Wholesaling Houses; the Good, the Bad and the Ugly

When I first began investing in real estate I had no idea of the broad range of possibilities for making money.  One of the more surprising ways was the concept of wholesaling.  Being from New York, I heard the line, “I can get it for you wholesale” a million times but never even considered houses ad something you could wholesale.

Wholesaling houses is simply the idea of buy low, sell low.  We find a bargain and then sell it to a bargain hunter.  How do you do it?  The same way as every other aspect of our industry, locate suspects, prescreen for motivation and sort the prospects from the suspects, create and present your offer(s), follow up, control the property and close quickly.

While wholesaling isn’t my core business I do wholesale a few properties a year either because they are out of my farm area or I have enough projects going on that holding a vacant house until I can get a crew on it isn’t as valuable as the quick cash that a wholesale deal can provide.  Besides if I provide good deals to other investors, they are likely to return the favor sometime in the future.

In order to be successful at wholesaling you need to buy very low and the only way to do that is to find properties that people absolutely, positively don’t want and that the average homebuyer won’t touch either because no bank will finance it or it has something that frightens the average buyer (structural issues, infestations, major repairs, etc.).

A good wholesaler can see past the problems all the way to the profit!  They know that there aren’t many problems with a house that cannot be fixed for a price and that the market for these properties is much smaller than the standard retail properties on the MLS.  A smaller market creates the opportunity to purchase these properties cheap so they can sell them cheap and still make a profit while leaving profit in the deal for their buyer!  Many new investors are frightened by these scary looking properties and tend to walk away because they can’t see the profit potential.

One such property was recently uncovered by one of my students. When we went to look at it I was blown away.  Most wholesale properties I have seen have been vacant, this one happened to be occupied up until two days before we inspected it.  After having viewed thousands of houses over my investing career I thought I was beyond shock. I was wrong.  Take a look at the video.  What do you think?

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As tempted as I might be, I’m going to avoid social commentary here and stick to the subject of wholesaling.  With wholesaling the “good” actually comes from the “bad” and the “ugly.”  With trash, debris and vermin piled wall to wall up to the windowsills and only very narrow paths through the garbage, these was the worst living conditions I have ever seen.  I lived in a college dorm, rented a house with fraternity brothers and have rented to some pretty lame tenants and this exceeded anything I have ever witnessed by an order of magnitude.

The good news is that we can see past what is and on to the possibilities.  This little 3-bedroom 2-bath block home had a good roof and looked fine from the outside.  It sits in a decent working class nice neighborhood with well-maintained homes along the street.  While the place needed to be gutted to the studs, fumigated, the HVAC replaced, new baths, new kitchen, flooring and paint there is a profit to be made by the right buyer because there is nothing wrong with the house that cannot be fixed by a check to the proper tradesperson.  The key to success is in buying it right.

The end of the story is the property was put under contract and wholesaled to someone who is ready to do everything that needs to be done and sell for a profit or hold is as a long-term rental.  But their exit strategy is their business and a topic for another day!

What would you do?

 

 

“Outside the Box” Buying Strategies

This past weekend, I was featured on Atlanta News Talk Radio 1160-AM, with North Metro REIA owner Buddy Corbin.

We had a good hour of talking about the current state of the economy, ways creative financing can help, and why I believe the individual investor will be the one to pull our nation through this recession. Buddy and I discussed buying strategies that are ‘outside the box’, and solutions that nearly anyone can take advantage of, if they learn how to do it correctly. Not only that, but we also covered many options on how you can make money in real estate now, and how to make the most of the properties you currently have. Needless to say, it was a power-packed hour!

You can check out the recording on North Metro REIA’s website, below:
http://northmetroreia.com/radio-show/augie-byllott-buying-strategies-that-are-outside-the-box-on-wcfo/

I’ll be speaking there on September 11, 2010 and can’t wait. It’s going to be a fun ride!

Building Wealth – Episode 7 – The Special Sauce

My wife Audrey is an awesome cook; she has recipes for everything.  Even when she doesn’t have a recipe, she creates one.  Her thinking is that as long as we like the ingredients, it should turn out all right.  Knowing our favorite things is like having a special sauce.  Blend them together and good results are virtually guaranteed.

Possessing the special sauce can make a significant difference in your ability to achieve successful entrepreneur.  A pact can also be a recipe for a special sauce. PACT it is an acronym for Personal Action Coaching and Training.  It is also an acronym that describes how I choose to live. With Passion, Action, Commitment and Tenacity.  Its my special sauce.

Take the positive path, the high road.  Always do your best and projecting a positive, enthusiastic, up beat attitude.  You’ll be amazed by the results!

To your success

Augie

Building Wealth – Episode 6.6 – Planning For Effectiveness

Hocus, Pocus…Time to Focus

The human brain wasn’t designed for multi-tasking anymore than ADD is an excuse for not starting and completing a task.

One of the best ways to overcome distractions is so tackle our tasks one at a time, and to see them through to the end. To do this, find a private space, turn off the phone, your email, close the door and stick to the task at hand. This will help you overcome many distractions allowing you to be more focused and way more productive.

To your success…

Augie Byllott

Building Wealth – Episode 6.5 – Planning for Effectiveness

Establish Accountability

Who holds you accountable?  Are you accountable?  To yourself, your business, your clients?  When you share your goals with others it can make a big diffenence in how effectively you manage yourself and your priorities.

Sharing your goals with others can help keep you accountable.  Make it a formal arrangement and when it becomes a habit… watch your productivity leap forward!

To your success…

Augie Byllott