Wholesaling & real estate investing is a niche that satisfies the investor’s short-term profit goals. It can be lucrative, but it does carry more risk than long-term rental home investing. The risks involved can be reduced by following a few simple but very important rules. Here is the checklist.
Know your market: A thorough knowledge of your market area, home prices, neighborhood characteristics, rental demand, and tenant demographics is necessary for success. You will need to meet the requirements of your buyer customers and to do that you’ll need to know what they plan on doing with the property and their profit needs.
Know your customers: As a wholesaler, you’re flipping the homes quickly, and usually, your buyer will be another investor. The rental investor will want a home that’s rent-ready, one with the features area renters want, and at a price that’s discounted below current retail market value. If your buyer is a fix-and-flip investor, they will often be selling to a rental investor, or they may be selling to retail buyers. Either way, to understand how to meet their needs, you’ll need to understand their buyers’ or renters’ requirements.
Build a strong buyer database: You never want to negotiate a deal on a home until you have one or more potential buyers you know will have an interest in it. Join a local real estate investment club, network in real estate circles, and do some marketing to get your name out there to connect with rental and fix-and-flip investors. Just names and contact information aren’t enough information if you are serious about real estate wholesaling success. You want to have notes about each buyer, their primary interests for property characteristics and neighborhoods, and their profit requirements.
Become an aggressive deal-finder: Profitable wholesale flip deals will not just fall into your lap. You’re going to have to learn how to research your market using various sources for distressed homes or sellers. Your competitors will be using those same sources, so you also want to become a smart marketer to locate properties. You can use a combination of print media, social websites, your own website, and networking to locate distressed sellers. The better you are at attracting the business to come to you, the more profitable deals you’ll close.
Learn to back into the purchase price: Start with your buyer’s requirements and an estimate of what a prospective property will be worth to them. Once you know approximately what you can sell it for, you can work backward to a purchase price for the home that allows for your expenses and profit margin. Once you have this information, you can negotiate with confidence with the seller.
There is a lot to learn to become a successful real estate wholesaler but starting with this checklist, you’ll have the basics in place. Then fill in the blanks with education and experience for amazing short-term real estate investment profits.
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