Investing in real estate is one of the best ways to build your net worth and make business connections that will last a lifetime. Wholesaling is great for beginner investors that may not have a large amount of cash to invest. The money that you earn through wholesaling can later be used to become a landlord or flip houses.
Before you dive into this exciting new business venture, take a moment to do your research. Wholesaling real estate is a business in which mistakes can cost you big time. Stay informed so you can avoid them long term. Here are some of the most common mistakes that real estate wholesalers make.
Lack of Emergency Funds
Many people new to wholesaling think that since they don’t need money to get started, it’s okay to jump in without an emergency fund. This is not the case at all. New investors must understand that they’re still financially liable for the property even though they are not purchasing a property if they can’t find a buyer. You’ll also need to factor in your budget for marketing.
When you’re just getting started, take care to account for the required expenses and anything that could go wrong when you’re in the process of closing a deal.
Failing to Research Your Buyers
No matter what you do, make sure that you know your market and what your buyers want. If you fail to research your buyers, it’s easy to have that potential profit fall to the wayside. After all, you can’t make money on a house you can’t sell. For instance, you might find a beautiful property in a neighborhood that your ideal buyer would never desire to live in, or you could buy the wrong property altogether. No matter who your target buyers are, make sure you are fully aware of what type of properties they’re looking for.
The best way for you to have a clear picture of your clients’ wants is to build a relationship with them. Earn their trust. Take your time to study what style of home they’re interested in and which neighborhood appeals to them. Once you have gathered this information, establish a database of client information. This will help you stay organized as your buyer’s list grows.
Not Investing in an Email Campaign for Your Buyers
You can’t reach your full potential as a real estate wholesaler if you fail to market your property effectively. You might have found an extremely lucrative investment property, but none of this matters if your buyers don’t even know that the property exists. It is your duty as the wholesaler to reach out to buyers. If you’re not taking the initiative to market your property, there is no point in comprising a buyer’s list.
Exhaust all of your resources to ensure that you make the highest number of sales possible.
Not Establishing a Buyers List
A buyers list is critical to your success as a wholesaler. The right buyer’s list is critical to guarantee that you’re able to produce a steady revenue. Keep an eye out for events at which you can network and in touch with ongoing buyers. You’ll meet the most valuable clients at an REIA meeting. The people that you can establish a relationship with will be your lifeline in the years to come.
Don’t wait until you’ve already begun putting properties under contract to create your buyer’s list. Waiting too long will cost you money in the long run. You could be forced to accept a smaller offer. If this doesn’t work out, you’ll be forced to dip into your bank account to cover the cost.
Lack of Planning
As they often say, failing to plan is planning to fail, especially true in the business of wholesaling real estate. Each property you’re investing in should be on a detailed timeline. Be realistic with your goal, so you’re not as stressed throughout the entire process. When crafting your timeline, account for every detail so that you’re maximizing your earning potential.
Rushing the Sales Process
The tendency to rush the wholesale process is yet another reason it is crucial to have a plan. Account for every step that is necessary for your wholesale journey. It will take time to complete the home inspection and find the best buyer for your property.
Throughout the entire sales process, you must look at everything from a buyer’s perspective. Remember, a buyer is not only looking at the initial price of the property itself. A good buyer will also consider any extraneous costs that are sure to come once they close the deal, so don’t put too much pressure on them.
Overestimating Your Profit
This is an easy mistake to make. It takes money to make money. Wholesaling real estate is no exception. After you crunch the numbers in the wholesaling business, your profit may not be what you expect. Your goal as an investor should always be to maximize your profit. With extensive research and planning, you will be able to make an educated estimate of what your profit should be. If you neglect to do the math, you could easily be hit by a financial loss.
Call Motivated Sellers
Whether you’re a beginner at wholesaling real estate or you’re a seasoned professional looking to brush up on your technique, it’s always wise to account for every mistake that could be made. This attention to detail is crucial to close more deals and maximize your profit.
If you’re looking to expand your wholesale real estate business to unprecedented heights, consider recruiting a team of experienced cold callers. At Call Motivated Sellers, we are an American-based real estate cold calling service, complete with highly skilled cold callers. With the help of Call Motivated Sellers, you can focus on maximizing your profit. Leave the hard work of vetting your leads to us so that you can focus on your real estate business. A partnership with Call Motivated Sellers is sure to increase your conversions and your profit.
Are you ready to work with us? Contact our team today!
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