Have wholesale real estate deals you are still trying to move? Why aren’t the buyers biting?

Finding deals is only half the equation in real estate. You’ve got to be able to resell in order to really turn those opportunities into cash. While wholesaling has grown in popularity, many are struggling to move properties for longer periods. That can mean losing contracts, being stuck with deadweight that ties up vital capital and killing your income. What can investors do about it?

Here are five common reasons people aren’t buying wholesale properties now, and how investors can change that…

Unknown Repair Factors

There is still a lot of inventory out there, and investors are crushed on time to evaluate all of their options. If your property is just a big question mark in terms of repair costs and issues, it can be easier just to skip onto the next deal. Most of the time they are thinking worst case scenario. So, don’t be afraid of scaring them off with the details. They just need to know so they can make an offer. Cosmetics are one thing, but how are is the plumbing, electrical and roof? How urgent are any code violations against the property?

It’s Too Expensive

Are you really offering wholesale pricing? It is important to look at this in terms of percentages and dollars. It should be competitive versus the ARV so that investors can line up appropriate loans. So know your lending market. It should also leave enough dollars to be attractive. A 30% discount on a $50,000 property is really nothing once your end buyer pays closing costs and even does basic cosmetic improvements like flooring.

It’s Too Cheap

Savvy real estate investors know that there are still houses trading out there for under $10,000. Others are going to be very suspicious of anything inder $100,000. That doesn’t mean you need to bump up the price, but justify it. Show them why the deal is so good. Maybe you just need to flip fast, that’s the going rate for local REOs and the neighborhood, or you have built in room for a new roof replacement.

No Trusted Relationship

Simply trying to blast out your wholesale house ads on Craigslist to strangers can soak up a lot of time. It means always trying to connect with new people, build a new relationship, and develop that. Ideally wholesalers will make these connections once, and then just be able to present great fitting inventory to their list who trusts them and who just buy. Focus more on nurturing the list than just flashing your inventory to strangers.

They Know How Much You Paid

One of the biggest hurdles today is that buyers can instantly see what properties sold for online. If you bought it for $40,000 less 60 days ago, they are probably going to think you should get half that (or less). Use double closings with transactional funding instead of buying and then going to market the deal, and avoid this challenge.

The latest data shows house flipping activity hitting a new high. But with all the extra competition where can real estate wholesalers get the edge and find the deals?

Mix Your Cardio & Scouting Properties

There are thousands of investors out there hunting for deals. Many are getting better and better at using technology to scout potential deals, and to be alerted to new listings. They are marketing more broadly and are sending a lot of blanket mail. Yet, many of the best deals can be hiding in neighborhoods right around you. Most are not listed on the MLS. Often the owners are not proactively looking for buyers. But they can be great deals. Get out there and find them. You can drive. Or you can go deeper by getting on your bike, walking, or running. You’ll get some extra cardio in, and may even get the chance to build more personal connections and relationships.

Note Investors

New data from DistressedPro shows that while foreclosure activity may be declining in most states, bank repossessions and mortgage defaults are still around twice as high as before 2008. Yet, not all are speedily making it to auction or are being remarketed publicly. Billions in non-performing mortgage loans are being sold through back channels, and to note investors. Find these players and offer your help when borrowers just aren’t going to be able to stay on track.

New Real Estate Agents

Thousands of new real estate agents are getting into the game. Very, very few get started with any idea of what they are doing. Training, education, and support is minimal. Most often they face intense competition from their coworkers in their own offices. That leaves them few places to find help when they get stumped or are trying to figure out what to do with leads. Help them out. Make sure they know you are there to buy their good deals, and set them on the right track to find what you are looking for.

New House Flippers

House flipping has become a new craze spurred by endless ‘reality’ TV shows. Everyone wants to do it. Some are making incredible spreads by fixing up and flipping homes. Yet, data from RealtyTrac shows that turn times are reaching new highs at an average of over 180 days. That suggests many are getting stuck. They are having a hard time turning around properties, and many are running out of funds in the process. Be there to take those deals off their hands, and bail them out when the numbers make sense.

 

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

Where can real estate investors find the best mortgage lenders for their wholesale deals?

There is no shortage of real estate deals out there today. Even for those that aren’t into marketing for deals or dialing for dollars. There are billions in non-performing loans and shadow inventory REOs. Banks have unleashed a new round of foreclosures in the first half of 2015 too. Auction sites are plump with offerings in many markets. Even a couple emails to public listings can turn up motivated sellers. But turning these deals into cash money often requires some form of financing. So where is the best place to find the right funding?

Wholesaling success is all about securing a lender and loan program you can count on.

There are many financing options, but it is crucial to find the right match:

Transactional Funding

Transactional funding can offer the lowest risk, fastest loan closings, and easiest type of financing to get into play. But it does require that investors already have an exit, with a qualified buyer contracted. This is the no-brainer and efficient choice for those that have built buyers lists, or are fast at connecting the dots. It may not work for those buying on spec.

Hard Money Loans

Hard money loans can be great for fast closings. They can be especially beneficial for those without great credit, for financing properties others won’t, and when creative deal structuring is required that conventional lenders would be scared off by.

Blanket Mortgages

Blanket mortgage loans are now available through several hedge fund conduit lenders. These can provide large amounts of funding for those buying distressed properties in bulk, or refinancing existing property portfolios to tap pent up equity. Some investors haven’t liked the terms of these loans or required capital reserves. But they do offer access to large sums for those that do.

Working Capital

Business loans, credit cards, and lines of credit for working capital can even be used to fund cheap foreclosure properties. PayPal’s new working capital program offers established users working capital loans with no credit checks, and flexible repayment terms. This might be great for buying those dirt cheap foreclosures selling under $10,000.

End Loans

While many real estate wholesalers only focus on their acquisition financing, and finding buyer leads, there are big benefits of lining up financing sources for those borrowers. Sending them to a reliable end loan source can make the entire transaction smoother, help you act with confidence, and keep up overall performance.

Finding the Right Match

There are lots of mortgage lenders out there. Not all serve the real estate investor community, but some do. What is really important is finding a reliable lender you can trust, and matching your loan applications to the right lender for each deal.

What to Look for in an Investment Property Mortgage Lender

• Responds quickly
• Takes the time to answer your questions
• Is actually actively funding deals, not just taking applications
• Does what they say they will
• Are quick to alert you to issues when they arise

Make sure the lender is the right fit for your:

• Area
• Property type
• Purpose
• Loan amounts

Create profiles and cheat sheets so that you instantly know where to go for each deal when you land one.

 

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.