The Disadvantages of Real Estate Wholesaling For Real Estate Investors
If you are considering real estate wholesaling, then you undoubtedly have already heard of the advantages. This is why you are considering the opportunity. However, there are a few disadvantages you should be aware of as well. One, when buying the real estate, you must have an idea of the condition of the property. This will allow you to know what the profit will be between the amount you pay for the property and what you can sell it for. There are a few unscrupulous wholesalers who will inflate the value of the property and you could end up with a property that you actually lose money on when you re-sell.
Work with trusted wholesalers who you know are in this business to genuinely make money by selling properties they know are worth more than the purchase price. There are many ways to find trustworthy wholesalers. Another way of protecting yourself against an unscrupulous wholesaler is to have your own trusted appraiser who will look the property over and tell you what it is worth.
Another disadvantage is buying the property and finding out something major is wrong. This can cost a lot of money to repair and eat into your profits. The same thing is true if something happens after the purchase and you have to fix it before putting the home on the market.
If you have to hold onto the property longer than normal, this is another disadvantage to investing in real estate wholesaling property. A typical investor is looking to make the purchase and turn around and sell it as quickly as possible. When this does not happen, time is money. The longer investors hold onto the property, the less money they will make.
Never buy a home sight unseen. Investors who are just getting into this type of business may do a majority of their business over the Internet. The investor could be in Florida and the home they purchase might be in New York. Virtual real estate wholesaling is becoming a big business today. However, for the investor this could be a problem. Photos of the home may not tell the true story.
What they see in a photo and the condition of the home could be two entirely different situations. There are investors who buy properties in lots and turn around and sell them. But the properties could be in such bad shape that they are not going to make money from the purchase. If you decide real estate wholesaling is the way you want to go, choose properties that are close to you so that you can actually go out and see them. Then you can see what shape the property is in for yourself.
Do not go into the business of investing in real estate blindly. This is where many people have problems. They are lured by the thought of the money they can make and without knowing what they are doing, they will actually lose money. As an investor, you will want to know as much about property values as possible to successfully move forward with re-selling the properties.
Jeff Divers is the owner and founder of Vivid Properties LLC, a family-owned company providing quality services for your real estate needs.
Stephan is a freelance writer, who often writes about wholesaling houses and real estate tips.
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