Susan Ormont - RISK VERSUS REWARD: A SIMPLE GUIDE FOR INVESTING IN REAL ESTATE

license required, although knowing how real estate transactions work can be helpful. Another advantage involves working with a real estate agent or broker, since they can search the MLS for properties. I can also help you find a title company that’s open to the wholesaling process (not all are). And each company has different requirements for all the parties involved, so I can educate you about that, as well.

Finding the Right Properties

When I’m helping my clients look for properties to wholesale, there’s a specific number to keep in mind: 70. End buyers (think flippers) tend to want to pay 70% of what they can get once the house is fixed up. Here’s the formula to use: fixed-up resale value – repairs – wholesale fee = max offer you should make Here’s an example if you want to make $7,000 on a home that should be worth $125,000: $125,000 (ultimate resale value) – $15,000 (repairs) – $7,000 (wholesale fee) = $103,000 (max offer) If you work through this formula and the deal seems to be possible, it’s time to see the house in person. Of course, there are usually unexpected expenses that come up in renovations, but by seeing the property for yourself, you’ll be able to get a better estimate about potential repairs. After you’ve done this, rework the formula, then figure out an offer. It’s often advantageous to offer less than your max so there’s room to negotiate, if needed. (Or maybe you’ll even get it for that price, which means more money in your pocket!)

48

Powered by