Mistakes to Avoid in Wholesale Real Estate Investing
Wholesale real estate investing is the fastest way to make money in real estate. 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.
Likewise, the very high end neighborhoods are not the best places to flip houses.
Better go for the middle level areas where you also find most of the properties. In my area, I stick to neighborhoods with houses between $100,000 and 200,000.
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. Less costly ones include Carpet, paint, kitchen bathrooms, windows, fixtures, etc. The best way is to have ball-park figures for each item. This way, you can estimate repairs in 10 to 15 minutes of seeing the house.
You must estimate your repairs on the higher side to be safe.
3. Paying too much for properties
Paying too much for houses is a common mistake. You must have a simple calculation of your offer price. Never pay more than your offer price. It is better to negotiate with the seller than to end up making a loss or being stuck with a house you cannot sell.
4. Not making enough offers
You cannot buy houses if you are not making enough offers. Some of your offers will be rejected, but some will be accepted. The more offers you make, the more houses you will buy.
Another common misconception is to think you must have cash, and ready buyers, before you can buy houses. This is not true. The only money you probably need is earnest money.
We have covered how to sell your houses fast in separate articles.
5. Not having a good follow-up system
A real estate website that automatically follows up with motivated sellers is a must. This will save you time and the risk of forgetting to follow up.
Since you are always in touch with motivated sellers, you end up closing more deals.
6. Not following up with the closing process
After you find a buyer for your property, you must collect earnest money, which they stand to lose if they do not close. Make sure this is a substantial amount.
You must make sure you know where they are getting their cash. Have they just sold a house? Are they getting it from 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
Keep your seller on the loop at all times. Sometimes you find you need to re-negotiate.
Simon Macharia - About Author:
Be sure to learn some helpful real estate investing tips that work in the current market. Whether you buy or sell houses or even wholesale them, learn how an automated website for real estate investing can make a huge difference by closing more deals spending less time, money and effort.
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