7 Real Estate Quirks & Misconceptions For Wholesalers To Watch Out For

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on Mar 19 in BestTransactionFunding

The real estate landscape is changing fast. Beyond the mechanics of wholesaling houses for high profits investors need to know how emerging trends and some of the finer quirks of the industry can impact profitability.

Throwing out offers in mass with confidence is relatively easy for property wholesalers with the best transactional funding lined up to fund all of their deals. On the flip side, while there are still some properties rotting on the market, many areas are seeing homes being snapped up in minutes, often before they can even be put online. However, there are some emerging quirks of the market which it is wise for serious wholesalers to be tuned into.

Some of these have the potential to stick wholesalers with properties they can’t turn over as quickly as they thought. Others can help investors stay away from snags and take the lead in the boom ahead…

New Construction Isn’t Perfect

As some find publicly marketed inventory tightening or more competitive, more investors are considering the lure of new construction properties. As Delaware custom home builder Turnstone Builders recently blew wide open in an ultra-transparent blog post – new construction can be far from perfect. It can be riddled with contaminated land, faulty structures, and more. Don’t fall for looks or the promise of new always being better without a warranty and some due diligence.

It’s Cheap for a Reason

The incredibly low prices real estate has traded for since the crisis has helped thousands of new investors get into the market. With properties going for under $10k a pop, they became accessible for everyone, while those with good credit can put houses on their cards as easy as buying lunch. However, as with most things in life; cheaper isn’t always better. There’s a reason properties have sold for $100, $5,000, and $10,000 in areas like Detroit. Some also might question the math of purchasing properties and then putting double the purchase price into them in rehab money. Deals mean undervalued properties, or at least fair priced homes that may be worth more to others; it has nothing to do with the dollar price tag.

Responsible Products

Unfortunately the real estate industry seems to foster the temptation to throw ethics to the wind in exchange for more deal flow and more cash. It often starts slow, with one toe into the grey area, and then bam! In the real estate industry this has often turned into rationalizing selling bad product. This might be poisoned land, homes with mold, old meth labs, or even homes with Chinese drywall. You wouldn’t appreciate someone selling you a dangerous car that you plan to drive your kids around in, or faulty toys that can be lethal. So why sell on homes that can be even more dangerous? If in doubt throw the file out. If you don’t, at least know that investors and home buyers are better educated than ever, and sooner or later it will comeback, even if you resell these homes.

Property Rights Wars

Property rights is the new frontier of real estate. The highest paid lawyers in the country are moving into this niche to help affluent property owners and the public preserve views and space. Eminent domain activity is also heating up. This is perhaps most noticeable in South Florida, along the planned route for the Keystone XL pipeline, and California’s new rail line. For some investors property in the path of eminent domain can turn out to be incredibly profitable. In other cases it can mean big losses. It all depends when you buy it, and for how much.

Forward Thinking Buyers

Home buyers, including end investors are thinking further forward than they used too. They may not verbalize these considerations, but there are factors they are looking at, and which unless addressed could become barriers to resale. On the other hand those wholesalers than pay attention and get ahead of the objections could find a new sweet spot. The most intelligent and serious buyers today are taking into consideration factors like rising sea levels, length of functional use, and long term performance. If your end buyers are long term hold income property investors or high net worth home buyers you might want to keep this in mind when searching out new areas and making offers.

Privacy

Mark Zuckerberg’s real estate woes in California have highlighted the desire for privacy many luxury buyers are seeking today. They don’t just want large lots and homes, they want a nice cushion to keep the paparazzi away too. How can you help serve up more of what they want than the competition can?

Sustainability

Although industry organizations like the CCIM Institute have proclaimed that green building has now become mainstream, and buyers want it, the online real estate landscape still appears to be very thin when it comes to searching for and finding green homes and lodging. How can you incorporate this into your strategy?

Authored by Best Transaction Funding BestTransactionFunding.com is the leading source of transactional funding and hard money loans for real estate wholesalers in the US, where 100% financing, and saying “Yes” is what we love doing all day long.

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