Wholesales. Part 1 of 3. Starters guide.
Some key terms that you should get familiar with…
- Bird Dogs
- Skip Tracers
- Motivated Sellers
- Inherited Properties
- Estate Sales
- Tax Properties
Continued… What’s the first thing that catches your eye when your start searching about wholesaling real estate?
Let me guess… You need zero money. Is this right? The truth is this… Yes! you can wholesale for no cost; however, you also need to be realistic and know that you will perform better if you invest in you wholesaling business. Let me explain on both…
First off you need to do your research and truly understand what a “Distressed Property” is. Yes, I am going to guide you here however dig in deeper (YouTube, Google, social media); research furtherer.
Once you start to get familiar with the above keywords we must start showing you how to evaluate a property. As a realtor would say we will get you the “Comps”
Understand your market we must know that property is a good deal!
Here is a very easy method to start with and a good portion of investors go by this… Keep in mind this is usually who your are selling to as you aquire your first whlolesale.
Its called the 70% Rule. In simple math see how to evaluate your property to make your a will have an investor on borad after you get the property on contract (this explation is in PART 2; follow this for later details).
Evaluation saying the property is worth after running our “Comps” $100,000.00 (easy math here)… So this is the ARV (After Retail Value). We will then times (*) by 70%; so 100k * .70 equals $70,000. We will then need to add in our repair and overhead costs. Lets say this number is at roughly $20,000. Now we minus 70k – 20k equals 50k.
Meaning if we do not get the above property example atleast 50k we will more than likely not be able to close this deal! Below is how this should be demistratied to your potential investors.
ARV – $100,000.00
Rehab/OH – $20,000.00
Purchase Price – $50,000.00
This is a quick example and I know this does not cover everything… PART 1 or 3!