Ways in Which You can Profit through Wholesaling Foreclosed Properties In Today's Market

Some real estate investors play their ventures safe and conservatively. They may follow the basic plan of purchasing one property and holding onto it for many years. During this time, the equity of the home will (hopefully) increase. As a result, the investors' net worth increases. This is certainly not a bad plan to follow. However, those looking for a dynamic process that can yield great wealth may look towards wholesaling real estate property investments.

And let the truth be told: wholesaling can deliver tremendous profits. Better still the current market that exists today definitely presents many excellent opportunities for those seeking significant profits from wholesaling.

So, what exactly does wholesaling entail and why is the current market an excellent one for this process? Here is the answer…

First, it is important to point out that wholesaling is a highly involved process. It can entail a single real estate transaction or several simultaneously. Basically, you have the option to purchase one hone or several homes at the same time. The latter type of wholesaling is frequently referred to as bulk real estate investing. Some may assume that buying several homes at one time can cost a significant amount of money. Such an assessment may not necessarily be an accurate one since wholesaling entails the purchase of several foreclosed properties from a single lender, hedge fund, or large investor group. The transactions may also vary depending upon the particular region of the country you are purchasing wholesale foreclosures. In the Midwest, for example, it is not out of the question to be able to purchase such properties for less than the cost of a used car. The lender may be a private holder of the mortgage or it could be a bank. Either way, you would be taking the homes off the shoulders of the lender at a dramatically reduced price. Since the lender can get rid of several troubled and costly properties in one bulk sale, the lender will be more inclined to cut prices significantly. This sets the stage for increased resale profits at a later date.
Why would a lender take such losses? It is because the lender is looking to cut its losses. Contrary to what some may assume, lenders lose big on a foreclosure. There are significant costs involved with foreclosing on a property. When a real estate investor comes along and offers to take 8 properties off the lender's hands, the deal may seem appealing. So appealing is it, the lender may let the properties go at far less than their market value in the form of a bulk discount.

In today's market, it is much easier to gain a favorable agreement from a lender to wholesale property. The reasons for this are evident in the financial pages of every newspaper in the country. Basically, foreclosures are at an all-time high with more to come once the shadow inventory of homes the banks are holding on to are released to the market. This means more and more lenders are overburdened with foreclosed properties and defaulted mortgages. They need to get such properties off their books before they continue to lose money with the administrative costs associated with foreclosures. Again, this opens a number of opportunities for those looking to wholesale real estate investments.

It is not out of the question to purchase wholesale properties for 30 – 60 cents on the dollar. Upon revamping or fixing the property, it may be possible to sell (flip) the property for 60 – 75 cents on the dollar. That is a return on investment that might not be possible to acquire in other investment venues.

But, do not fall into the mistaken impression that wholesaling real estate is easy. It is costly, time consuming, and entails many managerial components. It is not a get rich quick or easy scheme. However, it is a way to get rich when you know what you are doing.

As a finishing tip, if just starting out begin wholesaling in areas and property types that you know and are comfortable with, or find a mentor who can help you. If you were raised in an apartment complex, you might prefer to invest or wholesale apartment complexes. I would recommend wholesaling homes as a good place to start then move onto wholesaling apartments after you get some experience. With diligent planning an investment property can be very profitable.