4 Ways To Wholesale Houses Smarter In 2020
This is one of the best phases of the real estate market for wholesalers. There is a strong mix of distressed properties and motivated sellers, as well as demand from buyers looking to relocate.
New wholesalers should find this a fantastic time to get in the game. Experienced investors should be scaling their businesses fast.
Still, no one wants to get caught holding dead weight properties. It doesn’t take many of those to pull you down and eat up your other profits. So, here’s how to be more confident in taking on deals, how to find more of them with less competition, and how to lower your risk and do more at the same time.
Build In A Downside Cushion
Most experienced investors started doing this the minute that COVID-19 hit. While so far the US housing market seems to have kept going up, with no lack of demand, there appears to be a lot of financial distress and defaults happening under the surface. There’s no telling when it will pop. Though if you build in a little extra cushion to your deals, then you should still be able to exit profitably, even if prices come down 10% overnight. This will also help in case mortgage lenders start backing out on your buyers at the last minute, or are cutting loan amounts to account for declining markets.
Check Closed Sales
At first glance the market seems to be incredibly strong. Listing prices are skyrocketing, and if you throw up a house listing ad on Craigslist you are bound to get a lot of messages, calls and even showings.
It is vital to differentiate between the lookers and pending sales versus how many transactions are actually closing. Check out the latest closed sales data. What are the real prices and any contributions or other adjustments that alter the net sales price?
Be sure you are pricing your offers accordingly. It is also worth prescreening buyers and compiling a list of those who are qualified, so you have them ready to go in advance.
Look For Aged & Expired Listings
In spite of how hot the media, Realtors and other investors say the market is, many listings have still been sitting on the market for a year or more. Many investors have been holding dead weight properties for at least that long. Big liabilities which cost them money every month.
Sellers can feel spoiled for choice when they first list and get lots of lookers. None of those deals may materialize. Or they just get burned out from talking to too many buyers and hosting too many showings, without a closing.
Then after a few weeks those listings get ignored. They are buried under all the new ones, and no one sees them.
This is a great time to go back to older listings and expired listings, while owners may be refreshed and yet more motivated to unload their homes to any true cash buyers.
Use 100% Financing
You want to go fast during these times. Don’t miss out on all the opportunities. Of course you don’t want to take on extra risk in uncertain times either. Using 100% financing and transactional funding is ideal for this. With no skin in the game, and deals already sold before you buy them, not only are you looking at pure profit plays, but no risk to your own capital.
Many other lenders may be cutting back, but Best Transaction Funding is still here. Ask about our VOD service today so that you can get out there and make more offers.
