Real estate wholesaling can be terrifying business, particularly when starting out. Terrifying. There are more questions than sufficient answers that address your real concerns. Luckily, this age of the Internet we live in has made it easier for newbie real estate wholesalers to find most of the answers they need to get by.
So, you go through all the blog articles you can unearth. You chew all the course resources you have invested in. And you listen to all real estate podcasts you can find on the web. Deep down, however, that lingering fear refuses to go away:
‘Where the heck do I find a buyer?!’
Don’t fret. That’s why we are here.
And we would like to assure you that what you are going through is normal. Absolutely typical.
It’s a question that will always perturb you, and it’s not unique to newbie investors: even the seasoned vets experience it from time to time too. It’s one of the biggest challenges in this business.
The thing is though, thorough preparation will help you reduce the risk. Immensely.
I know you can’t wait to get to the strategies already, so without much ado…
#1 Know your Market
First off, you need to be really familiar with your market. You need to be absolutely sure of the areas you should be honing in on to land your first deal. You need to have an idea which pockets of your area appeal most to investors.
Having a good idea of those areas that attract fix and flippers like moths to a flame never hurts. Ditto the locations that buy and hold type of investors tend to prefer. You need to be aware of the land deals in your location, not to mention the new projects. In each market will be a sub-market, and each sub-market will have its own particular niche.
For instance, you may be looking to kick things off by focusing on a certain sub-division of your city. The advantage of this is that you are in a better position to focus all your marketing and branding in this locale – provided, of course, you’ve already focused your efforts by doing your homework.
Over time, you can just be the go-to subject knowledge guy for this area.
#2 Know your Buyers
Most new real estate wholesalers tend to overlook this one. If you enjoy what you could term a solid relationship with your buyers, you can ask them about a deal prior to having it under contract.
A solid buyer base puts you in the enviable position of knowing who buys where and what they usually look out for.
This means that in such instances, you will know about the sell price: the onus is on you to negotiate a good buy price.
This reduces your risk greatly.
#3 Have an Exit Strategy
If you have been doing your research, one of the things that may be clear by now is that you need to have an exit strategy when planning or executing any plan.
As a real estate wholesaler, you should aim for an end goal where all stakeholders – seller, buyer, tenants and yourself – are happy with the results of the transaction.
It may not be the easiest thing, but part of the reason many new wholesalers fail is because they place too much emphasis on the money they may potentially make. That’s a mistake. In this business, repeat business might mean success or failure. A good relationship isn’t about take only – it’s about give and take.
The good thing about striking good transactions (save for karma, if you subscribe to that school of thought) is that those you have helped might just end up referring you to others in similar shoes. And so on.
Remember the good ol’ word of mouth? It still rings true here. And no website or amount of marketing can secure you that.
Now that we mention websites and marketing…
#4 Use Online Marketing Sources
As a newbie investor, you will not enjoy the kind of solid relationships we’ve mentioned. And that’s understandable.
This is where online property sites like Craiglist, Zillow, FSBO listings sites, Backpage and other media outlets come into the picture. The idea is to get the property in front of as many eyes as possible within a short period of time. If you really have a deal, it should have no problem selling. But it will take a little longer in the case of thin margins.
Now, this strategy has a major downside to it. The property owner may come across their listed property! To circumnavigate the upshots of this, it’s a nice idea to state in your contracts that you reserve the rights to market the property, although being a realtor gives it more credibility.
#5 Use Offline Marketing Sources
There are times when computer-aided marketing methods do not cut it. Networking is a good example.
Building a network will involve less LinkedIn and Facebook and more ‘old-school’ methods like attending local real estate club meetings, attending meet-up groups and other gatherings where investors converge. This is something you should be doing, and if you are not, then you need to get started.
This is where you will meet true cash buyers, lenders and landlords. Orienting yourself with the players in your vicinity means you can use them as a resource for your deals. Again, remember a good relationship will take time to cultivate and is about give and take.
Being well versed in these areas will help you reduce your risk when it comes to real estate wholesaling.