Many individuals involved in real estate and real estate investing are somewhat confused and bewildered because of all the bad news about today's real estate market. But think about it. Are not there still people out there who need to sell a house? And are not there still people out there who need a place to live – who are ready to buy a house?
If that's true, then the best position to be in during a down market is where you can "connect the dots." In other words, you want to have the person who connets the buyers with the sellers and the sellers with the buyers! And you make a profit in the process. It's called wholesaling.
Wholesaling is when you take control of a piece of real estate (in our discussion, we are referring to houses) with a set price and set terms. This is what makes it valuable to another investor. You are no doubt familiar with the types of RE investors: those who are in the Buy and Hold business; those who are in the Rehab and Retail business; and those who are in the Rent to Own business. Still others may be in the Wholesale business just like you are.
In order to make the deal attractive to all participants you will be purchasing a distressed property below market value and then make a profit by reselling it for a higher price to an investor as described above. What does the seller have to gain? In almost every case, it's peace of mind. You are helping them out of their troubled situation. Behind in payments, can not afford the needed repairs, moving and need a quick sale. Additionally, we've found that often out-of-town owners are looking to get out from under a property that has ceased to be an asset for them.
To find your sellers, the simple "We Buy Houses" ads work best.
You locate buyers with ads such as:
o Thousand Below Market Value
o Investor Special
o Great Rehabing Deal
As the responses begin to come in, this is how you build your buyers list. Never throw away any contact information. You never know when you might need it in the future.
The thing that sets wholesaling apart is the speed with which the transactions take place. On any given deal, you may make a little, or you may make a lot; but it can happen at the speed of light.
So why stand around wringing your hands? A down market only means many others have been scared off the playing field. That gives you more room to make deals.