Wholesaling generally refers to the process of buying a property for below market price, and then selling it to another investor, usually without fixing up the property – it’s a procedure also sometimes described as “flipping properties”.
Buying and selling wholesale real estate property can be difficult and challenging as sellers are instinctively inclined to sell their property for more if they realize you are a wholesale investor.
Whereas the deal itself can sometimes be difficult, finding properties to resell at a profit is relatively easy – if you know where to look. Many people who sell properties at wholesale prices are what might be called “motivated sellers” – those who are desperately trying to sell for a compelling reason. These reasons can include foreclosure, relocation or personal or health issues.
There are several methods of finding suitable properties that can potentially be wholesaled. Some of the best wholesale deals can be obtained from a county or city that has taken over a property, often for failure to pay taxes – a procedure known in the industry as “landbanking”.
Concentrate on looking for distressed properties and even foreclosures. Apart from lists provided by banks and other lenders, you can also locate foreclosures by reading the notices issued by the city or county and posted in the legal sections of business journals and local newspapers.
Some properties are available to purchase when the city or county has “red-tagged” them, meaning that the house is unfit for human habitation because of a safety or health issue.
Look for online or social media advertisements that state that the advertiser buys properties – “We buy Houses” is often a giveaway. These are usually ads that have been placed by fellow investors and there is nothing to stop you calling them and asking for their list of properties.
Networking is important when it comes to locating and buying wholesale properties. If local realtors are aware that you are interested in potential wholesale deals, you will find it a lot easier to find properties. A good network of useful contacts is invaluable and one of the best things you can have in real estate. Make sure you always follow up with your contacts – rather than waiting for them to call you back.
And sometimes the simple approach is effective – many successful investors advise that you can do worse than simply drive around respectable neighborhoods and look for slightly run down houses that are for sale.
Many people who are trying to locate wholesale properties make the understandable mistake of concentrating on the cheapest properties in their area. In fact, a profit can be made from wholesaling more expensive homes as there are usually homeowners who are desperate to sell their more expensive home, too.
Wholesaling has been around for a while, but in recent years it has become more widespread and acceptable – and contrary to what some people believe, it is perfectly legal. And with the right knowledge, foresight and connections it can be a profitable venture.