Once you’ve created your investor list (which we will discuss) it won’t be hard for you to move these deals in a short amount of time, normally within 10 to 15 days. Your buyers will be paying with All Cash and financing is not an issue.
This is much easier than selling to an "End Buyer". In a slower Real Estate Market, it may literally take two to three months for you to find a qualified buyer who wants to buy the property. Remember that the keyword here is "QUALIFIED BUYER". When you're dealing with other investors you know that they either have cash or hard money, and financing isn't a big issue. When you're dealing with "Joe Q. Public" you're going to get interested buyers with various financing issues and you're the one that has to worry about getting the deal closed.
That brings me to another reason why I prefer wholesaling real estate over rehabbing. When you buy, fix and resell real estate, you're committed to the property. Once you close on that baby it's your's...The Good And The Bad! If some unforeseen problem arises (It always does), you're going to be the one that carries the expense. If you're rehabbing a property, you've got to start by hiring a contractor or handyman. You’ve got to get him to do all the repairs to the property, market the property, go through the process with the end buyer. All of this may take a long time, and you are the one carrying the costs. Every day that this property remains in your possession, money is pouring out of your wallet.
In a wholesale deal, all that you are really doing is getting control of the property. You would simply take the same property that you would normally buy and rehab, and get it under contract. Then, you're taking that contract, marketing it and selling it to other investors that want to take on the project. There are investors out there that prefer doing rehabs. These are investors who have the cash to pay and who don’t mind waiting six months to do a rehab. There are also investors that want to do a deal, but are horrible at talking to sellers and would not be able to secure the pricing that you can.
The Rehabber will generally net more than a wholesaler, but look back at all of the risk and time associated with doing a rehab. The average, depending upon your location is between $25,000.00 to $40,000.00. and at times even more. But most wholesale deals are going to net you anywhere between $10,000.00 and $20,000.00. As you get better at negotiating, you'll be getting properties under contract for less and less, allowing you to sell the contract for more and more.
I would personally rather do four wholesales and spend less time than to wait six to eight months for a single rehab to cash out. Even if you're in a position to wait that long, is it really worth the risk? That's the question that you need to ask your self when deciding which real estate investment strategy you want to take on. Exactly how much risk are you willing to accept?
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