5 Secrets to Finding Your Next Wholesale Property
With most consumer purchases you make, there is a wholesaler involved. Whether it’s the food at the grocery store or the shoes at the mall, a wholesaler is typically playing “middle man” and earning their profits via arbitrage between two parties.
The same relationship exists in real estate investing, in which a wholesaler contracts with a motivated homeowner for the sale of the property at a specified amount. The wholesaler then finds a real estate investor to purchase the property at a higher price, assigns the contract to them and pockets the difference.
The secret to success for most of these wholesalers is knowing how to find off market properties. While this expertise is often earned through trial and error, below are a few secrets to success that can help real estate investors who want to try their hand at wholesaling. Even if you’re not ready to wholesale today, these tips can help you lay the foundation now for a wholesaling venture in the future.
1. Drive for Dollars
The most classic method for finding wholesales properties is as simple as it sounds: get in your car and start driving around in search of distressed properties. However, you don’t want to just go where the wind takes you.
Make a plan. Carefully select a well-populated area so that you know there will be a market for your property. Have a list of red flags to look out for, like chipped paint, unkempt lawns or missing roof shingles that indicate a property is being neglected.
2. Network, Network, Network
As a wholesaler, your job is to connect sellers with buyers. This means that having a wide and well-connected network is key.
First of all, be sure that everyone within your current network knows that you are seeking distressed properties. Talk to your family, friends and neighbors about it, and share about the topic frequently on social media. Even if none of these connections knows of an available property now, they may become aware of one in the future.
This is also a great reason to expand your circle and get to know real estate investors and agents, and even home repair specialists in the area. Anyone who’s driving around frequently or spending a lot of time in homes or various neighborhoods can help you spot your next “diamond in the rough”.
In fact, if you’re just starting out, it may be helpful to identify a real estate wholesale investor who could mentor you and show you the ropes of the business.
3. Become Familiar with Public Records
As long as you don’t mind rolling up your sleeves and doing some research, local public records may be the place to uncover your next wholesale property. When an estate is settled, it goes through probate court and is on public record. If the new owner of that property lives out of state, you may be doing them a favor by connecting them with a buyer.
Another way you can use public records is to identify pre-foreclosure properties. You should be able to find this information at your county recorder’s office. Again, these homeowners may appreciate your ability to connect them to a buyer, with very little effort on their part.
4. Connect with Your Prospect List One-On-One
Once you build a strong list of potential properties through any or all of the methods above, you could use direct mail to reach your ideal seller. One of the most important elements of direct mail is the frequency with which you send it. Sending one letter or postcard to a property owner is not enough. Plan on sending at least 3 to 4 pieces of mail within a period of 90 days or less. Express your interest in their property, why it would benefit them to contract with you, and make the call-to-action crystal clear.
Likewise, if you have phone numbers to go with your prospect list, you can also reach out directly to your list with cold calls. This can have mixed results and very much depends on your comfort level on the telephone.
5. Use Advertising to Get In Front of Property Owners
Depending on your commitment to wholesale real estate investing, it may be beneficial to advertise your services on a broader level so that property owners in your market know who you are and can reach out to you themselves. You can do this through traditional methods such as newspaper ads or road signs. Or, you can go a more digital route and set up a website where you can drive online traffic. Your advertising methods may fluctuate depending on your local market and your targeted seller. Keep in mind, it’s always best to test the waters out on a small scale with advertising before making a large investment.
The Most Important Element of a Successful Deal
Once you have a buyer in-hand, you can then assign the contract to them at the higher price and pocket the difference at closing. Of course, the most important aspect of this whole process is that the property is able to close on time. A hard money lender like Temple View Capital can help you push that deal to the finish line. Unlike other private money lenders, our underwriting team is in-house. This means your buyer can get the funds they need quickly so that your deal is a success. To connect your buyers with Temple View Capital for simple, efficient and transparent financing, contact us here.