During a wholesale real estate investment transaction, the seller and the wholesaler bind themselves under a contract that states that the wholesaler will sell a property within a certain timeframe by a specific date. Once the buyer takes a contract, wholesalers earn what’s referred to as their “assignment fee,” which is the financial reward for connecting buyers and sellers.
While the entire process is simple in theory, it can quickly become more challenging than you initially thought, especially if you’re undertaking this wholesale real estate investment on your own. As a wholesaler, you will be responsible for finding properties, negotiating with sellers, persuading buyers, and managing other aspects of your business. But before you can master the different elements of real estate wholesaling, you need to know how to identify a high-quality investment opportunity. Keep an eye out for the following characteristics to find the most profitable real estate wholesaling deals available.
It’s In The Right Neighborhood
When wholesaling residential property, most of your deals will be with investors who intend to renovate and sell the property or landlords interested in renting the property. As a result, the neighborhood in which a property exists plays a significant role in its profitability. Many real estate wholesalers focus on selling lower-value properties to Section 8 landlords. In contrast, other wholesalers direct their efforts toward middle-class properties for investors and landlords that prefer higher-value homes. Successful real estate wholesaling focuses on neighborhoods that fall under your niche.
Although many wholesalers don’t believe this fact starting out, you will find your most profitable investment opportunities in low-income areas, typically in an older part of town. If you’re unsure where to start, research to discover which houses are under targeted subsidized loans. These properties are much more likely to earn you a higher recoup on your investment.
The Property Is Undervalued
The only way for you to turn a profit as a real estate wholesaler is by finding undervalued properties, which are properties that are listed for less than their market value. The ideal undervalued property will exist in a favorable location. Even the most disheveled properties retain a significant amount of their value in the right neighborhood. This way, investors can upgrade the property to ensure that it is suitable for renters or buyers to live in.
Undervalued properties are easy to spot because they’re generally not well-kept. However, they can be quite challenging to find. If you’re struggling to find undervalued properties, don’t be afraid to look for deals in unlikely places. Keep an eye out for bandit signs, try driving for dollars, and speak to everyone about your real estate wholesaling business. And, of course, you can always seek the assistance of professional cold callers who can sift through leads and send qualified leads your way.
The Property Will Generate Income For Investors
A property that is suitable for wholesale real estate investment will undoubtedly have the potential to generate a significant income for investors. Contracting a property will be virtually impossible if it won’t generate income for investors. Even if the property isn’t in a location you would like to live in, ensure that the property has qualities that real estate investors often look for.
While there is no universally accepted definition of a “good” wholesaling property, specific characteristics signal a property’s potential to generate cash flow for buyers. Aside from location and an uncommonly low asking price, it is also essential to consider how the current market conditions may affect the property’s ability to make money. When assessing the property’s value, inquire about future developments in the surrounding area, the job market, and the average rent. This information will make it much easier to connect with buyers.
The Property Has The Right Owners
There may be many homes that would make a suitable wholesaling property, but one of the essential qualities of wholesale real estate investment actually isn’t the quality of the house itself. Rather, it’s who owns the property. The worst thing a wholesaler can do is attempt to negotiate with a seller who is adamant about receiving top dollar for their property because it simply wouldn’t make sense for them to agree with a wholesaler’s offering.
Remember, your goal as a wholesaler is to transfer the contract from the seller to the buyer. You’re the “middleman” who receives a fee for this transaction, akin to that of real estate agents. The buyers you’re interested in will likely flip the property, then rent or sell it. As a result, it’s in your best interest to find motivated sellers willing to accept a low offer for their property.
These people are typically in the midst of life-changing events and need to get the property off their hands as soon as possible. Most people in the market aren’t motivated sellers, but you can find them with the right strategy. Allow professional cold callers to work with you and devise a script made to attract your ideal seller. Soon, you’ll have a long list of motivated sellers you could never have found if you were left to your own devices.
Find Sellers and Buyers with Call Motivated Sellers
The most challenging part about starting a wholesaling business is finding buyers and sellers, so why not leave this to the experts? Once you’ve created a business plan, put your words into action with the assistance of Call Motivated Sellers. We’ll sort through buyers and sellers to find the best prospects so that you can focus on other aspects of your business. Our team of professional cold callers will vet leads for you while informing interested buyers and sellers about the benefits of your wholesaling services.
Call Motivated Sellers is an American-based real estate cold calling service that can help raise your sales and provide hot leads year-round. We have years of experience cold calling in the real estate industry and access to the best information for buyers, sellers, and agents to help you close more leads.
