very wary. They hear horror stories about, ⁓ like I heard this guy that you know, I had an investor that got screwed over by some wholesaler or whatever. And so I think it’s that’s a lot of the hesitation.

but real estate agents are can be such a huge benefit to ⁓ working with off market because you know, obviously I as much as everyone likes to think their buyers list is stronger than anyone else’s, ⁓ there’s always new buyers out there. There’s always people that you can be introduced to through real estate agents. and that’s one thing that we’ve always ⁓ you know, really relied on is meeting new people through through agents and

structuring commissions for them in different ways depending on the situation. And you know, I found typically the times ⁓ that we are working with a real estate agent, they are ⁓ you know, they they find buyers that are willing to pay a little bit more for whichever reason. And ⁓ so we’ve had nothing but great experiences working with different real estate agents in in our market, especially off market.

Dylan Silver (15:57)
I if someone going back to the idea of ⁓ pre foreclosures, if someone has a foreclosure date set, at that point in time is it too late for them to be helped or or will you go in and get that property under contract and find find a buyer even against a deadline?

David Fredenberg (16:53)
Yeah, we do it all the time. I mean, probably eighty percent of all of the properties that we are ⁓ sharing off market, we get under contract when they’re you know, they either have the auction date already set or it’s ⁓ already actively in foreclosure. ⁓ and it’s just monitoring and understanding, you know, the upset period in North Carolina. in South Carolina it’s very different laws. The when the date comes that

that property is sold. you know, but we we walk through a lot of different steps with sellers as far as what their options are. you know, showing them different ways to to help themselves, ⁓ whether it be bankruptcy or different ways to try to help ⁓ delay the lender or doing it ourselves. There’s plenty of times that we’re able to come in and, you know, show them, hey, we have every intent.

to purchase this home and you know they’ll extend an extra 60 days and give us a little bit of time to figure out what we need to do in the meantime. so there’s a again very you know unfortunately real or wholesaling is a very case by case basis. Every situation’s gonna be different, every lender’s different, ⁓ sellers are different. So it it really it’s it’s diagnosing each specific ⁓ case individually.

Dylan Silver (18:17)
One of the things that wholesale ⁓ really got famous for is being able to get into real estate with little money, right? But as more people got in and you know, the general public on some level became more aware of this idea of wholesalers and realtors became aware of of wholesalers, there’s not just more competition, there’s also more scrutiny. And so when folks are getting in and getting these properties under contract, of course there’s

Things that can go wrong, right? For newer wholesalers and for folks who are just starting out, any feedback for those folks if they’re scaling a business?

David Fredenberg (18:49)
⁓ yeah, I mean, you know, the the hardest thing just like anything is getting started. ⁓ you know, I think having a strong ⁓ buyers list and really have making some real building some relationships with ⁓ investors that you can rely on that you they’re not, you know, ⁓ blown smoke, ⁓ if you will. You know, that’s that can be one of the more frustrating things. I mean

One thing I’ve learned is lot of times it’s the people that talk the most do the least action. ⁓ so it’s just something to be mindful with. And, you know, regarding just the disposition side, that’s definitely my advice is make sure you ⁓ can build some solid relationships with investors as you you get up and going. And ⁓ on the acquisition side it it truly falls down or boils down to ⁓ you know, diagnosing problems and

being the solution to them.

Dylan Silver (19:44)
We are actually coming up on time here, David. Any new projects that you’re working on? And then also anything you’d like to mention directly to our audience.

David Fredenberg (19:51)
⁓ new projects we we constantly are you know in and out. We’re we’re really starting to make a learning a lot more about land development in general. you know, there’s we’ve been pretty hot and heavy on ⁓ subdivision. So you know, finding a house that we could subdivide into three, four, five lots, whichever. and then trying to just, you know, understand highest and best use.

⁓ zoning, et cetera, ⁓ in our market. We’re we’re seeing a lot more of that. but any something ⁓ to I guess to say in general, ⁓

I I do want to mention a book I recommend people read. it’s called Flip the Script by Oren Klaff. ⁓ it’s a great read. ⁓ you can use it in so many different ⁓ so many different ways in business in general. It’s not a real estate specific book. ⁓ but that would that would be something I’d I’d like to share with ⁓ all the people out there.

Dylan Silver (20:52)
David, thank you so much for joining us today. Thanks for your time.

David Fredenberg (20:55)
Absolutely. Thanks, Dylan.