Updated almost 11 years ago on . Most recent reply
Wholesale virgin!!!!
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Congrats on taking, or at least wanting to take the plunge! Wholesaling is very easy to do, and it is very easy to get buyers for the home. If you are going to enter into a contract and assign it to others to buy, just be prepared for what those buyers want. In many situations with wholesaling, you are getting a good deal on a home, and hope to sell it to someone else for more, before you have to actually perform as the buyer.
Your most likely buyer is another investor who sees a good deal. For this reason, it is important to know what these investors want, before you enter into any contracts to buy. I am looking for at least a 15% ROI. If you purchased a home for $250,000 and it needs $50,000 in work, and it will be worth $400,000 at the end, I would be willing to pay about $280,000. That is because I would have to spend $280,000 on purchase + $50,000 on rehab, puts me at $330,000 actual dollars invested and at risk. If I add a 15% profit, I get to $379,500, but I am estimating about 6% in commissions and closing costs to sell. ( I own my own RE company, so I pay about 4% in commission to sell which includes both sides and I estimate a 2% credit to the buyer).
With the numbers above, you could buy for $250,000 and sell to me for around $280,000 and make a nice profit. Many of your deals will be more narrow than what I have described here. Get to know the investors in your area and what returns they expect and want. Once you know those numbers, you know exactly how to structure each deal. In my area, I know flippers who will do a 10% ROI and others who want 20% or more, so knowing who to call makes it easier. Good luck!