If you could look at an investor’s portfolio and ask one question, would it be how to find wholesale properties? Probably not because when you think of real estate investing, fixing and flipping singe-family homes, searching for the best investment properties with potential, and even investing in REITs probably comes to mind.
Some investors say that wholesaling is a good way to get started in real estate investing and make money quickly because wholesalers don’t have to spend time or money fixing up the house like rehabbers do. However, it’s not as simple as it seems to be a wholesaler.
Typically, the most difficult problem for wholesalers is getting an investor to purchase a property. Not many wholesalers put in the effort required to make a list of eager investors ready to add a new property to their portfolio. Even if they’re able to talk to people and make connections, they still may not be able to find a buyer. In fact, most wholesale deals fall through because the wholesaler can’t find the right investor at the right time to assign the property contract to. Close to 90% of real estate wholesalers fail and quit because of this exact issue.
So, how do you build an investors list of willing and ready buyers? What kind of hurdles do you have to jump through to be able to gain some insight on how to find wholesale properties?
We’ve laid it all out in simple steps.
How to Find Wholesale Properties: The Basics
Your role as a wholesaler means you’re acting as a intermediary between a homeowner and a seller. You’ll do this by finding distressed properties and contacting the owner in an effort to convince them to enter a wholesale contract.
If they do, you’re job will be to negotiate a price with the homeowner (usually below market value) and then draw up a wholesale contract that states how much you’ll sell the house for within a certain time frame. You’ll then tap into your network of investors and try to find someone who will buy the property at a higher price.
When the deal is successful, the buyer has an investment property with earning potential. The seller has cash in hand and is free of a distressed property. And you? You walk away with the difference.
How to Find Wholesale Properties with Potential
Wholesaling real estate is a good opportunity for new investors to dip their toes into real estate investing because you don’t need cash in order to make money. The name of the game here is to know how to find wholesale properties that have potential.
You can find these properties a number of ways:
1. Work with an Investor-Friendly Real Estate Agent
One of the easiest ways you can find distressed properties is to work with an investor-friendly real estate agent because they have access to the local MLS–something which you do not (unless you have a real estate license). They can use the MLS to identify properties that are going to be in foreclosure or temporarily off-market properties.
2. Drive for Dollars
Drive for Dollars is an easy way to find distressed properties in a desired neighborhood. All you need to do is hop in your car and drive around. You’re going to be looking for properties that look worn-down, neglected, or vacant. You can also look for properties that have “For Sale By Owner” signs.
3. Auctions, Bank-Owned Real Estate, Foreclosures, and Short Sales
No homeowner wants to lose their property and when they’re faced with a short-sale or foreclosure, they’re going to be motivated to sell. All of these types of properties are perfect for getting real estate at a discounted price.
You can use free websites like Auction, Realtor.com Foreclosures, HomePath and HomeSteps to find these properties, but you can also use subscription-based sites like RealtyTrac and Foreclosure.com if you’d like more detailed information about the properties.
For government-based foreclosures, you can try HUD.gov, USDA-RD/FSA Properties, and IRS Seizures.
4. Networking
The longer you’re in this industry, the larger your network will become–and that, dear friend, is a good thing! You can reach out to fellow investors, real estate agents, contractors, lenders, etc. and see if anyone knows someone who wants to sell their home quickly and with as little hassle as possible. Of course, this isn’t always going to work out, but you never know where a lead can lead.
How to Succeed at Wholesaling Real Estate
In order to be a successful wholesaler, you’ll first need to be certain that this is, indeed, the path you’d like to follow. Being a wholesale real estate investor isn’t for everyone, and that’s okay! There are plenty of other ways you can delve into real estate investing.
If you feel like wholesale real estate is the right option for you, we have a few tips that’ll help you be a successful wholesaler.
1. Embrace Technology
It doesn’t matter what industry you’re in, you need to know how to use technology to your advantage. You can use online tools like CRM software (customer relation management), mobile apps, and document management software to make your life a lot easier and more organized–especially as you grow your wholesale business.
2. Don’t Take On Too Much
Outsourcing work can boost efficiency and save time, as experienced company experts understand. After all, investors who think they can do it all themselves often get overwhelmed, which leads to making mistakes that could cost thousands of dollars. Don’t be afraid to ask for help if you feel overwhelmed!
New Western helps wholesalers every day to expand their business and close a higher percentage of deals than they ever could on their own.
3. Create a Website
Everything you need can be found on the internet nowadays. Having said that, most people use the internet to seek for anything, even a new home. So, making a website that’s engaging and informative can help establish your business and bring more leads your way.
4. Be Honest
You need to be open and honest while dealing with sellers and potential buyers. Make sure to describe your role in the deal, your goals, and any potential downsides to the people you’re dealing with–particularly if this is new territory for anyone involved. The best way to build trust with a seller is to always give them the whole truth, even if it’s not what they want to hear.
5. Always Follow-up with Buyers
Whenever a deal is settled, make an effort to reach out to the buyers to make sure the deal went through without a hitch. Not only are you making sure everything went smoothly, but you’re also leaving buyers with a good impression of you and your professionalism. Who knows, they may want to work with you again in the future. Or at least pass your name off to someone they know.
6. Leverage the Connections of Others
This takes networking to the next level. Don’t just consider who you know, but also think about all everyone those people know. If you’re not asking people if they know someone who might be interested in a real estate deal, you’re leaving opportunities on the table.
This is one of the areas where New Western can literally deliver the opportunity to you. With a network of over 200,000 investors, it’s a virtual certainty that one of them will be a good fit for your deal. And remember, all those people know people. That’s 200,000+ reasons to trust New Western with your real estate deal.
How to Find Wholesale Properties: Final Thoughts
Wholesaling houses is a terrific method to make money and build your network of real estate professionals and investors alike. It’s important to know the ins and outs of wholesale investing before you dive right in. Yes, wholesaling is legal, you need to make it a point to familiarize yourself with laws to ensure the deal is done ethically, legally, and safely.
If you’re uncertain about wholesaling in general or want to learn more about how to find wholesale properties, reach out to our team and we’ll be more than happy to help!
