Wholesaling is an amazing area of the real estate investment business. Buying at deep discounts and selling to investors so they can rehab and resell is a fast way to buy and sell. If you can find those great deals, rehabbers will wait in line to purchase them from you.
My husband and I were full time investors for 8 years before we got into wholesaling. Now it’s the main focus of our business.
Many investors start out saying they plan to wholesale because they need to generate enough cash to buy a flip property or to purchase and hold a rental. It doesn’t take long before they’ve changed their strategy because they can’t find deals cheap enough to resell them and have both parties make a profit.
The hardest part of wholesaling? Being able to buy deals cheap enough that you can sell them with enough profit left for your buyer to rehab and sell at additional profit for themselves.
Typically, finding these deals takes a lot of marketing. Why? Because you must have sellers contact you before they’re on any list or negotiating with others in any way. Wholesaling takes dogged pursuit of non-competition deals in order to be able to buy at the deep discounts.
What is a “non-competition” deal? A deal where you’re the only one talking to the seller, the only one negotiating to purchase.
Once a property hits any list, and there are many including:
- 30/60/90 day late
- out of state owner
- non-owner occupied
they are “competition” deals. A lot of people know about these properties; a lot of investors regularly purchase these lists; a lot of potential buyers are mailing to these lists. If you purchase any of these lists or go after any property already on these lists, you are competing with other buyers and sales prices go up with multiple offers.
Hence the need for marketing, getting your message directly to sellers and having them call you first. Direct mail is the most effective form of marketing – mailing directly to houses so the owners call you before their property has time to get on any list.
So, yes, wholesaling can be difficult because those properties are difficult to find. If you are able to find and negotiate a great deal, however, you’ll have plenty of investors ready to purchase those deals from you.
Do you wholesale? What tips can you share?