Thinking of getting into the wholesale real estate business? There is no doubt that it is one of the best investment opportunities that there is. In real estate wholesale, you purchase a property below its market value price, and then sell the property at a markup in a short timeframe (usually within a month). In the end, you are left with a profit without ever owning the property.
With every opportunity, however, comes a risk. The good news is, while there are several risks that come with real estate wholesale, there is also a way to avoid those risks. By understanding these risks and having a strategy in place to avoid them, you will be on the path to success.
Here are the most common risks of real estate wholesale deals and how you can avoid them:
No Guaranteed Income
If you are looking for an additional source of income, wholesale real estate is an excellent opportunity. If you’re looking for a steady income on the other hand, you might want to consider looking for something else. Very rarely does someone get into the real estate industry and get a paycheck every few weeks.
How to avoid it: have a ready list of buyers and sellers to maintain the health of your sales pipeline, and focus on deals that are big enough to keep you going for a few months. Dry spells do occasionally happen, but having an active buyer/seller list and managing your margins will enable you to float the dry moments and concentrate on landing bigger deals.
When realtors receive a deal, they count on that deal closing. However, this isn’t always the case. Chances are you will run into many deals, but you won’t be able to close every single deal. This typically happens to those that are new to the wholesale business. You know what they say though, you learn from your mistakes! So, when a deal doesn’t close during the first few months of your business, evaluate what you could have done better and view it as a learning opportunity. Sometimes, a deal that falls through is completely out of your hands.
How to avoid it: If a deal falls through it’s best to move on to the next best deal. Of course, no realtor wants a deal to fall through so the best way to avoid this scenario is to qualify your leads and have as many deals in your pipeline as possible. By qualifying your leads, you can determine how soon a client wants to make a purchase, what their budget is, if they have the funds and how soon they are looking to buy. If a lead is not clear on any of those things, they might not be ready to buy, and the deal may just into a waste of time. Additionally, by having many deals in the works at the same time, you reduce your overall risk level and increase your likelihood of growth.
The Instability Of The Real Estate Market
Almost everyone knows that the real estate market is not always balanced. Sometimes it’s a buyer’s market and there’s little margin for whole sellers. Sometimes it’s a seller’s market and there’s no inventory to purchase. For this reason, every real estate professional goes through challenging times at one point or another.
How to avoid it: You have very little control over the changes in the market. So, when times are good, you need to make the most out of it. While the market is hot, work as hard as you can to find as many qualified leads so that when times are tough, you are not under so much pressure and you have a bit of wiggle room. Then when times are tough, you need a rock-solid real estate lead qualification program in place to ensure you’re setup for success until times are easy again.
Not having a buyer in time
You might get an awesome deal but part of being a wholesaler is being able to turn around and find a buyer so that you can make a profit. You might run into a situation where you have a great property and no buyer.
How to avoid it: Build a strong contact list. The more people that you know, the more people you will be able to connect with when it comes time to find a buyer. If you have a large network, you’ll be more likely to find someone that knows someone who is looking for a property.
Getting Into Wholesaling Because It’s “Easy”
We will admit, wholesaling is a great opportunity to make amazing income. However, it is not as easy as it looks. It is very unlikely that leads will just show up at your door. The main purpose of real estate wholesaling is to find properties that are being offered at a lower price than they are actually worth so that you can make a profit. This takes a lot of research and time.
How to avoid it: Work with a group of experts who know how to find motivated sellers! Our team at Call Motivated Sellers does just that. Our team of cold calling professionals connects you with qualified leads who are motivated to sell their property. Our team brings you the qualified lead so that all you have to do is close the deal. The real estate wholesale business is not easy, but it does not have to be so hard. With the right sales strategy and right team, you can expect to see a steady flow of business.
Call Motivated Sellers
After learning about all the risks associated with real estate wholesaling, you might be wondering if you are making the right choice. It might seem intimidating to hear about all these risks, but by being aware of the risks and having a plan in place to avoid those risks, you can be very successful.
At Call Motivated Sellers, we want to be a part of your team so that you have a steady flow of business. With our help, we can minimize all of these risks.
Ready to get started? Contact our team today!