Here’s another addition of our Ask an Investor Series on Jersey Digs. A place for you to write in and ask us all your real estate related questions. We are now also posting all of our responses here as well, to expand a little on our answers and provide a little more depth. Please keep writing in to Jersey Digs with all of your questions, we’re having a blast answering them!!
I would like to start investing in real estate through wholesaling. I was wondering if you have good suggestions about finding cash buyers and good property to invest in. Where do I start to look for rental properties below market rate and fixer uppers?
Of course, make sure to include GreenPen Investments, Inc. on your list of cash buyers! Personally, if we were wholesaling properties we would keep the list of buyers small and limit it to only investors that (1) have a good track record, (2) you know can perform and (3) that you will be able to trust to keep information confidential and not try to cut you out of the deal.
The second part of your question about finding good properties to invest in will be the tricky part at this point in the market cycle. There really is no easy answer to this question right now as there are a lot of competitors for the same properties. The only way to compete here is to be genuine with the people you deal with. For example, if a seller gets 2 or 3 identical offers on their house but you live next door and have always been nice to them, why wouldn’t they sell it to you instead of someone they only met once?
We have worked with many wholesalers through the years, some of the mistakes we’ve seen have been:
1) Wholesaling a property for MORE than it is listed. When a wholesaler sends us a potential deal we have to start our due diligence process. If the property is already listed through a real estate agent (which is fine), we will see what it is listed for. If the price you are marketing is MORE than what it is listed for, why should we go through you? The wholesaler must secure the contract for less than the listed price, while still making sure they have a profit on their end. No good real estate investor will deny a wholesaler their rightfully earned profit. If it weren’t for the wholesaler, we wouldn’t know about the deal.
2) Pretending to be an expert. We were sent a deal many years ago and wanted to arrange a viewing of the property. The wholesaler arranged to meet us and the listing agent at the property. As we viewed the property we had several questions. The wholesaler wanted to answer all the questions, but didn’t know the answers. It’s OK to not know the answers, if you don’t, delegate to the agent, or say you don’t know. We will do our due diligence to check your answers anyway, so you might as well be honest.
3) Be honest about the situation. If your contract is coming to a close let us know that it’s a rush so we can act accordingly. This has happened in the past and we were able to rush everything on our end and close on the property within 2 weeks. If you’ve budgeted a very large profit for yourself and there is room in the price for negotiation, let us know so we don’t immediately discard the property due to pricing.