Hi, Mark Van Dyke here, Virtual Wholesaler and Founder of the VirtualWholesalingUSA.com Quick Start Marketing System. I’d like to take some time today and talk about researching deals that we will contract without ever setting foot into the property. First, one of the biggest challenges facing Virtual Wholesalers who are contracting deals out of state is the ability to spot property flaws or rehab estimates when your sitting at your desk hundreds or even thousands of miles away from the subject property. It can be difficult and probably one of the hardest part of Virtual Wholesaling Real Estate. But, mark my word, this should not be a deterrent in any way to a Virtual Wholesaler who wants to flip deals site unseen!
Now, nothing beats actually seeing the house or visiting the property, but as I will show you in my Quick Start Marketing System at VirtualWholesalingUSA.com, you’ll be glad you actually never have to physically see any of these properties that you are about to flip. Look at it this way, when you tie up a property your gonna want to use the 65% rule minus repairs to get your deal under contract. Ok, So… Finding the market value of a property is not that difficult, as a matter of fact you can do it online for free at any of the many valuation sites. (MLS, Zillow, Redfin, Google, Yahoo). But the hardest part in this equation is determining the amount of repairs required to bring a home to “Perfect Market Condition.” Now, most Sellers will always say… “Oh, it just needs a few thousand dollars to bring it current!” Then you go on to ask them… “Ok, Exactly when were the Kitchen and Bath Rooms last remodeled?” Pause… Longer Pause… “Um, well, not since 1970?” Case in point! This place most likely needs a full rehab and that could be anywhere from $10-$20 per sq foot (Depending on Local Comparables & Required Finishes) and on a 1,500 sq ft house that’s somewhere around $15,000-$30,000 to bring it to “Perfect Market Sales Condition”. A far cry from a “Couple Thousand Dollars” the Seller originally stated!
Ok, So… We got past the Sellers “Imaginary” Repair estimates and figured that our maximum all cash offer on this $100,000 house, (We know this market value by researching 3 Sold, 3 active and 3 Pending Comps in the neighborhood) which is going to give us our maximum all cash offer of ($100,000 x 65% – $20,000 = $45,000) That’s right, $45,000 All Cash & We Pay All Closing Costs. Heck, we even help our Sellers with moving expenses to make it easy on their move. Wanna see my Motivated Sellers Site? Check it out at Sell House Fast®
Ok, lets get back on track to how you are going to move this deal no matter what the repairs turn out to be. So, once you have your contract on the property, you are going to call your all cash buyers and get them to drive by the house to see if they want it. By doing this, you’ll want to get feedback from your buyers on the location and the type of deal you have under contract. You’ll hear it all… Bad area, house on corner or busy street, or needs way to much work, etc… The key here is to keep going, keep marketing and calling your buyers until a buyer steps forward. And yes, a proofed up buyer, because ALL of your Buyers have a POF or a Proof of Funds on file prior to seeing any deals from you! This POF tells you they have the cash to do this deal and are not wasting your time! MAJOR POINT TO REMEMBER HERE! NOTE: I’ll show you how to qualify and all cash buyer efficiently in my VirtualWholesalingUSA.com quick start marketing program.
Remember, the need for local knowledge is one reason why many Virtual Wholesalers like to flip deals in cities where they’ve either lived before or they have family and friends living there. It does help if you have some local ties to the area, but again, it only matters what your ultimate buyer thinks of house and the area. So lets ask ourselves this… “If we don’t know the area how can we tell if the property is a good investment? Well, by working with your all cash buyers in that particular area who will do most of the heavy lifting for you in terms of the due diligence in evaluating the deal and proceeding forward if they like the project and your terms/contract. Getting to know your buyers is key and your gonna want to know how long they have been buying in a particular area and how many deals they have completed and how many more they are going to do this year!
Let’s talk a little more about sales price and market value. First, you have to know if your buyers are either rehabbers or land lords. If the latter, then turnkey properties means the purchase price is going to be higher than if they were managing the work themselves like a rehabber. But no investor will pay market value for a property. That just doesn’t compute or make sense. Also, don’t lean to heavily on websites like Zillow or Trulia to help you determine whether a property’s price is reasonable. Even if the published numbers are completely accurate for 80 percent of properties, the 20 percent that aren’t could be off by 20 to 30 percent. Be careful. Use MLS if you can, or get a realtor on your team to help you here.
Look for an investor friendly agent who works that community and get their conservative opinion on whether your contract price is a value. Ask yourself, is juice worth the squeeze? Don’t waste your time and the Sellers if they are asking too much for a distressed property. Remember, you’re buyers will always tell you what it’s worth to them for sure! Sometimes you’ll have to adjust your tactics with the Seller once your ultimate buyer makes an offer. Or, you’ll have to take less then you originally thought. Its a touch and go situation when it comes to this…
Sometimes its smart to pay for a broker price opinion or a BPO. The BPO may cost $75-$100, and it will give you information on the neighborhood, the larger market and comps for the property. I like properties that have the 3’s, meaning, 3 Sold, 3 Active & 3 Pending. This gives you and your buyer the confidence that this area is alive with deals and movement in the market.
Ok, I hope you learned a few things here about How To Research Potential Wholesale Real Estate Deals Nationwide From a Thousand Miles Away as a Virtual Wholesaler. If you’d like to partner up with me and start doing deals nationwide with me, then please just click the button below and get started today! I look forward to working with you!