Home Buying/Selling Specialist: What’s So Hard About Wholesaling?

What’s So Hard About Wholesaling?

And if you're a real estate agent, how do you work with wholesalers? Probably the number one way is to call them when you go to list a property and it's too trashed to list. Many sellers don't have the funds to fix up their property but a wholesaler will take it as-is.

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
  • probate
  • etc.

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.

I’ve written many posts about wholesaling – what wholesaling is and how to wholesale. Be sure to check those out.

Do you wholesale? What tips can you share?

Karen Rittenhouse | www.JKKPropertyInvestors.com | 336-834-0614 | karen@karensperspective.com
Comment balloon 1 commentKaren Rittenhouse • August 28 2018 05:43PM

Comments

Great post Karen - thank you. I've been in the business 40+ years and never quite understood this wholesale real estate thing. I actually never saw the difference between wholesale and retail - if such a thing exists in real estate. I know it's a marketing thing. But quite often the consumer is confused.

I get wholesale deals in my inbox all the time. Such so-called deals are always way overpriced - higher than normal market prices. For example, here's one from yesterday : <<"Wholesale value $350,000, retail $500,000">>. When I check, the value of the property does not even exceed $300,000, at best.

And then I meet people that tell me they bought a property "wholesale". I always ask what that means. They always believe they pay less than market price. But when I check, they always way way overpay for the property - in almost all cases more than the market value regardless of condition.

Please don't get me wrong, I'm not being critical or putting it down. I'm just saying. I buy, fix-remodel-improve and flip myself. But I don't wholesale because I don't know what it means.

Too bad you are not in my market area, I come across some great opportunities from time to time.

Posted by Richard Bazinet /MBA, CRS, ABR, Phoenix Scottsdale. Sellers, Buyers & Relocations (AZuRE Team - Realty ONE Group) 19 days ago

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