Above is the replay of April’s webinar about how to wholesale houses to buy-and-hold investors for massive profits. If you have 30 minutes, you can watch the video (it starts at about 2:10). Or if you’d prefer to get the quick takeaways, read the article below.
On this call, Ryan shared loads of tips about how to make big profits by wholesaling houses to buy-and-hold investors. He talked about why buy-and-hold investors can often buy your property for more than house flippers and even shared an easy way to find buy-and-hold investors in your local market.
And if you’re in a crunch for time, here are the takeaways from the call!
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Takeaway #1: Don’t overprice your wholesale deals
Ryan addressed a particular myth within last month’s call. Namely, that by selling to “newbie” investors, wholesalers can make more money per deal. The idea is that you, the wholesaler, could boost your property price (and thus your wholesale fee) when selling to new investors who don’t know any better.
There are several problems with that.
First of all, new investors are often more weary of the deals they buy since they’re… well, new. They don’t know exactly what they’re getting into, so they often double and triple check everything. And they’re probably even super familiar with all the recommended mathematical formulas (75% of ARV, for instance).
But that isn’t the biggest problem.
The real problem is that you’re going to kill your business’ longterm growth. When buyers, new or experienced investors alike, tag you as having a reputation for unfair prices, those investors will stop looking at your deals.
Ryan even said that one investor within his market often overprices his properties and he doesn’t even read that investor’s emails any more.
So, give the people on the other end a fair price. You’ll still make a nice profit, they’ll walk away happy, and you’ll be able to do deals with them in the future.
Takeaway #2: Target buy-and-hold investors for bigger profits
The wonderful thing about buy-and-hold investors is that they’ll often pay more for your wholesale deals than a house flipper would.
Well, it’s all in the business model. A house flipper is looking to get as big of a paycheck as possible within the next 90 days. But a buy-and-hold investor will profit off of the property for years to come, and is likely buying the property with money that they have to reinvest into their business.
For that reason, they’ll often accept a higher price tag and provide you with a bigger paycheck than a house flipper would. And if you don’t believe me, watch the clip above to see what Ryan, a buy-and-hold investors, has to say about it.
Takeaway #3: Double check your due diligence
Not long ago, a friend of Ryan’s — someone who he actually buys properties from — lost upwards of $100,000 on a bad deal. The gist of it is… the wholesaler (Ryan’s friend) bought an 8-unit apartment complex, planning to flip the property to Ryan. During Ryan’s due diligence, however, they found that the property was zoned as single-family home, not for holding an apartment complex.
Shockingly, the county was unmoving on that zoning and outright rejected Ryan and his friend’s proposal to re-zone the property.
That unfortunate mistake will amount to somewhere between a $100,000 or $150,000 learning mistake.
(Here’s the full story on Ryan’s Facebook page)
Do your due diligence on every property you purchase, be thorough, and do it twice if you have to. Better to take longer to purchase a property than to unnecessarily lose $100,000.
Takeaway #4: Keep rental renovations more basic than retail renovations
If you do different types of real estate investing (like many of our members) — wholesale, flip, buy-and-hold, etc — then this is an important nuance to be aware of.
When flipping homes, renovating the property to look pretty and appeal to retail homebuyers is absolutely necessary. You don’t want to over-renovate of course. But you do want to get the house sparkly clean, with an eye-popping color palette and attractive landscaping.
When you’re renting a home, on the other hand, those retail renovations aren’t necessary. Ryan uses the same “boring” color palette on all of his rentals, the same vinyl flooring, and the same appliances. They are sturdy and will last a long time (which is good for owning rental properties), but they are a bit boring. And that’s okay. Those boring but sturdy renovations will save you money and tenants won’t care either way.
Takeaway #5: Find buy-and-hold investors with this simple trick
Okay — so you know that wholesaling to buy-and-hold investors can help you get bigger profit margins. But where can you find these types of investors in your market?
The trick is to work backwards. What do buy-and-hold investors do with properties? They rent them out. And by seeking out properties currently for rent, you can often call and find the buy-and-hold investor behind the curtain, letting them know that you wholesale deals and would love to pass some their way.
Look for “For Rent” signs and check Zillow to find these properties that buy-and-hold investors in your market are behind. Then call their phone number. If you get a gate keeper, just explain that you have a deal you’d like the person to check out and the gatekeeper will likely pass that info off to the head honcho.
There you have it. We hope this helps you build a bigger business and make bigger profit margins. And if you’re wanting more free info, you can join Ryan’s Facebook group over here. And you can join our next call live (to ask your own questions!).
And yes, you can join even if you’re not a member with Call Porter. Our goal is simply to provide you with free value.
We believe that what goes around comes around.
So we’re just gonna give like crazy. 🙂