If you are interested in Real Estate Wholesaling, you should learn the most common mistakes in the business, so that you can steer clear!
Property investing is an incredibly popular field with immense opportunity for profit. Many people believe that real estate wholesaling is the best way to get your career kick-started before entering the flip and fix game, or before becoming a landlord.
While this is true, it doesnâ€™t mean you should go in blind hoping to figure out everything along the way. If you learn the mistakes that others have made, you can take the correct action to avoid them.
Things That You Should NEVER Do When Real Estate Wholesaling
Below are 9 common real estate wholesaling mistakes that beginners in the business make.
1. Jumping In With No Emergency Cash
One of the main reasons that wholesaling is great for up-and-comers is you donâ€™t necessarily need any money. As a wholesaler, youâ€™ll sell the contract for the property to an investor who will close in your place.
But just because you donâ€™t need money, doesnâ€™t mean you shouldnâ€™t have some available just in case.
If for some reason you cannot find a buyer, you will be responsible for paying for the property. Moreover, youâ€™ll have to pay for things like bandit signs and any marketing you use.
2. Not Assembling A Buyerâ€™s List In Advance
One of the main ways wholesalers find investors to sell to is by assembling a buyerâ€™s list. These ongoing buyers are people you might meet by networking at an REIA meeting, and they are always interested in new opportunities to purchase properties.
A mistake that some wholesalers make is that they wait until after theyâ€™ve put a property under contract to assemble this buyerâ€™s list. If you wait too long, you might have to be willing to (yet again) negotiate down and settle for a lower offer. Or, in a worse case scenario, youâ€™d have to close instead if the buyer, and pay out of your own pocket.
3. Ignoring The Buyerâ€™s Needs
The goal of any flip is profit, and wholesaling is no different.Â However, sometimes you might be so focused on your own profit that you might forget that of the buyer.
The two are actually related. If the buyer feels that he wonâ€™t profit from a house because it needs an extraordinary amount of rehab, heâ€™ll want to negotiate lower. If he negotiates too low, you wonâ€™t make any money from the deal.
To avoid this, put yourself in the buyerâ€™s shoes. Just because you wonâ€™t be making any of the renovations, doesnâ€™t mean that you should ignore them.
4. Failing To Get An Inspection
Sometimes, wholesalers become so proud charismatic ability to close sales that they donâ€™t realize that they are...