3 Secrets on How to be an Effective Wholesaler
If you are beginning as a wholesaler in the real estate industry, you might be wondering how you can expand your network of leads or what you should be effectively doing as a wholesaler. Well, worry no more as we discover the secrets on how to be an effective wholesaler, even if you are just starting!
The first thing you have to understand for you to be an effective wholesaler is to learn of your craft continuously. You must expand your knowledge of wholesaling by making sure that you know many methods to cut off expenses if ever you’re going through a deal.
Know what comps are
You can start by learning how to get comparables or “comps” in short. As a wholesaler, comps are crucial to get the best sale possible for a deal. Understand that the nearby homes beside the property that you have a deal with, affects how much the deal should cost and enables you to gauge whether or not it is actually worth the deal. Comparable houses can let you see what the house is going to be worth once it’s fixed up so you can figure out the value of it.
Multiple Listing Service or MLS is a great tool for finding comparables, especially if you are a wholesaler, as it gives you insight into the property’s value. Real Estate IQ is one of the MLS providers that you can use for finding comps.
Acquire knowledge of estimating repairs
You would also want to understand how to estimate repairs. It enables you to compute the costs that would be needed if you will have repairs on a certain property. With that, you’ll be able to see what your actual profit would be if you are going to get the deal on a contract with somebody else.
Given that you can estimate the repairs or rehab costs, you should be able to analyze the deals as well. In that case, you should go ahead and pick up the formula so you can fully analyze it and get the value of what you can offer with your deal.
[ARV(After Repaired Value) x 75%(0.75)] – rehab costs – your wholesale profit = value that you can offer
Knowing that you can estimate repairs and then analyze the deal itself, you’re now able to calculate the risks and see if the deal is worth taking at the moment or not.
Real Estate IQ offers a wide range of tools, such as Repair Estimator and Deal Analyzer that you can use to help you in making sure that you calculate the costs you’ll be taking in a property. You may check out our tools HERE!
Let your voice be heard on social media
Before you can get a continuous flow of deals within your reach, you should go and expand your connections first. You can effectively start by taking advantage of social media. Given that most of us are all hooked into the internet, and we use social media a lot, particularly Facebook, you can go and look for groups that are for the real estate industries in your respective locations.
For example, you are located in Houston, so just use the search function and type in “Real Estate Industry Houston,” and you should get results. After that you can go ahead and use the search function in the group itself and use the keywords “buyers”, “buyers list”, and “cash buyers”. It would enable buyers to reach out to you if ever they are interested in dealing with you.
Another thing that you can make use of social media is Direct Messaging or DM for short. You can contact buyers through DMs to ask for their phone number so you can call them. In this way, you can establish a connection with the buyer so you can start the conversation and negotiate for the property to put it in a contract.
You can also join buy/sell/trade groups on Facebook and post “We Buy Houses” there. It is an effective way of openly announcing that you are buying houses, and it will surely give you a lot of attention and these buyers would notice you right away. But be careful as some of the groups have specific rules against “spam posts” as they consider posting too much as spam.
With all of these said and done, you should be on your way to becoming an effective wholesaler that you imagine.
Luke Watkins is a real estate investor with mastery of fix-and-flip and wholesale deals. His experiences include working with some of the biggest residential flipping companies in the country with a monthly average of closing 20 to 30 deals. He also has a background in construction and property management; and has invested in Salt Lake City, Utah, Indianapolis, Indiana, Albuquerque, New Mexico, and now Dallas, Texas.
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Disclaimer: The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.