Wholesaling On Market Properties
What You Need To Know
Hi. Welcome back to the videos with me, Sunny and Synergy Real Estate and Property Management.
So today, we want to go over “wholesaling”. So wholesaling is positive investing. And that’s kind of been in the media or news a lot lately because it’s one of those “or you don’t need a lot of money to start” or “you don’t need this and that” and so it’s kinda of, it’s a lot of gimmicky is the kind of way they present it.
Basically, what it is, you go out as a wholesaler and find properties that people are willing to sell. You then figure out what that property would sell for after it’s done being repaired. Back out the repair costs and all of the fees and costs, as well as the purchase price and you back out the fee for yourself as well. Generally, we’re looking either at a percentage of 3 to 10 percent or a fee of 5 or $30,000. Right?
So let’s say that, you know this property, actually we’ll using an example, right?…yesterday I got sent a property. You know, the wholesaler’s trying to sell it at $350,000 and he said there’s about $15,000 worth of repairs and when it’s all done, it is going to be worth $450,000.
So the biggest problem is if you’re not from the area you’re just gonna run comps…and you have no idea what those other properties look like and those neighboring neighborhoods look like as well.
And so what we did was re-run the comps on this property and sure enough, it came back that once the property was finished, we are looking at $350,000. Right? And because he run the comps on such a wide scale, he also got a very nice gated community in his comps which brought the comps up to $450,000.
Now, because he was not from the area, he didn’t realize that the four hundred fifty comes from a different neighborhood and different style of building…ah you know all of these different amenities versus where his property is. And so he is trying to get us to purchase this property at three hundred fifty because it’s a good buy, right?
And so, that’s something to look out for when dealing with these wholesalers. A lot of wholesalers come in, they’re very excited and want to sell everything without having a lot of money in pocket, so they keep collecting their wholesale fees.
But the problem here becomes, when you don’t know what the actual value of the property’s going to be and it’s done, you don’t know how to run the comps correctly, you don’t know the neighborhoods then you’re going to get the incorrect valuations. In fact, every single wholesaler I dealt with, has had that problem. Either they are on with their after repair value costs and they’re off with their repair costs or they’re off with their after repair value costs and they’re on with their repair costs. Either way, you are overpaying for property and you’re not going to make any profit for it.
So just to be very careful, you know, wholesalers do not have to be licensed real estate agents. They do not have to have any kind of previous experience besides being able to send out postcards and possibly do some online advertising.
So something to look at, something to kind of think about and if you come across a wholesale dealing and you need some help in analyzing it, feel free to give us a call at 661-770-7382. Email sunny, firstname.lastname@example.org and website, www.re-synergy.com . And you can always come see us at Panama and Wible inside Albertson Shopping Center.
Alright, till next time. Thank you.
Watch it on YouTube: https://www.youtube.com/watch?v=-NIK-_jGhNI&feature=youtu.be