I was originally going to write this article as the shortest article in history. It was going to answer the question that is asked by every newbie investor at one time or another….
“Can I Wholesale Real Estate in this Market?”
All I was going to put was a big giant red YES! but then i figured to explain a little bit further so really new investors can see why.
The premis of wholesaling real estate is to buy the property at a discount and then turn around a sell it for more then you bought it for. Your purchase price is at a discount to the CURRENT market value of the house. In an exploding market you might buy a house with an ARV (after repair value) of 200k for 110k and then turn around and sell it for 120k. Now that same house in a down market might only be worth 130k. After doing your MAO (max allowable offer) calculations you’d probably purchase the house for 75k and then turn around and sell it for 85k. Does that make sense?
In theary it is a simple and straight forward concept and will work in any market at any time. The only caveat is there must be people buying or you are stuck with the house. But that is an entirely different article for another time.
A good tip that I learned from Steve Cook is to not be afraid to adjust your formula for buying to get inline with the current market conditions. In a crashing market it is good idea to buy at even deeper discounts in order to protect yourself in case you have to hold onto the property for a few months.
Even though you can wholesale in any market, it is critical to pay attention to the ups and downs so you can adjust.
I hope this helps…
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