The wholesale formula is key to your success as a wholesaler is in finding people who are motivated to sell their homes. A lot of people may want to sell, but they shouldn’t be your focus. When a seller isn’t financially under the gun they are more inclined to hold out for the perfect offer to come in. The best deals are those that come from people who for one reason or another have determined that a quick sale is in their best interest.
Abandoned properties are excellent targets for your initial steps into wholesaling. They usually have distressed owners and these properties are usually in far from pristine condition. Even if the neighborhood is somewhat desirable, you’ll be less likely to face stiff competition when buying one of these properties because most buyers are interested in houses that are ready to live in. You’re going to want to be able to accurately get a handle on what your true costs will be. Before you make an offer, go through the house and determine what it will cost to rehab the property. Don’t forget to factor in a profit margin for yourself and allow for holding and closing costs. It’s also critical that you have a firm grasp on what resale prices are, so know your area well.
When you’re wholesaling you actually put a property under contract yourself and then assign that contract to an investor interested in purchasing and rehabbing the property. Before you get too carried away and start indiscriminately putting houses under contract, you should give some thought to how you’re going to dispose of them. Without an exit strategy, you’ll be required to close on the property. Once you’ve mastered the educational principles of wholesaling, you may think you’re ready to dive into rehabbing. Before you do, learn what you’re doing. Failure to fully understand all of the components to profitably rehabbing a property can mean some very costly mistakes. If you place a high value on your finances, tread very carefully.