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Smart Real Estate Strategies When Waiting For A Correction

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on Thursday, 27 May 2021
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The market has been waiting for a real estate correction. What are the best strategies and moves to make when you need to make money, but aren’t sure when the dip is going to happen?


The Next Shift


Despite the media drooling over competitive housing markets and fast growing property prices, experienced investors have been warning that the distress hangover triggered by the events of last year still haven’t begun to kick in yet. Even regular individuals have been watching and shaking their heads on the sidelines as they see property prices balloon to mind blowing sums.


There are a lot of things driving this craze. There are fundamentals which may be supporting this activity and are making it more sustainable than the run up to 2008.


However, the latest round of data is already showing signs of a slow down. Robert Shiller of the Case-Shiller Index said March 2021 house prices grew at their fastest pace in 15 years. While he hasn’t forecast an immediate crash, he does predict a coming correction that will cause some pain as people watch their home values drop.


CNBC reports that home sales volume already fell by almost 3% in April 2021. That’s coupled with the Wall Street Journal’s Marketwatch observing “pending home sales sink as the housing market falls back to earth.” Pending home sales fell by 4.4% in April, and are a leading indicator of the direction of closed home sales in the months ahead.


April ought to have been a busy month with more new listings, and plenty of cash in the market as home buyers enjoy getting their big tax refund checks.


This suggests that the next correction could have already begun. Though there are also factors which could stretch out the current run for another year or two.


What To Do


Real estate wholesaling is the obvious play here. It allows you to get in, out and paid fast.


Though how you do it can make a huge difference in how much you can make, versus setting yourself up for financial disaster.


Fully leverage acquisitions: Keep cash to market for volume, maximize sales prices, and maintain emergency funds and liquidity.


Sell first and fill the orders: This strategy is often called reverse wholesaling.


Use back to back closings: So you don’t get caught holding the hot potato.

 

Buy low: Build in a cushion for change. Though don't sit on sidelines when properties are going up in price daily, and some are doing instant flips at market value.

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Real Estate Investing: How To Minimize Risk

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on Thursday, 02 July 2020
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How risky is real estate investing really?


Investing in real estate is often promoted as a super low or zero risk business or investment. All with many great benefits. Yet, many would be investors get stuck on the sidelines, worrying about risk. It paralyzes them into inaction.


So, what are the real risks? How can you eliminate and minimize them?


What’s The Real Risk?

The truth is that there is no such thing as a 110% risk free investment. They don’t exist. Just like there is no guarantee you won’t slip and fall getting out of the bed in the morning, or a plane won’t crash through your roof and get you in bed in a freak accident if you don’t get out of bed each day.


In real estate there is a risk that property values will fluctuate, that malicious tenants and employees will try to sue you, that scammers will sue you for your website features, that tenants won’t pay, or even there could be an earthquake, wildfire or global pandemic virus that prevents you from collecting rents.


However, small the chances, these are potential risks. The most important question that investors should be asking is whether the risks outweigh the rewards or vice versa? Or even more critical, does failing to invest in real estate bring even more risk than doing it?


What if you don’t invest in real estate? What if the money under your mattress gets stolen or is devalued due to inflation? What if your own home catches fire and burns down? What if your bank goes bankrupt or leaks your information and you lose all the money in your checking and savings accounts? These may actually be more serious risks than investing in real estate.


What if none of those things happen, but you one day simply can’t work anymore or are laid off, and don’t have enough money for you and your family for 30 years of retirement? All because you didn’t invest in real estate.


When you dig in. what’s really scary is NOT doing it.


Ways To Reduce Risk When Investing In Real Estate

It seems far less risky to take action and invest in real estate. Yet, it would be foolish to completely ignore the potential risks either. Fortunately, there are several ways to minimize these risks, and boost your upside potential.


The top risks of investing in real estate seem to fall into these buckets:


  • Falling values of properties you are holding onto

  • In ability to collect consistent rents on properties you are holding long term

  • Malicious business and personal injury lawsuits

  • Exposure to losing any money you have tied up in properties

 

Here’s how to crush that risk…


Get Insurance

Insurance can help defend and against direct loss and damages to properties, as well as potential lawsuits.


Use Financial Leverage

If you don’t have any of your own money tied up in a property, then you can’t lose it. If you pay all cash for a property and sit on it, you are a target for lawsuits. So, what if you were able to use other people’s money to fund 100% of your investments? You’d have nothing to lose and everything to gain. That’s exactly what Best Transaction Funding does for you.


Secure Your Profits & Exit In Advance

The smartest, wealthiest and most successful investors don’t put out a penny unless they know they have a dollar coming in. They don’t buy inventory unless it is already presold. You can do the same thing with real estate through wholesaling and reverse wholesaling too. Find the end buyers, use transactional funding to finance the deal, and you are in, out and paid right away. You know you are going to profit before you buy a property, or spend an hour looking for one.

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4 Creative Real Estate Wholesaling Strategies To Use Now

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on Thursday, 26 July 2018
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Looking for ways to make real estate wholesaling even easier and more profitable? Check these ideas out…


Wholesaling can be one of the easiest and most profitable ways to engage in real estate. Yet, with a few creative strategies investors could find it even easier to get started, and to make more profit on each deal.


Co-Wholesaling


This is a way to partner up with others, expand your reach efficiently, and streamline your workload. You can either co-wholesale to find more inventory to promote to your buyers, or do it to tap into existing buyer databases and move your inventory faster and easier.


Reverse Wholesaling


Instead of going out to find the inventory, and then panicking about finding buyers for it in a very short period of time, why not find the buyers first, take orders and then go fill them. It slashes risk and stress, and makes sure all your deals are pre-sold before you sign a contract or take on funding for them.


Taking Equity


Multifamily investor and syndicator Sterling White says that he got his start wholesaling. On his first deal he chose to take equity instead of an assignment fee. That way he got to participate in the ongoing cash flow and equity appreciation. You might be able to do both - take a fee now, and equity for later too.


Prehabbing


A favorite strategy of the Fortune Builders team who were among the first house flipping TV stars, prehabbing means clearing out all the junk and creating a clean slate for your end buyers. Some properties look a lot worse and more work than they are because of all the dirt and stuff. Clearing a house out might only take a day for a good crew. It can make a huge difference in the appeal and value others put on the property and how fast it sells.


If you have only been wholesaling via assignments or using your own cash or hard money, then double closing with transactional funding is a great play to try too. With 100% financing you can do more deals, reduce the risk buyers and sellers will try to cut you out, and build in bigger profits.

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4 Trending Real Estate Investment Strategies In 2017

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on Thursday, 20 April 2017
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What real estate investment strategies are trending this year?

The market is changing. Most housing markets are becoming more expensive, interest rates are going up, and many investors are switching up their strategies. So, what’s trending now?

1. Reverse Wholesaling

For those seeking low risk investing, and low capital outlays, reverse wholesaling can be the perfect REI strategy. Instead of finding deals, and then trying to line up funding and marketing for buyers, reverse wholesalers find the buyers first. Then with transactional funding they can turn deals around in a matter of hours. They know their exit before they get in.

2. International Investing

There is set to be a significant amount of cross-border investing in 2017. The majority of global investors surveyed say they plan to increase their investment in American real estate this year. That will account for a sizable percentage of the $1.7T in capital these investors have to put to work this year. At the same time many US based investors may again begin investing offshore. Among this group are those looking to diversify their buy and hold portfolios, those hedging against and American real estate downturn, and those looking for less expensive assets with better cash flow.

3. New Construction

In many areas it has become cheaper and more profitable to build new rather than acquire exiting distressed properties. Some are engaging in gut rehabs of older properties or are expanding with additional square footage. Others are building spec homes to flip, or fourplexes to rent out for cash flow.

4. Partnerships

With many new investors trying to get into the market, and experienced investors looking to diversify and spread risk of any local downturns, more investors are partnering up. Real estate crowdfunding is one way to do this. Others are teaming up with a few peers to take on rentals, and some lenders are offering JV opportunities which provide 100% financing and equity sharing.

How will you invest this year?

 

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.

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How Much Money Should Real Estate Wholesalers Make?

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on Thursday, 12 January 2017
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How much profit should you be making on your real estate wholesale deals?

Property wholesaler profit margins are one of the most commonly debated topics among new investors, rehabbers, and buy and hold landlords. So, what’s the right amount? How much is too much? How should wholesalers set their markups?

Some wholesalers may not make as much as they could on deals because they are intimidated about losing them. Sometimes end buyers are complaining that wholesalers are asking for way too much, and are just wasting their time. So how do you pick the right number?

4 Ways to Price Your Wholesale House Deals

Fixed Fee or Percentage

One way to choose is to pre-determine what percentage or dollar amount you are going to charge across all of your deals. It could be 3% or 6%, $1,000 or $100,000. Or more. It’s up to you. This can make it easy when screening potential properties to see if they match your criteria. However, one flaw is that this doesn’t always maximize your deal flow and profit potential long term as the market changes.

Profit Left to the Next Buyer

Again, you can choose a fixed dollar amount or percentage spread which you think if fair for you end buyer to make after they buy, fix, and flip or rent the property. Of course, every buyer is different. Some use cash. Some use very expensive hard money loans. Some can get rehab work done cheap. Others pay a lot for contractors and materials. Some can flip a property in a week. Others take over 6 months to complete a flip.

ROI on Your Time

As a real estate wholesaler you are providing a valuable service. However, unless you have a team you are still often trading your time for money. Make sure you are getting a fair return. What’s your time worth? How much time do you spend flipping a deal? If you just quit working a McDonalds for minimum wage, then making $30 an hour may seem like an awesome deal. If you just quit being an attorney or doctor making $500 an hour, then you’ll probably want to make sure you are earning $1,000 an hour as a wholesaler. Remember to factor in all the time prospecting, screening, negotiating, and marketing, and managing the transaction.

Filling Orders

Another way to do this is to simply fill orders. Take pre-orders for deals aka ‘reverse wholesaling’. Then go find a fit, and profit what you can. You may have end buyers who are happy with 20% returns on two flips a year. Others may insist on getting properties 40% below market value, or being able to double their money. Take the order, find the deals, squeeze in however much you can. This is a little more fluid when it comes to predicting your income. However, it can lower risk and waste. One downside is that you are effectively letting someone else set market prices, versus controlling them yourself.

Looking Forward

There are wholesalers who can make $100k per deal, and do 10 deals a month. Others might do 1-4 deals per month and are very happy putting $20k in their pockets. Some might land some whales and make a million on a very juicy deal. A lot of it depends on how good you are at finding and negotiating deals, as well as how you market and present the inventory.

One thing which is really important, and which many wholesalers forget is to keep an eye on the changing market. Prices and profit margins will change. Protect your income and industry but refusing to sell out too cheap, but give good deals if you want more business.

 

What do you think? How much do you charge? How much do you think wholesalers should markup deals? Let us know on Facebook and Twitter

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Is Reverse Real Estate Wholesaling Really A Smarter Strategy?

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on Thursday, 22 September 2016
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Is reverse wholesaling a better way to flip properties?

Flipping houses has become incredibly popular thanks to reality TV shows, celebrity home flippers, and a rising housing market. Many investors have found property wholesaling a great way to take advantage of this with less risk, and more volume potential. Now some are pursuing a niche in reverse wholesaling. So how does that work? Could it be a smarter way to profit from the current market?

Reverse Wholesaling has been gaining attention thanks to real estate educators like Kent Clothier at REWW. The concept is simple. Instead of contracting to buy properties or acquiring them, and then going looking for end buyers, reverse wholesaling flips the process around. It means finding the end buyers, then filling their orders with wholesale properties. It’s essentially preselling and taking pre-orders.

Does it make sense? Of course. Instead of investing all the time, effort, and money into inventory which you aren’t sure will sell, or how long it will take to sell, it means the confidence, speed, and enhanced profitability of knowing your deals are already sold before you get them. This decreases risk, and makes sure you are operating at maximum efficiency.

To make this strategy work investors need to target buyers first. The more qualified buyers you have waiting for multiple deals the more you can get out there and do. Of course you will ultimately need the deals, but there are plenty out there if you know where to look. The latest data shows a substantial double digit surge in REOs this year, and there are almost 1.4M vacant homes which could be ripe for flipping.

As a reverse wholesaler your volume and income potential may only be capped by your access to capital. That’s what transactional funding lenders are for. Best Transaction Funding specializes in this type of lending, and can provide up to 100% financing with no appraisal requirements.

 

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.

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Wholesaling Houses: A Safe Haven in Uncertain Markets

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on Wednesday, 02 September 2015
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Markets are on a roller coaster ride. But there is one group of investors that continues to push ahead confident and unfazed…

Real estate wholesalers profit when the market is up and down. For most it is a scary time for investing. When markets in general aren’t being manipulated, they appear to rocket and dive out of control. Right now no one knows what’s going on in the stock market. And both the bulls and the bears aren’t sure what’s next for real estate. Some are concerned that the fundamentals just aren’t there to support the current upward trajectory. Others point out that historical data suggests the best is yet to come, and we’ll see a rising housing market for another seven plus years. However, it may also be true that a stock market crash generally preludes a housing contraction.

The bottom line is that no one really knows what is going to happen and when. We can draw some obvious conclusions based on data, but there are many factors working at the same time. And statistics can be deceiving. No one can afford not to invest. No one wants to be stuck with a hot potato that they can’t afford to keep holding.

The beautiful thing is that it doesn’t really matter what the market does or not for real estate wholesalers. Even aside from the attractive returns this is one of the main draws. People will always need to buy and sell real estate for one reason or another. And that means income and investment returns for real estate investors during the deepest crises and most exuberant booms. And by pre-selling, or ‘reverse wholesaling’ as Kent Clothier proposes, and using transactional funding, this is about as risk free as individuals can hope for today. You are in, out, and boasting top returns. And with over $150B in distressed loans and properties in the pipeline there is still plenty of opportunity for those seeking to substantially boost income and wealth in the short term, and get into something that can get providing long term.

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.

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