What Is a Wholesale Property?


17 May What Is a Wholesale Property?

Do a quick Google search. You'll see a lot about wholesaling real estate, but not a lot about what a typical wholesaling property looks like.

When you are trying to fine-tune your strategy for wholesaling houses and find the right properties, it helps to have a very detailed idea of how you go about finding these deals. Here are some practical examples of what you might see with a wholesaling property that has potential to fit into your wholesaling plan.

The Distressed Property

In assessing wholesaling real estate for beginners, distressed properties are far and away the biggest sources of real estate wholesaling deals.

Let's say you have a property out in a rural area, worth about $180,000 – four bedrooms, two bathrooms – but the seller is willing to part with it for $80,000.

Why? Maybe three big dogs destroyed a lot of the appliances and trim, and created an unholy mess that requires all of the carpets and even some flooring to be ripped out.

Distressed properties are a great source of wholesaling deals, but you always have to keep in mind what's required in order to make them habitable again. This cost factor is incredibly important – so in this case, if you have to put in $50,000, you can still make a deal, but if the rehab costs near $75,000 or more, it could be time to write off this particular property.

The Divorce House

Here you have a property in an up-and-coming suburban neighborhood that's worth about $325,000. The sellers – two names on the title – are willing to sell for around $250,000. That's a nice gap of about $125,000 and this particular property only needs a little cosmetic refinishing to the tune of about $30,000-$40,000.

These two individuals want to sell because they're going through a painful, emotional divorce. Neither one of them wants to look at the house ever again, and their two grown kids have their thumbs on the scale. They have about $60,000 into the house in equity, and they're willing to split that equity and go rent somewhere separately.

Some of these deals are no-brainer from a wholesaling perspective – these people have a bad emotional connection to the property, but you don't – and you can come in to make the deal happen fast.

wholesale property landlordThe Accidental Landlord

It sounds like the title of a mystery novel, but it happens a lot more than you'd expect.

Let's say you have a larger building, or even a combined property that's worth a total of around half a million dollars and has four or five dwelling units included. It's already split up for tenants – and it's in good condition. It only needs about $50,000 worth of fixes to electrical and plumbing systems. But the seller is willing to take less than $300,000 for it.

Why? Stress! Unruly tenants are causing this potential seller to tear his or her hair out. It's just not worth the hassle and the buyer is very motivated to unload the property. When you find deals like these you'll know that this is what a wholesaling property looks like.

Written into the Will

Here's a situation where you have a $250,000 house, and the owner suddenly died. The house is written into the will, but the will has three executors.

These siblings are willing to take just under $200,000 for the property, and it doesn't need any work at all – it's been recently renovated and it's ready to live in!

The sellers won't go under $150,000 because they know what the property is worth on the market. However, they’ll go down to about $180,000 just to liquidate (at least two of them would like to pay off remaining balances on their own properties) and that gives you enough of a margin to make this an attractive wholesaling deal, if you find a good buyer and make it happen quickly.

No matter which of these scenarios you're looking at with wholesaling, it's a time-intensive and research-intensive process. You have to figure out how much work the property will need and make sure you still have the margin. Working with an agent can be tough, because he or she might not be able to answer your calls at that particular time that a deal presents itself.

What Privy does involves streamlining and expediting your work. On the one hand, you can do your research ain about a quarter of the time that it would take you without this investor activity platform that provides transparency into local markets. On the other hand, you can also export these insights to buyers with a few clicks.

You find the deals – you show the deals – it's that simple. When your buyers can see up-front the value of a property, they're more likely to respond to you quickly. When you can get around using the agent as a gatekeeper and do your own research, you’re likely to find better deals – deals that get you that margin that you need to consistently make good money and stop churning wholesaling properties.

Yes, you can use Zillow, but you don't get this information with Zillow -  you just get what you might find in an MLS. Check out the value that Privy can provide for just a few more dollars a month by comparing it to other REI tools you might use:New call-to-action


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