Mistakes To Avoid In Wholesale Real Estate Investing
Wholesaling houses is the fastest way to make money in real estate investing. You also need little to no money to get started.
However, you must look out for some common mistakes that can be costly to your business.
1.Buying in the wrong area
This rule is golden in real estate investing - you must buy from the right neighborhoods. Avoid buying houses from war zones or you might not have any interested buyers.
Similarly, do not target high end areas when wholesaling houses.
Better go for the middle level areas where you also find most of the properties. I stay around $100,000 and 200,000 in my area.
2.Wrong repair estimates
If you wholesale houses, you must be able to estimate repairs fairly. You do not need to be accurate to the nail.
You should be able to spot all required repairs - some of them can get expensive like roof, foundation and structural repairs. Carpet, paint, kitchen bathrooms, windows, fixtures, etc are less costly. Each item should have a simple ball-park figure. You will then need 10 to 15 minutes to estimate repairs.
You must estimate your repairs on the higher side to be safe.
3.Paying too much for properties
This is a very common mistake where you agree to pay too much for a house. You should be able to easily calculate your offer price. Do not go above your offer price. Negotiating with the seller is better than being stuck with a property you cannot sell.
4.Not making enough offers
You can only buy houses if you are making offers. Some will get rejected, but some will be accepted. The number of houses you buy will be proportional to the number of offers you make.
Secondly, a lot of real estate investors think they must first have cash, or even buyers, before they can buy houses. Not true. Earnest money is probably all you need.
We have covered how to sell your houses fast in separate articles.
5.Not having a good follow-up system
You must have a real estate website that follows up automatically with potential motivated sellers. This frees up your time, and you do not stand the risk of forgetting to follow up.
You end up closing more deals because you always remain in touch with your sellers.
6.Not following up with the closing process
You must collect earnest money from your buyer, which they stand to lose if they do not close. Always make sure earnest money is substantial.
You must make sure you know where they are getting their cash. Did they just sell a house? Do they have a line of credit? Get another buyer if they tell you they are getting a mortgage; wholesale deals are not funded by conventional mortgages.
7.Not keeping in touch with the seller
Stay in touch with your seller at all times. This is especially important because sometimes you might need to re-negotiate a few thousand dollars to make the deal profitable.
by: Simon Machcria