How,buy,real,estate,wholesale, DIY How to buy real estate at wholesale prices and successfully
When starting a new work at home business it is very easy to become consumed by it. We spend so much time trying to get the business up and running that we may end up becoming burned out and lose our motivation. There is so much to learn and Normal 0 false false false MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable{mso-style-name:"Table Normal";mso-tstyle-rowband-size:0;mso-tstyle-colband-size:0;mso-style-noshow:yes;mso-style-parent:"";mso-padding-alt:0in
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 owners 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. But first things first. How do I find these motivated sellers you ask? Personally, I place ads in my local newspaper and on various websites such as craigslist.org and realtor.com letting people know that I am looking to buy homes. I put signs around my local area and I even have those cheesy magnetic signs on my truck. Believe if or not, the magnetic signs do work. I also look in those same newspapers and same websites to see if I can find a motivated seller advertising their home as well as any FSBO (For Sale By Owner) websites. I also drive around various areas in my city looking for vacant, distressed, for rent, and FSBO properties. And in doing all of this research and advertising, I get quite a few deals each month. 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. Its 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 doesnt 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 dont think it was worth all of that time and energy to make that small amount of money. Its unfortunate because had they done their homework, they could have had a better experience. So now you know what to look for when seeking out and buying wholesale properties. Check back to find out more on various real estate investment related topics as I will be sharing more in depth information on topics like rehab and buy, sell & hold cost estimations to help you determine if a deal is indeed one that you should invest your money in.
How,buy,real,estate,wholesale,