For those who have never invested in real estate but are thinking about it, “buy and hold” is probably one of the most intuitive methods of all. After all, most of us live in a house. How difficult could it be to own another one, rent it out, and make some money? Well, many of us end up learning by doing that renting properties is not as easy as it may seem on the surface.
Sooner or later, many newbies figure out that wholesaling is best suited for them. As with anything else, however, even wholesaling is not for everyone. It takes investment commitment both in terms of time and money. Marketing needs to happen week in and week out in order to keep generating leads. Without leads, there is no offer that can be made.
Once the leads start to come in, we talk to these potential sellers and capture key pieces of information from them in order to sort good leads from the rest. We then analyze the good ones. One of the most critical steps is to figure out the maximum-allowable-offer (MAO) amount. When the numbers make sense on paper and if the seller is highly motivated, we make an appointment to meet with the title holder(s) at the property.
Armed with a purchase agreement and/or an option-to-buy agreement, fully prepared to make an offer, we visit with the seller(s). We leave out the purchase price, of course, because we do not know how much to offer until and unless we see the actual property and its neighborhood. If and when the numbers continue to make sense upon visual inspection, we make an offer. Without offers, there is no deal to be had.
By the way, there is a big difference between a listing broker and a wholesaler in terms of how we do what we do. A listing broker’s job is to find a ready, willing, and able buyer – usually an intended owner occupant – for the seller through a listing agreement, which obligates the seller to pay commission to that broker when the duty is fulfilled. A wholesaler’s job, on the other hand, is to find a wholesale property for our buyers – usually investors who are cash buyers. We already have – and are constantly adding additional ones to – an existing list of wholesale buyers (investors) who are ready, willing, and able to buy with cash.* In contrast to the listing brokers who are paid by the sellers, we get paid by the buyers. Therefore, naturally, we focus our marketing activities on the areas in which the existing buyers are looking to buy. And the MAO amounts are established at the numbers that we KNOW will move the property as soon as one becomes available. In order to keep our cash buyers coming back to us for more deals, we ensure that there is plenty of juicy meat left on the bone when we hand off the properties to the cash buyers.
Back in the fourth quarter of 2004, when I began devoting full time to investing, never in my wildest dream could I have imagined myself wholesaling properties to other investors. With plenty of cash to invest, I used to see myself as a buy-and-hold investor. Since then, a lot had happened not only in the real-estate market but also in the capital market – as I’m sure almost everyone who has been in the market can relate. Essentially, I felt that I had no choice but to get into wholesaling in order to stabilize our cash flow.
Every so often, if a deal comes along that is perfect for us, we consider adding it to our existing portfolio of buy-and-hold properties. Our primary focus today, however, is wholesaling. In a way, I am actually glad that I was “forced” into wholesaling. While the jury is still out, thanks to wholesaling, I believe our investment company has been able to survive the worst economy the world has seen since the Great Depression. And the best part is that nothing gives me more pleasure than to be able to help solve motivated sellers’ real-estate problems – by moving their properties quickly to ready, willing, and able buyers – so that they can move on with their lives.
Happy investing!
*If you are interested in getting on our buyers’ list, please go to www.OaklandHouseDeals.com and fill out the form in as much detail as possible. The more detailed you specify your requirements, the easier it is for us to find the right match for you. Some of our clients even provide the street boundaries in which they are looking to buy. For your information, due to our existing cash buyers who buy as soon as the properties become available, you will rarely see a property listed at this website.
