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How to buy real estate at wholesale prices and successfully sell at a profit

Mackenzie Carson, June 29, 2024

Discover how to find motivated sellers. Learn how to determine whether a deal is profitable or not. Learn the different ways to advertise to bring you more sellers apts in Gainesville ga.

When buying a wholesale property there are two qualifiers that you need to be looking for. The first is a motivated seller. There are many reasons why a seller might be highly motivated to sell their property. Maybe the seller is about to go into foreclosure and needs to get the property off of their hands. Perhaps they are going through a divorce or maybe a loved one has passed and the executor of the estate is attempting to sell the property. Whatever the reason, there is no shortage of motivated sellers out there that are willing to part with a property for much less than the properties market value. The most common scenario in today’s market is one in which the seller is about to go into foreclosure or is already in pre-foreclosure due to foreclosures being at an all time high right now. This is due to all the adjustable rate mortgages that people signed with sub-prime lenders during the housing boom 2-3 years ago. These home owner’s mortgages are hitting their adjustment phase, and many can no longer afford their monthly payments. In many cases these home owners are desperate and looking for someone to come along and rescue them out of their situation. That’s where you come in.

Once you’ve found a motivated seller you will need to determine whether or not the deal is profitable. This is the second qualifier and would seem to be pretty elementary, but you would be surprised at how many investors’ make costly mistakes at this point in the process. OK so now you have your list of sellers. It’s time to call each one and gather all pertinent information on each of their properties. Personally I use a checklist, making sure to ask each and every question on my list so that I have enough information to make my offer once I am ready. The next step is to check the comps of the area and figuring out what the fix-up costs will be, as well as the closing and holding costs if your planning on closing on the house and then putting it back on the market at a reduced price after rehabbing it. If after all of this research is completed you determine that the deal is a good one, then it is time to call the seller back and make an offer. My offers are normally between 50-65% of ARV (After Retail Value). Now pay close attention here! This is where you save the most money in buying properties. You need to buy the property ‘right’ otherwise you can get yourself in a real pickle. Some investors will go up to 70% of ARV. I may go above 60% if the deal is right, but NEVER! NEVER! NEVER! buy at market value. Many investors do their first deal and either doesn’t buy right or they put too much into rehabbing the home and either lose money or make a minimal profit when they sell. Then they never do another deal again because they don’t think it was worth all of that time and energy to make that small amount of money. It’s unfortunate because had they done their homework, they could have had a better experience.

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