- October 5, 2020
- Posted by: Editor
- Category: Advice
Real estate wholesaling is typically the investment strategy of choice for many first-time real estate investors. It involves finding a great real estate deal, placing it under contract with the property seller, and quickly assigning the contract to a qualified buyer. Wholesale deals are attractive because they usually require little or no money to get started, have a shorter turnaround period, and involve very little risk. Unlike the fix and flip or buy and hold strategies, you don’t need to worry about financing, closing costs, repair costs, or landlord responsibilities.
Even though the profits may not be large, if you are looking to invest in real estate but don’t have access to funds, wholesale deals can be a viable option. Many people use it as a transitional strategy and later adopt a strategy that suits their goals, budget, and schedule.
However, real estate wholesaling is not as easy as many may think. Like all other investments, there are several risks and complexities. Therefore, it’s important that you learn how to find wholesale deals that will give you the best returns.
What Makes for a Good Wholesale Deal?
It’s important that you understand what properties are appropriate for this real estate investment strategy before you begin finding real estate wholesale deals. In other words, for you to be a successful real estate wholesaler, you should have a good understanding of what makes for a good wholesale deal. This will make your property search and path to profits much easier. Remember, the success of your first wholesale deal will also impact your ability to consistently build your wholesaling business.
As a wholesaler, you need to make a contract with the property seller at a bargain price and sell it at a higher price to be able to make a profit. The bigger the difference between these two, the more money you’ll be able to pocket.
Generally speaking, the best wholesale deals are usually distressed properties. They can be short sales, bank-owned properties, or foreclosures that are abandoned and need a lot of repairs.
Properties that have been on the market for a long period may also be owned by motivated sellers. In most cases, the owners are desperate to sell the property as fast as possible to avoid more problems. Therefore, they are likely to sell at a discounted price and provide you with the opportunity to get a good wholesale deal.
You should find properties that you can purchase at a steep discount. This allows you to sell them to end buyers at or below market value and still make a profit.
Since your end buyers will typically be real estate investors, you want to find deals that will work for you and for the investor who’ll purchase the property. This means that, when searching for wholesale real estate deals, you should also analyze their investment potential before you get them under contract. If you want to increase your profit potential, find investment properties for sale with a high potential return on investment.
5 Strategies for Finding Good Real Estate Wholesale Deals
You have to keep in mind that, to be successful in real estate wholesaling, you have to make numerous offers. You’ll probably need to sift through multiple properties for sale before you find a good deal. Moreover, when it comes to wholesaling, the more wholesale deals you close, the more money you make.
Generally, the most successful real estate investors are those who can identify lucrative real estate deals quickly. Consequently, one of the most commonly asked questions is, “Where can I find good real estate deals?” If you are interested in finding real estate wholesale deals, we have compiled a list of proven strategies to fast-track your search for good wholesale deals.
- Driving for Cash
One of the key ways that investors hunted for wholesale leads was by hopping into a car and driving through the neighbourhood looking for homes that looked distressed. Though some see it as outdated, it’s still effective today and is probably the most inexpensive way to find off-market real estate wholesale deals.
Some of the signs of a distressed property to watch out for when driving for cash include:
- Vacant property
- Boarded up windows
- Fire damage
- Uncollected trash
- Insect infestation
- Uncleared grasses
- Direct Mail
A great way to find wholesale deals is through direct mail. You may think it’s an outdated tactic, but it still works!
You can also find good wholesale deals by creating a direct mail campaign. This involves sending out postcards or letters to targeted homeowners expressing your interest in purchasing their house.
While it’s one of the most effective ways to find motivated sellers, it can be pricey. You need to purchase mailing lists and may have to mail multiple times before you get a response. Setting up a direct mail campaign is a lot of work and takes a lot of persistence.
Another easy and low-cost technique for finding wholesale deals in your local housing market that never gets old is putting up bandit signs. These are outdoor “We Buy Houses” signs that are placed in busy street corners and high traffic areas. However, before you put up these signs, be sure to check the local laws and regulations to avoid running afoul of the law. Bandit signs are illegal in some cities.
There are a lot of people who may be interested in selling their property but haven’t listed it for sale. However, you can use your network of agents, real estate investors, real estate attorneys, and other real estate professionals to reach them.
Consider joining a local real estate investment club and attending real estate meetings. It’s one of the best ways to find wholesale leads. The more contacts you have, the greater your chances of finding good wholesale deals.
- Create a Website
The internet gives us the opportunity to reach hundreds or even thousands of people in a single click. You can get wholesale deals online by creating your own wholesale website. Once your website is set up, you can then employ SEO marketing, advertising, and social media marketing to boost your direct marketing campaign.
Real estate wholesaling can be a lucrative real estate investment strategy for first-time investors or those with a limited amount of money. However, for you to take full advantage of the opportunities that come with this strategy, you must have a solid grasp of how to find good wholesale deals. The key is to use strategies that will help you reach motivated property sellers effectively such as those mentioned above.
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