New To The Wholesale Business
My partner and I recently joined the real estate business as wholesale sellers.
It's been tough to find any deals.
We're honestly looking for some sort of guidance.
We currently have an owner attempting to sell his property that has a current appraised value of $12K. He owes about $2.5K in back taxes.
We honestly don't know if we should make this contract. It is a very small and modest lake house (2bed 1bath). It is about an hour out from Orlando, FL.
The schools in this area are somewhat far.
Could an investor see an actual profit?
Could we make any profit?
Answer from Joe Trometer
Hi Denise, Thanks for the question…
It's great that you found a property you can get under contract. I'll bet that took some work and effort on your part!
How did you find that property?
Did you implement some sort of marketing, advertising, or networking to find your deal?
Wholesale buying and selling is a marketing business…
The "Wholesale Business" is a common practice of doing business among all types of products in addition to Real Estate like; automobiles, food, clothing, just to name a few of the big ones.
For example; I worked for a wholesale foodservice supplier in my younger days…
The Company had connections and contacts with food suppliers to buy products at wholesale prices.
My job as a salesperson was to sell the foodservice products to Restaurants, Hospitals, Hotels, Country Clubs, and anyone else who could meet the minimum order of products we sold delivered to them the next day via a tractor-trailer truck delivery.
My point here is
To wholesale products (including Real Estate), we needed a list of sellers who were actively and readily supplying products to our company.
At the same time…
We needed a list of buyers, likewise, who were actively and readily buying products our company provided.
We had competition!
If we did not have a product our customers wanted, they would go to our competitors to purchase it.
If we could not sell enough products from our wholesale suppliers, we would lose the opportunity to do business with that wholesale provider.
The Wholesale Business is a Marketing Business.
To be effective and profitable in Real Estate:
We need a list of property sellers at wholesale prices, and,
We need a list of property buyers that are ready, willing, and able to buy on short notice.
There are a variety of Seller types; Banks, Investors, Homeowners, Estates, Tax Sales, to name the obvious ones.
And there is a variety of Buyer types; Rehabbers, Contractors, Homeowners, Investors, again, naming the obvious candidates to purchase properties from you.
There is a Ton of Money to be made in the Wholesale Business!
Could an Investor see an actual profit?
That is completely up to the investor who buys the property from you. We have know way of knowing what their plans are for the property unless they want to tell you,
Your Investor sharing their plans with you is a Very Poor Negotiating position.
Give your Investors (your entire list of Investors) the Fact-Sheet on the wholesale property you have to offer,
at your price,
and let them make their own decisions.
Could we make any profit?
Would it be fair to say, "There is profit in every piece of property to the right buyer?"
I realize you are new to the business…
Due Diligence is where you research:
The value of the property
The condition of the property
And a variety of other factors like the School Systems, Demographics, Crime Rate, ect…
In other words,
Know your Property Values
Know your Property Buyers needs, wants, and desires.
Would it be too simple to say?
"It Boils Down to" …. "Supply and Demand" .... and You are the "Middleman"
and some Advertising,
I would be constantly building 2-Lists.
I would keep in contact with my list of Sellers and my list of Buyers on an often and frequent basis – at the minimum of once per month. Or as often as you can acquire wholesale properties to offer. Everyday would be Awesome!
The Ideal Scenario when contacting your Lists...
I would be asking my Buyers, "What type of Properties they are looking for".
Then I would be in constant contact with my Sellers on the type of Properties they have for sale.
As your lists grow, contact your Sellers and Buyers more often.
I hope this help you out some :-)
If you would like to add to this, please click on the link below… Cheers!