You have located a property for wholesale and have finalized everything with the owner, so what next? It’s time to look for a buyer. You’re not looking for a first-time buyer; you’re looking for a contractor or real estate investor to buy the property and possibly do some necessary renovations.
Finding a real estate buyer has to be a quick process. Remember, as a wholesaler, you have entered a contract with the property owner, and you must do your business before the contract expires. As starter, chances are that you won’t have a list of potential buyers as you will need time establish a reputation in the market. However, there are a couple of ways to find buyers, without necessarily paying extra cash. They include:
- Emailing investors that you already met in meetup events
- Distributing flyers in your neighborhood
- Listing the property on free sites, such as Zillow and Craigslist
Once you start receiving calls from potential buyers, it is important to save their contacts, even if they won’t buy the property at that time. This will help you a great deal when sending out your subsequent listings.
Not everyone can start and run a successful real estate wholesaling business. The business demands a lot in terms of patience, time, and commitment. It is important to enter the business knowing that success won’t come easy; you will need to pay the price. Since you will be dealing with clients, you will also need to have excellent marketing and communication skills.
Perhaps the first key to success in property wholesaling is locating the right property. Distressed property owners who want to sell their property as quickly as possible are the best prospects. Those kinds of properties are definitely attractive to investors as they fetch huge profits, especially if they are located in desirable areas and have desirable amenities. Before making an offer for any property, you will want to know the level of repair needed so that you can factor it in the offer.
Knowing how to make an offer is crucial in wholesaling. If you’re making an offer that is too low, potential sellers may get scared. On the other hand, making a too high offer will reduce the profitability of your business.
When it comes to real estate wholesaling, distressed properties are no doubt the best as it is possible to sale them under the market value. Distressed properties are those properties whose owners want to sell quickly or those under foreclosure. As a real estate wholesaler, getting a distressed property enables you to sell it at a far much higher value than what you bought it for. Another reason why wholesaling real estate is so appealing is the fact that it has low capital requirements. Typically, real estate wholesalers, especially starters, use free or inexpensive ways of locating distressed properties. Seasoned wholesalers, on the other hand, tend to use sources such as online real estate websites, real estate investment groups, real estate wholesale groups, and even property finders, in locating distressed properties for wholesale.
The internet is a great source of distressed properties, but you will need to know the best sites to check. Of course, you don’t want to waste your time browsing a site only to meet property owners who are not motivated to sell. Some of the most reliable sites where motivated sellers can be found include HomesByOwner.com, FSBO, and Craigslist. These sites are easy to use as each offers a search bar where you can type a keyword that you’re searching for. Keywords are a great way of conducting searches as they make it possible to narrow down the search. Some commonly used keywords in searching for distressed properties include distressed property, fixer upper, motivated seller, estate sale, must sell, and sold as is.
Real Estate Investment Groups and Wholesale Groups
Real estate investment groups and real estate wholesale groups give real estate wholesalers the opportunity to network. These groups bring together real estate investors, real estate professionals, appraisers, contractors, title companies, real estate agents, and other people who have an interest in real estate. Here, meeting lead sources, mentors, and even partners won’t come as a surprise.
Hiring a property finder is just another popular yet affordable way of locating a distressed property for wholesale. A property finder is a person or organization that specializes in finding properties that are up for sale; so, they are experts in the game. Whether it means cold calling, moving door to door, or scouring neighborhoods, a property finder will use every means possible to locate distressed properties.
One good thing with property finders is that you don’t need to pay them upfront. Instead, they will do the work first and demand payment when you will be purchasing the property. It is little wonder this people are sometimes called bird dogs. They save wholesalers a great deal of time, which can be utilized elsewhere, including connecting with other real estate investors and finding property buyers.
While locating a suitable real estate property for wholesale is a milestone, it is quite another thing to convince the owner to sign a contract with you. Having the property owner sign the contract is important because it gives you confidence to go ahead and sell the property at a profit.
Approaching the Owner
You will need to book an appointment with the property owner so that you can have good time to discuss about the business, and you will want to go about this in a delicate way. Remember, as a wholesaler, you may not be a traditional real estate professional; hence, gaining the trust of the property owner will play an integral role in moving forward. You will need to keep time for the meeting and be courteous and professional.
Negotiating the Deal
When negotiating with the property owner, it is important to discuss the benefits the owner will get if they sold the property to you. You could focus on things like ensuring that the property owner does not default on the mortgage they are servicing. You may also want to focus on how you will handle processes such as appraisal, inspection, and the contract drafting. Show the property owner that you’re going to take care of these processes so that they won’t have to go through the trouble. Most owners prefer not to incur any upfront costs. If there are any repairs that need to be done on the property, it is important to let the owner know that they will be taken care of since the cost of any repairs will justify your offer to the property owner.
Signing the Contract
Getting the home owner to sign your contract will give you the all-clear to go ahead and wholesale the property based on the contract terms. You could involve a real estate agent or a local attorney in drafting the contract (though most wholesalers do it on their own).
In most cases, property wholesalers tell owners that the buyer is their partner. This is meant to prevent the owner from knowing that the wholesaler is reselling the property at a profit. Although there is no crime in so doing, it is not recommended as it looks deceitful.
Do you desire to dive into real estate business but don’t have finances to back your desire? If your answer is yes, then property wholesaling could be a perfect fit for you. Wholesaling will also suit you if you have an eye for distressed real estate properties, you are a people person, and possess skills for negotiation. Yes, it takes a lot of time to establish yourself in the market as a wholesaler, but if you do it right, then overwhelming rewards would be waiting for you. If you’re passionate about real estate and have good communication skills, you may also be the right person to open wholesaling business.
To start a successful property wholesaling business, you will need to undertake some research, which will be helpful in locating real estate experts and groups that can offer you valuable advice on how to go about the business. Additionally, you will need to invest time in locating distressed properties and get to grips with real estate wholesaling contracts. Lastly, you will want to find motivated sellers.
Compared to other areas of real estate, wholesaling requires less initial capital. The business does not require you to have a minimum educational requirement or a real estate license either.
Once you get into the business of wholesaling, it won’t take long before you realize if it fits you or not. The business requires a lot of commitment when it comes to finding sellers and buyers, and it involves lots of grey areas. Once you have a couple of deals on your profile, you be will have opened the gates for more business. Experience will give you confidence to work even harder and succeed in the business.