In Today’s Economy: First Step to Successfully Making Money in Real Estate Investing!

In Today’s Economy: First Step to Successfully Making Money in Real Estate Investing!
Steps to Success in Wholesaling Property

Success in Wholesaling Property

During the years 2000-2007, we had quite a bit different real estate market then we do today.  During that time, buyers were easy to find, but discounted properties werehard to find.  Today, we have a situation where the properties are easy to find and for great prices, but the amount of qualified buyers is limited.  This is due to the lenders clamping down on their lending criteria. 

Therefore, in order to be successful in real estate investing  today, you need to have a buyers list first.  You need to know what your buyers want and where before you start looking for properties.  After all this should make sense from a business perspective, because a business is a lot more  successful when it focuses on what its customers want and for what price.   We are doing something similar to this by finding out what they want, where they want it, how much they can afford, what features it needs to have, etc. 

If you are focusing on real estate investing that offers quick returns, such as flipping houses.  In this case,  you can target two different types of buyers.  These buyers will be owner occupants and wholesalers. 

Let’s discuss the owner occupant buyers first.  They are the buyers who are looking for another home.  In most cases, they will live there for the next 3-15 years.  It will need to meet their specific budget, accomodate their family via size and accomodations, and be located in a favorable area to support their lifestyle.  Essentially, they will be a lot more picky buyers.  They will need to qualify for conventional financing, thus fewer of these buyers will be able to obtain a loan to buy the property from you. 

Wholesalers are real estate investors working in your local area.  They are actively buying and selling properties.  They have established a system that works for them in that area.  Therefore, they will have specific criteria for the properties they buy in order to maintain a certain profit margin.  There criteria will not be as limited as the owner occupant buyers, because they will not be living there.  Wholesalers want a certain type of deal, but many homes will meet their criteria.  The best part of working with wholesalers is that they have connections in the area to make sure their properties close.  Most of them are going to be cash buyers, thus they will be able to close faster and more consistently.  Wholesalers have a power team in place that will help them close deals on a regular basis too.  If you are a new real estate investor, wholesalers can help you shorten your learning curve in real estate.  They will teach you where to look, what to look for, what to pay, how to exit the deals for profit, and who to work with in that area.  Essentially, they give you a ready made system that is proven and works. 

You might wonder why a wholesaler would pay you money to find them properties, when they already have the experience and resources to do this on their own?  You make a great point.  However, many wholesalers are busy and try to reduce the amount of time they spend doing things they don’t have to do.  They are willing to spend money to buy your property leads, so they can reduce the amount of time they have to spend finding properties and negotiating deals.  Think of it this way, the more properties a wholesaler has the abiity to close on the more money they can make.  They make money  buying and selling properties.  The only way they can increase their income is by closing more deals in a given year.  Now, hopefully you can see why they are willing to pay you good money over and over again to help them find good property deals to buy.  

Wholesalers are the main buyers that I would recommend focusing my attention on when you first get started in the real estate investing industry.  You will be able to close more deals faster and more consistently.  They are repeat buyers too.  In any good business model, it is best to have a customer base that you can rely on for repeat purchases.  It will save you time and money spent constantly looking for new buyers for your properties.  You will be abke to do more deals faster.  In many cases, you will be able to do multiple deals at a time when you have a group of wholesalers to work with in your area. 

It is best to shoot for at least 30 wholesalers that you have spoken with, so you know what their investment criteria is, so you can start looking for properties for these wholesalers.  Once you start putting deals in front of these property wholesalers, you will find that 8-12 will close consistently.  They will most likely be your best customers and the ones that will take you under wing a bit.  In many cases, they wll teach you more about their business so you can structure better deals for them.  In the end, it will benefit them and put more money not only in their pocket, but in yours too.

So, in order to get on the fast track to success in real estate investing today, your first step is to build a list of wholesalers who are doing real estate deals in your own backyard.

June 29, 2011 / by / in , ,

Leave a Reply

Your email address will not be published. Required fields are marked *