If you’re just starting out in your real estate investment career and you aren’t quite sure where you are going to find your first property then you should consider working with a wholesaler. Boston has a highly competitive market and real estate prices are among the highest in the country. It can be hard to buy a foreclosure and going to an auction with a bag full of cash may not even be possible. A wholesaler can be the quickest and easiest way to get your hands on your next great deal.
What is a Wholesaler?
In the real estate market and wholesaler is someone that finds great deals and then sells that property to other investors below market value. They take care of all of the legwork so that you don’t have to. There are a number of different methods that a wholesaler will use to line up investors with motivated sellers in return they get a finder’s fee. They never actually own the property, they effectively find it for you. In many cases that is how someone gets their foot in the door in the real estate market, by becoming a wholesaler themselves. The finder’s fee can range anywhere from a couple of thousand dollars to $15,000 or more. Ask any investor and they are more than happy to give a commission or finder’s fee to someone that brings them a good deal. Here is a look at how wholesalers work.
Finding a Bargain
One of the ways that wholesalers find bargains is by chasing down distressed property owners who are motivated to sell. Real estate is a cut throat industry and finding leads on potentially good deals is hard enough that is why wholesalers can be a valuable resource. The whole process of “driving for dollars” and qualifying leads takes a lot of time and it can cost you money. Let someone else do the work for you.
Crunching the Numbers
At the end of the day you have to crunch the numbers and see if a deal works for you. It is easy to overpay for a foreclosure or REO that a wholesaler brings to you. The small fee that you are paying the wholesaler may be your only profit if you’re not careful. Even here in Boston where prices are high there are still a lot of decent investment properties to be had. Connecting with wholesalers is a good strategy but it shouldn’t be your only strategy, you should still look for deals on your own.