Wholesaling properties can be easy and can be hard. It just depends on some simple principles. This article will help to get you started on learning to wholesale properties with 3 easy tips.
Wholesaling properties can be easy and can be hard. It just depends on some simple principles. This article will help to get you started on learning to wholesale properties with 3 easy tips.
Before we get stared we need to answer the questions: What is real estate wholesaling? What does a real estate wholesaler do? What are wholesale properties?
A real estate wholesaler buys a house from a property owner at a discount and then resells the property to someone else who will either fix it up and flip it to an end user or hold it for investment property as a rental.
There are many tips that we could discuss but we will cover three that the beginner wholesaler should consider.
Tip #1 - Choose Your "Farm".
Select a geographical area that you will "farm". By "farm" I mean an area in which you will find your wholesale deals. Your farm can be anywhere but for beginners it's recommended that you choose a place that is convenient for you. You will need to go there frequently. You will need to drive the area and get to know it well.
Tip #2 - Know What A Deal Is.
Wholesale properties are bought at a substantial discount and resold for a moderate profit for yourself but with enough room for the buyer to make a profit when they rehab the property and resell it or rent it. Depending on the economy and the area, you may need to get the property under contract at 60%- 65% of the after repair value. The after repair value (ARV) of the house is based on the comparable sales of similar houses within a radius of .25 miles or less and within the last 6 months or less.
The buyer will need to spend money on repairs and other costs. This amount will be considered when setting the selling price as well as the price you will pay for it. This may sound confusing at first but as you gain wholesaling experience, it will become second nature.
Tip #3 - Develop a Buyers List.
Once you develop your farm and have found a deal, you must have a buyer to be able to sell the property and make your money. This takes several approaches.
Attend local real estate investor meetings. Network and let people know that you are a wholesaler. Collect investor's business cards. Ask if you can put them on your email list to let them know when you have a deal. You will never get a "no" to that question. You can collect names and info from people who call about deals that you advertise. You can call ads in the paper and if they are for sale by investors, get their info and ask if they like to be on your email list. It can be a slow process but you will be surprised how it will grow over time. The more the better. There are ways to build your buyer's list on the internet that will be covered in a later article.
These are just three basic tips for the new investor who wants to start wholesaling houses. There is a lot to learn but it is learnable. Wholesaling can be a fun and profitable business.
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