There are some things you need to consider when you’re expanding your wholesaling business to other markets.
In this short but impactful episode, Brent “Mr. TTP” Daniels shares some guidelines to effectively sort out locations so that you can get better deals and find success. He also gives a quick run-through of ways to entice distressed property owners into selling.
Wholesaling Quicktip – Where Is the Best Place To Start Wholesaling Houses
These are some guidelines that I want you to use when you are picking out an area. Number one, the older parts of town. The biggest best deals are the properties that are in rough shape. People don’t have the capital to be able to invest in their properties to get the most out of them. These properties fall into disrepair and become vacant. These properties become beat up by tenants or the owners of the property can’t take care of them anymore. Usually, it’s the older properties. The older the property gets, the more out of fashion they get or their appliances and some of the inner workings of the property, the mechanical parts of the property, start breaking down. That’s the property that we want to go after.
Next is affordable housing. This is critical. I want you starting out focusing on, if this property was fixed up, could a first-time homebuyer buy it? That’s the biggest pool of buyers. Next is what is the median sales price in your area? You google, “Median sales price in my area.” That’s going to show you the sweet spot that most people are buying those properties in and that’s the property that I want you to go after. Those are the neighborhoods that I want you to go after.
Not only is that the biggest pool of end buyers for those properties, but that’s where your cash buyers want to purchase. We got to find that. We’ve got to look at where are our customers? Where are our cash buyers looking to purchase? Next is to look at the recent cash buyer activity. The area that you pick has to meet these criteria. It has to be older properties. It’s got to be affordable housing and recent cash buyer activity. Where are your customers at? Mike?
Brent, older parts of town, 30 years or older. Is that why when you pull a list on PropStream, you go year built of the property, 1990 or before then?
Yes. That’s exactly it.
The biggest best deals are the properties that are in rough shape.
When you look at buying affordable properties, you’re talking about the after-repair value as something that a first-time homebuyer could get into, the median-priced home. That’s not where they would buy it.
You are looking at once it’s totally renovated to be in that median. You’re going to want to make offers, depending on the area you’re at, 50% or 66% of that median price or whatever the after-repair value is for that property.
In Phoenix, you’re looking at neighborhoods where the after-repair value is what, for example?
$377,000 is the median sales price. That is the sweet spot, Mike. We’re locking these properties up at $200,000 to $250,000 and making an absolute fortune on them because we’re getting good deals in the areas that people want to buy. Who to target? This is Wholesaling 101. We got to go after the distressed property. Not only are you going after the neighborhoods that are 30 years or older or at the price range that our median, but you got to go after the properties that there are signs of distress.
Remember, the national statistics show that 6% to 10% of the real estate market is in some sort of distress. That is where we live. That is our sweet spot. It’s not the sweet spot for Opendoor. It’s not the sweet spot for Offerpad. It’s not the sweet spot for Zillow offers. They want to get in and make it quick and easy. This is the sweet spot for professional flippers looking for opportunities every day in every single market.
The second part is they got to want to sell them. There is nothing that we’re going to do and say to convince somebody to sell their property at a discount. They have to want to do it. They have to be in alignment with the price, the terms and with you. They have to want to sign a piece of paper that says that we are able to purchase that property. They sign the purchase agreement. They have to want to do that and that’s critical because I think a lot of the slippage and the heartbreak that we see in this business is we’re going after people that we think needs to sell, but they don’t want to. It all comes down to what is their timeline. That’s why the timeline on them making a decision is absolutely critical. They have to want to sell the property. They have to have at least 30% equity.
Traditional clean wholesale deals come down to two things, equity and motivation. They got to have them both. The equity has to be a minimum of 30% in that property so that you can get in there, get a good discount, and have enough room in there to make your fee and make the profits for it. There’s got to be enough meat on the bone for your end buyer. The prospects have to meet all these criteria.
If you were interested in joining the most proactive group in real estate investing, it is the TTP Program. Go to WholesalingInc.com/TTP. Scroll down and check out the hundreds of testimonials. Check out what the program is about. If it feels good in your guts, then sign up for a call. I look forward to working with you personally.
About Brent Daniels
Brent Daniels is a multi-million dollar wholesaler in Phoenix, Arizona… and the creator of “Talk To People” — a simple, low cost, and incredibly effective telephone marketing program…
Also known as “TTP”… it helps wholesalers do more, bigger, and more profitable deals by replacing traditional paid advertising (postcards, yellow letters, bandit signs, and PPC) with being proactive and taking action every single day!
Brent has personally coached over 1,000 wholesalers enrolled in his “Cold Calling Mastery” training, and helped 10,000’s of others who listen to him host the Wholesaling Inc. podcast, watch his YouTube channel, and attend his live events…
A natural leader, Brent combines his passion for helping others with his high energy, “don’t-wait-around-for-business” attitude to help you CRUSH your wholesaling goals as quickly and easily as possible!