Why Should Real Estate Investors Wholesale REOs?
Wholesaling is the process that real estate investors use to purchase a property and quickly resell it for a profit without rehabbing or repairing it.
The point of wholesaling is to make a quick profit using minimal or no money, not having to use conventional funding or take any market risk.
If this sounds like an ideal investment, it can be if done correctly.
Whether an investor's objective is to rehab or buy properties to own as rental units his ability to do wholesaling gives him the ability to have a regular cash flow.
The problem for rehabbers is continuously raising funds for each property and getting qualified retail buyers who can get financing from conventional lenders.
Rehabbers with limited funds may have to wait months and months to complete one deal to get the proceeds for their next deal.
If this rehabber wholesales between completed rehabs and works only with cash buyers, he will be able to quick-turn deals and he will never be at the whims of a bank for lending money to an end-buyer.
Rehabbers have to repair a property so an end-buyer can essentially move in and start living there when the sale closes.
Often this means updating a kitchen and bathrooms for the rehabber to get the highest price in his market.
Getting this best possible price can take time and continuing monetary input into the property with no guarantee of a profit when it is sold.
Rehabbers make the largest profits on rehabbed deals but run a market risk while holding them for sale.
The result can be wild swings in income to rehabbers as they wait for their properties to sell.
Buyers for properties who want to rent them are traditional investors who believe that their mortgage will be paid by the tenant.
The average landlord lasts only three years before he quits in disgust.
Still, landlording is critical to our economy and many investors have good success over the long-term.
Investors accumulating properties as rentals have the issue of constantly raising funds to finance deals.
Lenders have flip-flopped on how many loans they will give investors to finance properties.
Normally, an investor would need 20% of his purchase price to buy rental properties with limits on how many he can own.
His percentage return on capital invested is high, but in terms of actual cash flow, many rental units are needed to make a living.
Both rehabbers and landlords can wholesale properties while they pick and choose the best deals for themselves and sell the remaining properties to other investors, who likely will rehab or keep them for rentals.
The huge benefit, besides cherry picking the best deals, is their ability to generate a consistent cash flow as they need it between rehabs or in addition to their monthly rental income.
In summary, wholesaling offers rehabbers and landlords the ability to generate a steady monthly income while they wait on income from their other properties.
Depending on the area of the country where they are wholesaling, the income to landlords can be the same as income on five or six units or more.
While for rehabbers, the income can be equal to 20% to 30% of the amount of a specific rehab.
The key to becoming successful as a wholesaler is in building a powerful buyers list so the wholesale deals can be easily and quickly sold to cash buyers.
The point of wholesaling is to make a quick profit using minimal or no money, not having to use conventional funding or take any market risk.
If this sounds like an ideal investment, it can be if done correctly.
Whether an investor's objective is to rehab or buy properties to own as rental units his ability to do wholesaling gives him the ability to have a regular cash flow.
The problem for rehabbers is continuously raising funds for each property and getting qualified retail buyers who can get financing from conventional lenders.
Rehabbers with limited funds may have to wait months and months to complete one deal to get the proceeds for their next deal.
If this rehabber wholesales between completed rehabs and works only with cash buyers, he will be able to quick-turn deals and he will never be at the whims of a bank for lending money to an end-buyer.
Rehabbers have to repair a property so an end-buyer can essentially move in and start living there when the sale closes.
Often this means updating a kitchen and bathrooms for the rehabber to get the highest price in his market.
Getting this best possible price can take time and continuing monetary input into the property with no guarantee of a profit when it is sold.
Rehabbers make the largest profits on rehabbed deals but run a market risk while holding them for sale.
The result can be wild swings in income to rehabbers as they wait for their properties to sell.
Buyers for properties who want to rent them are traditional investors who believe that their mortgage will be paid by the tenant.
The average landlord lasts only three years before he quits in disgust.
Still, landlording is critical to our economy and many investors have good success over the long-term.
Investors accumulating properties as rentals have the issue of constantly raising funds to finance deals.
Lenders have flip-flopped on how many loans they will give investors to finance properties.
Normally, an investor would need 20% of his purchase price to buy rental properties with limits on how many he can own.
His percentage return on capital invested is high, but in terms of actual cash flow, many rental units are needed to make a living.
Both rehabbers and landlords can wholesale properties while they pick and choose the best deals for themselves and sell the remaining properties to other investors, who likely will rehab or keep them for rentals.
The huge benefit, besides cherry picking the best deals, is their ability to generate a consistent cash flow as they need it between rehabs or in addition to their monthly rental income.
In summary, wholesaling offers rehabbers and landlords the ability to generate a steady monthly income while they wait on income from their other properties.
Depending on the area of the country where they are wholesaling, the income to landlords can be the same as income on five or six units or more.
While for rehabbers, the income can be equal to 20% to 30% of the amount of a specific rehab.
The key to becoming successful as a wholesaler is in building a powerful buyers list so the wholesale deals can be easily and quickly sold to cash buyers.