Thoughts on wholesaling thread

[Scott Bradley]

Wholesaling in Real Estate is a term where you find a property as an investor that you don't want, and don't want to see the closing all the way through...

The real estate strategy is to go into the property...create a win/win situation between you and the buyer...and then flip the contract to the other investor for at least $5000.

The thing with this type of real estate investing is that the people who sell their house for below market value are looking to sell yesterday....so they are willing to sacrifice their equity and save their credit to get out of an embarrassing situation. For it to work they have to give up equity for the Real Estate investor to help them...

Here is an example....
Sally has a house that is in pre-foreclosure....she calls an investor that has "I Buy Houses" signs on his car. Sally tells him of her situation. She has a 1,000,000 house with 500K in equity in it...She needs to sell ASAP with a quick closing and needs help NOW. What an investor can do is...Go into the property....control it with the paperwork and contingencies in the contract...

E.G.
Subject to "finding an appropriate lender" ...etc

Once they come to an agreement on it...the investor can sell that contract to another investor to carry out the deal....It is a win/win situation...

The investor who helps Sally wins becaus he gets an initial cut of the equity in the property, the investor who gets the property wins because he gets more equity and sees it to the end, and Sally wins because her credit is not destroyed, and she may be able to cut a deal with the second investor who is seeing the deal all the way to the end.

To do these wholesale deals take no money or credit and is the initial way most real estate investors start their real estate investing career.

What do you guys think?

P.S. The example was just for illustration purposes.

[malm42]

I have been researching and reading about wholesaling and I think it would be a great idea if you found the right property. Just yesterday, I saw a written up AD by a private owner in our local grocery store. The ad says "house for sale, $8,000". I was expecting this house to be a complete junker, not to mention the house is in a town that consists of 1,000 people. So, I figured I would just go check it out and so i went this morning and the house has great potention. It is a normal single family home and needs a lot of work but it has HUGE potential. I don't feel like doing all the rehabbing and closing costs, so I think that I may wholesale it. I think that it is the perfect house for this and the owner is selling it WAY before FMV. I just need to do some more research on how to get started and go through with all the contracts and legal stuff.

[Scott Bradley]

Man that is crazy!!!!!!
I would take that and do everything I can to get the most equity out of it!

Let us know what you plan on doing with it!

Does anyone else have some thoughts on wholesaling?

Scott

[Scott Bradley]

By the way...if you need investors to wholesale it to...just let me know...I can find you someone

[silversurfer]

Small town real estate kills me. I would love to see see someone put together all the figures on these properties (cost, rehab cost, sale cost). We were very lucky to sell my grandmother's house within a week to the next door neighbors, because an unwanted house in her town will sit for sale for 2-3 years. What was the price of the house? $11k. What do rentals go for in that town? There are no rentals- you can buy a used trailer for $500 down and $200 a month or rent a room on a widow's farm. People who would be homeless in the city have "caretaker" jobs where they live in barns.

Adult friends bought a place in TX near a military base that had a pool and 4 bedrooms for $150k. They lived about a mile from the gulf of mexico and a local bar had a $5 all you can eat shrimp special stocked with fresh-caught shrimp. But they traveled an hour to costco, had racist neighbors, etc. If they didn't have the job at the base they wouldn't live there.

Last year a friend of mine who was roughly 28 yrs old sold his townhouse for $1 million. Because that's what real estate costs here.

Friends of mine spend hundreds of thousands of dollars flipping a property only to make under $10k profit on the deal due to high real estate costs, high rehab costs and a soft market. The issue with wholesaling houses and the like is to find the right properties. In some markets, like east coast cities in 2004, there were virtually no right properties.

SS

[malm42]

That is very true. The house was way below the FMV but I did not buy it because it's all about LOCATION LOCATION LOCATION. No new families are moving into a town of 1,200 people. I live in a town that consists of about 4,500 people and the market here is usually good. Right now it is obviously downhill because of the credit crunch and the hype about the markets.