Last week, my blog post discussed my method for determining the maximum purchase price you…
Wholesaling houses is appealing to many beginning investors because it can be done with minimal…
One of the Myth’s of real estate is that you have to have money. This…
When I was just getting started as a wholesaler, one of my greatest fears was…
In real estate there seems to be a culture of do-it-yourself. There is a swagger amongst investors who will tell you they can do almost everything and anything in no time at all. Now, I’m sure you could learn how to be a lawyer at the public library but I think formal training might be of some value.
You can’t be all thing or all people in real estate. In the next few weeks I will write a post about forming a Master Mind Group but for now I want to give a special plug to wholesalers. I want to both convince investors to work with wholesalers (specifically rehabbers) and I want to help wholesalers add value to their services. The first step to any business is to learn the business and the next is to learn what you should delegate to others.
Keep Your Friends Close and Your Wholesalers Closer
There is another cultural norm in real estate: if you can be cut out of a deal you will be. I don’t know how many times I’ve seen wholesalers, realtors, and mortgage brokers cut out of deals after performing significant services for which they were never paid. This is one reality that makes it very difficult for wholesalers to provide their best services. They have to spend almost as much time securing their position as they doing trying to get the deal done. Wholesalers don’t have the protections that realtors have. They’re actually a pretty skittish bunch. Cultivating a relationship of trust with your wholesaler will ensure they can give you the best service and increases the chance that you’ll get more good deals coming your way. The wholesaler/buyer team is much like a marriage. It can’t work very well if there isn’t trust or if only one partner is working on the relationship. In fact, I know many would-be wholesalers that leave the business because they bust the humps to find deals but then can’t find reliable end buyers. That is just a crying shame considering how rare the good deals. Help your wholesaler help you.
I often get questions from aspiring wholesalers about the steps involved in an REO wholesale flip.
In today’s article, I’ll walk you through one of my most recent deals from beginning to end..
While checking the MLS about a month ago, I noticed a property that just hit the market. It was located in an area that I have done quite a bit of business in, and have several buyers looking for deals in..
Wholesaling REO Property Success: Case Study
The property was listed as a 2/1, and was priced at $11,000, which is a phenomenal price for this area. I recently sold a similar property in the same neighborhood for $25,000 so I knew this was priced right, and was out the door to look at it within minutes of seeing the listing.
Once I got to the property, I was pleasantly surprised. Aside from the fact that the house smelled like a curry factory, it was in great shape. It also had 3 bedrooms instead of two, which was just icing on the cake.
I rushed home to write up an offer, and had it submitted within the hour. I made the offer directly to the listing agent, allowing her to make both sides of the commission, as well as the $3,000 selling agent bonus that was being offered.
One of the questions that I get asked most frequently from aspiring wholesalers is, “How do I know how much to offer on a property?”
Just use the magic Wholesaler Formula, right?
Most people are looking for a magic formula that you can just plug a few numbers into, and out will pop the correct answer..
While there are formulas that you can use as a guide to arrive at your offer amount, there is no cookie-cutter formula that will apply to all markets and all neighborhoods across the board. In some areas you might be able to get away with contracting deals at 65-70% of market value and wholesaling them for a profit, but in markets like mine (Tampa), you are going to need to be much lower.
Great Deals Differ from Market to Market
If you want to be a successful wholesaler, you need to hit the streets and find out what constitutes a good deal in YOUR market. This takes quite a bit of time and effort, but it is something that you need to do if you want to start contracting deals and getting them to the closing table.
What’s worse than not getting any deals and struggling to buy houses? The answer is buying the wrong house. You see, many investors take an early exit from this business because they overpay for a property or because they don’t understand the correct formulas to use when evaluating a deal.
Today, I want to break down a deal that was emailed to me recently. It’s a single family house that another investor is trying to wholesale.
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