Market, Market and then Market some more
December 25, 2013
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Having trouble finding deals?
I was told the other day by a friend of mine, “Wholesaling is difficult”. I think I gave a blank stare back with thoughts running through my head as to why would they would think that. They stated it was hard to find a great deal. Still taken back from their comment I found it to be an interesting comment, but not the first time I had heard it. I’d like to believe that it must be easy for me because I AM THE QUEEN OF WHOLESALE; but in reality it truly just goes back to the basics.
I have taught a lot of students the strategy of wholesaling properties throughout my 14 years as a real estate trainer and I have given the same message to each class I teach. In order to purchase a great deal you must have a motivated seller. Anyone can put a property under contract but it doesn’t mean it’s a deal. It has been my experience that if you can’t sell your wholesale contract, then one or two things are probably a problem. One, you have not marketed the property correctly and two, you contracted the property for too much. If you don’t have enough profit in the deal for your new buyer they will not be interested in buying your contract.
So how do you find a great deal at the right price? Find a motivated seller or better yet, let them find you. As a full time real estate investor I must find deals on a regular and repeated basis. I need to find a source of real property leads where no one else is looking. Once I have targeted possible motivated sellers, I spend time marketing, marketing, and marketing to that demographic. I find that a seller tends to be much more motivated when they call me.
Once the seller calls you then just run the numbers like you are taught in class. Don’t overthink this part and stay true to running the numbers. You have been taught in class that everything is based on the numbers. You cannot make an emotional decision; you cannot will the numbers to work for you. You have to put them into our time tested formula. While many sellers will not take your offer, you will find that the ones who are motivated enough will. Not everyone will like your offer; so what! If the seller wants more than what you can offer, refer them to your Realtor. Do not overpay for a property!!! If you overpay for a property, then you will be the motivated seller down the road. The key to successfully finding properties is to Market, Market, and then Market more.
When you are evaluating a deal, it is crucial that you make sure you are getting enough of a discount. Often there are hidden expenses that students don’t think about. Make sure that you are taking into consideration that you are going to have closing costs associated with the purchase and with the sale of the property. You also need to budget for 6 months of holding costs. If you are able to sell the property faster, then you will make more money. If you budget less time and it takes more time, you will lose money. You also need to factor in the repairs. Finally and most importantly, you need to factor in your profit!!! I have seen so many students figure all the other expenses and leave out their profit. Remember you make the money when you buy the property, make sure that you buy right.