What role does the wholesaler play in the real estate flipping strategy?
Real Estate Flipping Strategy
The job of the wholesaler is to go out and find the discounted, distressed property, put it under contract, find the investor using the real estate flipping strategy, and assign the contract to the flipper. The job of the wholesaler is not to actually purchase or invest any money, as that is the responsibility for the investor performing the real estate flipping strategy.
An investor performing the real estate flipping strategy needs to have a wholesaler who is going to bring him properties that he can quickly fix and sell conventionally to an end buyer for a profit. Therefore, wholesalers need to be aware of what constitutes a profitable real estate flipping strategy.
Profitable Real Estate Flipping Strategy Advice | Understand market values
How do you get an investor using the real estate flipping strategy to buy a wholesale property from you again? Make sure he makes a profit from your first transaction. In order to make a profit, you, as the wholesaler, must understand how an investor using the real estate flipping strategy turns a profit. This means understanding after repair value, being able to estimate repair costs & holding costs, and not offering a price that will prevent the flipper from making a profit.
Profitable Real Estate Flipping Strategy Advice | Making an offer
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When making an offer for a property, I start with the After Repair Value and multiply by 70% (takes into consideration all costs of acquiring the loan). From there, I discount the estimated amount of repairs. Finally, I discount my profit. A quick wholesale offer would look like the following:
- ARV: $100,000
- 70%: $70,000
- Repairs: -$10,000
- My Profit: $3,500
- Offer Price: $56,500
Profitable Real Estate Flipping Strategy Advice | Market Analysis
Once you have the right value and offer the right price, the third way a wholesaler can help assure success for an investor performing a real estate flipping strategy is by purchasing property in a place where the flipper can sell quickly. Types of market analysis considerations include quality of school districts, proximity to rail road tracks, distance from high employment area, crime rate, and quality of nearby parks. These items are important to homeowners with families, and if it assists the investor using the real estate flipping strategy in selling the property quicker, then they will make a good profit and want to utilize your services again as a wholesaler.
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