Real estate investments are often treated as one the best ways of investing money. However, what you are looking for is not just any real estate investment, but real estate investment that can give you good returns. By real estate investment we mean investing money into property i.e. buying property at a low price and selling it at a higher price so as to make a profit out of it. So the most important part of good real estate investment is to get hold of such properties which can give you good returns.
Now, how can you get these potential profit-making deals?
Your first avenue for finding good deals is the local newspaper (the property newspaper). Just search for properties that are listed directly by the owners who want to avoid paying commission to the real estate brokers. Since the owner is saving on the commission that they would otherwise have to pay to the broker, they would probably be able to offer a lower price to you and be more open to negotiations. You could also place your own ‘wanted’ ad in the local newspapers. On the same lines, you could use internet to search for the real estate investment avenues. In fact, you would be astonished by the number of real estate investment opportunities you are able to locate on the internet. Not only that, searching for real estate investment opportunities (i.e. property for sale) is much easier on internet than anywhere else.
Another good way to hunt for real estate investment opportunities is by using the services of real estate brokers. Some people use real estate agents as their first (and maybe the only) touch point for getting real estate investment opportunities. The real estate agents act as information hub for people looking to buy property. In fact, a lot of sellers find it much more convenient to sell their properties by listing it with real estate agents.
Multiple listings service is another good way to find real estate investment opportunities. Since the multiple listing book is provided only to the real estate agents and not to the general public (unless you are very lucky), all the cream (good real estate investment opportunities) would have already been taken before you get to see the book. The key here is to look for expired listings that didn’t get converted to a deal.
Another good way to get a property, that is a good real estate investment, is to look for foreclosures by banks/ VA/ FHA or to visit public auctions. You can generally get a good deal here. Divorce settlements are another good real estate investment opportunity.
So, real estate investment is really about finding good deals. And finding good deals does take some effort
Okay, so if you’ve followed my instructions in step one and really put the time and energy in to educating yourself on your target areas and understanding the value of the property in those areas, then we are ready to move on to learning how much you can pay.
Wholesale Real Estate means buying and selling real estate at a discount. Think of other wholesale companies and what they do, exactly that. They don’t over pay for products and turn around and sell them for retail value. So, it’s the same with Wholesale Real Estate, you buy at a discount and then resell at a discount. That simple.
You set your profit margin when you purchase the property meaning that “you make your money when you buy”, you will here that over and over. Don’t take this lightly. Too many people over pay for property because they are just so motivated to do a deal that there emotions take over…..don’t let that be you. There’s a saying that goes something like this…..”when emotions are up, intellect is down”. This is true. Don’t be the motivated buyer or you will fail right out of the gates. Be patient and find the right deal.
So, how much do you pay…..well, that depends on your negotiating skills. A rule of thumb for wholesale real estate is .50 - .60 on the dollar, but that doesn’t mean you set the bar there. We buy many properties at .20 - .40 on the dollar which yields us larger profits and less holding times. The goal is to buy and resell as quick as possible and the less you pay, the less you charge and the quicker it moves. You want to be the go to person where other investors come for good deals. Once you build a reputation with other investors, then it will make turning profits quick and painless. We will talk more about building your list of investors to sell to in future articles.
A quick summary.
- Wholesale Real Estate means buying and selling real estate at a discount.
- Don’t be a motivated buyer. Be patient and find good deals.
- You make your money when you buy
- Don’t be emotional
- Never pay more than .50 - .60 on the dollar of the retail value of the property
- Buy low, sell medium and quickly
- Build a reputation with other investors as the “guy (or gal) with the good deals”
Remember, Wholesale Real Estate is not easy and you won’t get rich over night. But if you work hard at it, you will make A LOT of money!
Step One, Doing your homework.
This is one of the more crucial elements to becoming a wholesale real estate investor that people miss. There may be some businesses out there that you can just dive in to without doing any research, but I don’t recommend it for this one. I even recommend for those who have a little bit of experience to really think about whether they are educating themselves or not.
As a wholesale real estate investor It’s important to understand some of the aspects of the business and what you are looking for in particular. Although you don’t need to study for months at a time to be successful, you will need to do a little research.
Where to start your research
- Pick some neighborhoods as your target. One or two will do to start. The more narrow your focus is, the better your results will be. We are looking for median neighborhoods to start our wholesale real estate business. So ideally neighborhoods where middle class folks live. Cookie cutter neighborhoods are a great place to start, you know where all the houses look the same. Depending on your area, will depend on the price points. A good gage is an average of 150,000 priced homes in most areas. Houses built in 1970 or above are best as they usually have less problems. Brick ranch style houses are great!
- Get to know your target neighborhoods. Drive them daily, twice daily if possible. Look for signs of crime, heavy foot traffic or any other red flags. Remember, you want to buy a house that will sell easily to someone with a family or that will feel safe. Although you will not be retailing the house yourself, the person buying it from you will be and they won’t buy it if it’s in a crime ridden neighborhood. Start looking for vacant or abandon houses, these are your first target properties that you want to focus on. Write down the information such as the address of the house, what it looks like, what kind of condition it’s in, etc. You will need to know all this. In future articles we will get more in to detail about these items, but for now you just need to familiarize yourself with the neighborhoods.
- Get some comps. Comparables are necessary for you to know how much you can pay for the house or at least get it under contract. So, if you are familiar with Real Estate and feel comfortable doing your own comps you can always go on Realtor.com and pull area specific comps. The only problem here is that you don’t get a lot of the important information. I would recommend talking with an agent or a broker to get some true comps. You need to know: average days on market, price per square foot, % of asking price obtained, etc… Remember to only compare similar houses, for instance you need to have different comps for a one story and a two story house. Make sense? Good!
Okay, now you have someplace to start. Get started on doing your homework and I would suggest not to cut any corners. Spend some quality time on this, after all you are building a brand new business for yourself so give it 100%. If you are not willing to do this step, then you might just as well quit now because you WILL FAIL!
Learn more about wholesale real estate simply just keep coming back. 
03
Mar
Author: / Category:
Wholesale Basics
It Takes Money To Make Money…..Or Does It?
Nope, absolutely NOT! Not as a real estate investor anyway. The person who told you this is likely trying to justify why they are broke. What you are going to learn here as you come back is a step by step guide on how to make money in real estate starting with NO MONEY! It doesn’t matter if you have no job, no credit, no friends, negative net worth, bankrupt and you are absolutely broke!
The fact of the matter is that, if you can’t make money with no money, then you can’t make money with money. In the case of real estate investing, it’s likely to hurt you if you have money than if you do not. Too many times do we just throw money at problems to try and fix them. You are better off broke to start this journey.
The key is to leverage your time and your brain. Stay in control, follow the path of what someone successful left for you. There have been many people that succeed ahead of us in areas of our lives and too often we don’t follow them. We try and make our own path because we think it’s better or that we’re smarter. Don’t make this mistake. There is no room for egos in real estate investing.
A few things you need to understand before you move forward.
- Don’t be a “Flipper”. If you are just starting out in real estate investing the last thing that you want to do is rehab and flip a house. You just don’t simply have the skill set and knowledge to pull this off. There are too many unknowns and variables when it comes to rehabbing a house for a profit. Be a wholesaler. That’s what you will learn here. If you had some big dreams and thoughts of being a flipper, then I apologize for bursting your bubble, but trust me it’s for the best!
- If you take rejection personally, then this probably isn’t for you! I don’t mean to be a downer, but my purpose of this blog is to give you the truth and not to sugar coat things like some late night TV infomercial! This business is hard and there is a lot of rejection.
- If you have the work ethic of a slug. FORGET IT!
I’ll leave you with this. Real estate investing and wholesaling properties is for true entrepreneurs. Those who are willing to do what’s hard now so that the rest of their lives will be easy. Those who have the “I’ll do whatever it takes” attitude is who this is for. If you were hoping for some song and dance about how you are going to get rich over night with no money down, then I apologize. However, if you have the right attitude and work ethic then you can do EXTREMELY well with this business. It’s really just a matter of choice.
