Common methods for connecting with sellers are putting up bandit signs, mailing flyers, and working with real estate agents who spe- cialize in investment properties. Searching through probate court documents is also an effective way to scope out potential properties. By accessing the documents, you can use more targeted marketing efforts to send flyers or letters to homeowners proposing to buy their property. It’s also important that as a whole- saler, you have a title company, con- tractor, and appraiser on your team to help finalize the sale and make it a more seamless process. Getting an appraisal on the property ensures that you are paying the right price for it and will have room to resell and make a profit. The title compa - ny runs a search on the property to confirm that it’s a legitimate piece of real estate, and the contractor can look through the property and draw up an estimate of repairs—a critical detail for when the time comes to find a buyer. Just as important—if not more so—is a wholesaler’s math capa - bilities, and the longer you’ve been a wholesaler with a successful
track record, the easier the math becomes. Knowing what to offer a seller really begins with the ending, meaning, you’ll have to work back- wards to come up with an appropri- ate number that benefits the seller, you as the wholesaler, and the inves- tor who will flip the property. Key numbers that will help you decide the best maximum allowable offer (MAO)—or the price you end up paying for the property—include: • The flipper’s profit (have you found a flipper, and if so, how much do they want to make off the property?) • After repair value, or ARV (the final price the house flipper is going to sell the property for) • Repair costs (how much will it cost to fix up the property?) • Fixed costs (how much is the deal going to cost the flipper?) • The wholesale profit (how much do you, the wholesaler, want to make?) As is the case with most things, experience and success make it easier to put a price to these points, resulting in a quicker and easier pro-
cess with each successful property purchase you make. What are the risks associated with becoming a real estate wholesaler? While the practice is legal, there has been controversy surrounding wholesaling on the basis that it’s essentially brokering real estate without the license to do so. Howev - er, laws around brokering vary wide- ly from state to state, leaving room for interpretation. As the middleman, wholesalers aren’t looking to actually settle on the property, they merely assign the contract to another investor. Ulti- mately, a newcomer to the world of real estate might find wholesaling an appealing route since it requires minimal capital to make a profit. • Grace Souiedan is Chief Lending Officer at Temple View Capital, a national private portfolio lender that offers flexible financing for investors in residential real estate. Founded by entrepreneurs with more than 20 years of residential mortgage and real estate investment experience, Temple View has been at the forefront of innovative product development since its inception. Utilizing a common-sense underwriting approach, deep commitment to customer service and a well-capitalized balance sheet, Temple View enables real estate investors, correspondent lenders and brokers nationwide to optimize financing efficiency on real estate investment projects and rental properties.
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