Purchasing wholesale real estate can be profitable.
People get rich buying wholesale real estate at a cheap rates and selling it at a higher price for quick profits. According to Realty Trac, 315,716 foreclosures were filed in January 2010 in the United States. Wholesaling is the process of finding the right foreclosure or bargain property and flipping it, which means to quickly sell for a profit. Real estate investors buy wholesale properties in bulk to increase their inventory and leverage their income.
Instructions
1. Develop a purchasing strategy to acquire wholesale real estate. Decide if you will target foreclosures or distressed homeowners. Foreclosures are properties the bank has taken back from the delinquent homeowner. With foreclosures, contact a real estate agent to obtain listings of properties to purchase. To find distressed homeowners, review the Legal News in your area to locate properties that are at least three months delinquent. Your strategy should detail your approach to purchasing wholesale real estate and give a clear focus on which types of properties and how many you will buy.
2. Negotiate cheap prices. When negotiating prices to purchase wholesale real estate, subtract costs for repairs and take into consideration the location of the property. Accept a price that is within your budget and allows you enough money to make repairs and still have a profit.
3. Fix properties. Rehabilitate necessary repairs to make properties marketable, such as cleaning the premise and adding a fresh coat of paint. Repair any unsafe damages, such as cracks in the stairs and holes in flooring. Do not make any repairs that are costly or could decrease your profits when flipping.
4. Secure wholesale real estate until the property is sold. The average time for a house to sell can vary depending on your location. For example, the National Association of Realtors indicates that in Detroit, properties remain on the market for an average of 111 days. During the time you are waiting for a buyer, it is important to monitor and secure your property from vandals and squatters. Lock and board windows and doors, and routinely check on the properties to monitor their conditions.
5. Create a buyers list. Develop a directory of people who are looking to purchase real estate at bargain prices. Build a network of other real estate investors, landlords, first-time home buyers and people looking to relocate. Attend industry events and join an investor's club to meet other real estate professionals and property investors. To establish a buyers' list, advertise your properties in your local newspaper with a number for people to contact you. When people call, collect their contact information to add to your list of prospective buyers. Also, host open houses and include a sign-up sheet for attendees to increase your database of buyers.
6. Develop and implement a marketing plan to promote your inventory of wholesale real estate to your list of buyers. This plan should detail specific strategies such as print advertising, Internet marketing, open houses, and inclusion in the Multiple Listing Service (MLS).
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