Why is it so critical for property wholesalers to know their landlord-tenant laws, and best practices for interacting with renters?
Many real estate investors may specifically turn to wholesaling in order to avoid the intricacies and hassles of dealing with renters and property management. However, ignorance is not bliss when issues with tenants arise.
Savvy wholesalers that expand their real estate knowledge to property management will not only increase the volume of deals they are able to handle, find discounts where other can’t, but will improve their contract to close ratios as well.
Far too many dismiss this important element of real estate investing. Here’s why it matters so much to wholesalers…
Effective Due Diligence
Without understanding tenants, related documents and notices, and management tactics wholesalers can fall far short of thorough due diligence. What makes a good lease? What tricks to sellers commonly try to pull when transferring property which can sabotage buyers? Who should obtain estoppel letters to verify rents and tenant status prior to real estate closings, and finalizing mortgage approvals?
Maximizing Resale Profits
Maximizing the potential of each wholesaling deal relies on speed and getting the best buyers in the door. Disgruntled tenants can completely derail plans to flip homes. They can not only prevent access, but can scare off potential buyers in a heartbeat. In the reverse; just a few moments of conversation, and a soft but firm approach can take a sour and non-performing tenant to one of the most loyal, and increase property value dramatically in the process.
Keeping Deals Together
The above equally applies to keeping deals together, even after both A to B, and B to C contracts have been signed. It will facilitate end buyer due diligence and walk-throughs, and avoid vandalism which can kill deals on the spot.
Passing on Good Deals
Good tenant handling can not only help real estate investors avoid bankrupting lawsuits, and financial nightmares, but can ensure wholesalers are providing their prized buyers list with good deals. It only takes passing off a rogue tenant or two to cut off deal channels and destroy reputation. So get a good handle on your local landlord-tenant law, polish your people skills a little, and there will be plenty of highly profitable deals to be done for a long time.
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