Do Not Make These Mistakes When Wholesaling Houses

written by: Simon Macharia; article published: year 2010, month 05;

In: Root » Legal and finance » Real estate

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Wholesaling houses is the fastest way to quick cash as a real estate investor. In the current real estate market, you must play safe to make profits in real estate investing.

Here are several traps you must avoid to wholesale houses successfully.

Flipping houses, also known wholesaling houses, is the fastest and easiest way to generate cash as a real estate investor. Little to no upfront money is needed for each deal when wholesaling houses.

To avoid failure as a real estate investor, here are a few things you must never do when flipping houses.

1) Do not buy in shanty neighborhoods
Few people or real estate investors desire to buy houses in run down neighborhoods. Stay away from buying in these areas if you want to sell your houses fast and easy.

Identify neighborhoods that are neat, attractive, nice, yet inexpensive.

2) Never miss the opportunity for an inspection
Be sure to do an informal inspection. I pay attention to how the house looks like on the outside since that is what buyers see first. You must pay attention to it.

3) Do not fail to be conservative with your comparable sales
The more conservative you are at estimating comparable sale when you buy, the less likely you are to make a high offer that leaves no profits for you or your real estate investor buyer that you wholesale the house to.

4) Never under-estimate repairs
The repair estimates you make determine the profits you or your wholesale real estate investor buyer makes. Do not get conservative with repair estimates or you will pay too much when you buy.

5) Do not pay too much when you buy
As obvious as this sounds, most real estate investors make the mistake of buying high. Of course you have done your due diligence with conservative sales value, generous repair estimates and equity before you buy.

Before you make your offer, you must put into consideration how much profit you are looking for. This way you are protected from a generous offer. I by no means shy away from letting the seller know that even though my profit might seem high to him, I must give a big discount when I sell my houses to sell them fast.

This always works in a buyers market.

6) ever spend beyond your projections
Flipping houses or wholesaling houses aims to make a profit after you flip the deal to your real estate investor buyer who then does repair work.

From time to time, you may find it crucial to do some light repair, such as hauling off trash cleaning up the yard, or such light tasks that make the house more visually appealing for sale.

Even though the goal is to flip the house to another real estate investor, at times it is crucial to fix modest jobs that could blow up estimated repair costs that could eat up into your profits.

Stick to a tight budget. The more generous you get the less your profits.

7) Do not keep all the money to yourself
The goal of every real estate investor when they buy any house is to make a profit. When you do your math, you be obliged to take into consideration the fact that you have to make a profit, and the real estate investor you sell to must make his profit too.

As long as there is room for your profits and your real estate investor buyer, you will flip houses successfully.

Once you stick with these rules, you will be successfully as a wholesale real estate investor.


Simon Macharia buys and sells houses in Dallas TX. He particularly likes to flip houses, running and automating his business through his real estate investing website

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