Why You Should Always Be Wholesaling Real Estate

The idea of wholesaling real estate generally refers to finding a property, putting it under contract, and then assigning the contract to a new buyer. Perhaps the most overlooked component of wholesaling is the fact that to be an efficient wholesaler you must be great at getting leads. It is this lead-getting skill that provides all of the leverage needed as a savvy investor.

Generating leads on a consistent basis is an art form in itself. The one thing I've learned, in the last 12 years as a wholesaler, is that the market continually changes and I must change my strategy to continuously find new leads.

For example, my local market is extremely "hot" with a small supply and a lot of demand. Therefore it is not uncommon for potential houses to be overbid by insatiably hungry buyers. Keep in mind, I'm not talking about MLS-listed properties. I'm talking about investor buyers bidding on potential wholesale deals that are not listed. Nonetheless, the savvy investor has to continually come up with strategies to keep the deal flow going.

There was a time when all I had to do was to send postcards and wait for the phone to ring "off the hook." This is not true anymore. I've had to change my lead-getting campaigns (which includes direct marketing, door knocking, phone calling, etc.) and resort to strategies that I have not used in several years.

The next idea that is crucial today is to see potential exit strategies through so-called "lipstick rehabs," full-blown renovations, expansions, "pop-tops," and even ขายบ้าน scrapes. Knowing these exit strategies can allow for higher offer prices in hot markets and still maintain a suitable business model. It is quite rare in my market to have offers accepted using the age-old formula of 65% of the ARV (after Repaired Value) minus expenses.

After your lead-getting campaigns are working and you have new leads, it is then up to the savvy real estate investor to decide what is the best exit strategy for the lead in question. For example, suppose you get a property in an area where the upside retail price is not very high, in relation to your purchase price. The question to ask is: Can the property undergo a lipstick rehab, which would be just right for a rental property? Next, suppose you get a property in an area where there is a lot of gentrification. Can your offer price be accepted if the exit strategy is more inclined for a heavy renovation/expansion or a scrape?

Always remember that there is really no such thing as real estate activity on the national level. The activity in your backyard is what's important.