Real estate wholesaling is a tough business but is less risky than flipping. Regardless, that’s not to say that the process is going to be smooth-sailing all the time. Like any other business, it has its highs and lows. If you know what you’re doing and enjoy each and every stage of the operation, you’ll find this line of work highly profitable.
Whether you’ve just started in the industry or already in the business for years, I’m here to share 5 common mishaps wholesalers make that you should avoid as well as ways on how to prevent them from happening.
I get that you just want to earn more. But if you’re making unnecessary charges on one deal, then you have to reevaluate your contract. Don’t get too greedy on one deal. Instead, concentrate on sealing in more deals and generating more from it.
Don’t get property contracts that are too high
This goes the same with signing up properties that are overpriced. If you, as a buyer, wouldn’t take it for the hefty cost, then don’t get contracts that come with an outrageous price tag.
Don’t underestimate the repairs
Location plays an important role in tying the costs. Repairs and other services can be priced lower in some areas and higher in others. It’s not a one-size-fits-all system. Do not underestimate repair costs and consider it when assessing the property.
Don’t overestimate the After Repair Value (ARV)
The ARV calculates the future worth of a distressed property once it has been repaired. After completing renovation work, you need to take in to account the purchase price and renovation costs in order to yield a more accurate sale price.
Knowing the ARV of a property and how to compute it will help wholesalers and flippers see if there is enough room for the lot to become profitable.
Give a good presentation
You see numbers after numbers without getting a clear picture of the property. How do you put a more accurate and reasonable estimated value on that? Of course, you do your research. I suggest that you attach pictures and a video. This helps in making the decision process faster and around the ballpark figure.
You’ll learn and grow as you go along the journey of real estate wholesaling. The sooner you figure out how to avoid these mistakes, the better it is for your business and for your clients.