Why Invest Now?
Posted: Thursday, October 08, 2009
by Jeff Adams
RealEstateWebProfits.com
Since about 2005, the market was at its peak. People that bought their home in like 1997 for $190,000.00 could sell them now for $500,000.00. When the market goes up, foreclosures drop. Why does this happen? For example, if you were to purchase a home for $200,000.00 and you got a loan for $200,000.00 and the home suddenly now is worth $340,000.00, you still owe $200,000.00. If something were to happen like getting sick or being laid off, and you could not make your payments, you still options because the house is now worth more. This is equity. You now have the ability to sell the home to someone else who just can't wait for such a deal, sell it with a realtor, or even get the bank to refinance your loan.
Getting into the real estate business right now, the timing could not be better. It is the perfect storm. The worse the market gets, the more money investors stand to make.
There are more and more people leaving the stock market and they are looking for a place to put their money. Add to that the fact that unemployment rates have gone up and the number of distressed homeowners. This leads to more people in the market to rent instead of buying.
These deals lead to positive cash flow. You have to find people who are looking for deals. Investors don't want to talk to brokers or hunt for deals; they just want returns on their investments. That is why they have us. By becoming a specialist and getting these buyers you can proceed to secure your financial growth and prosperity. Once you position yourself in the community as being a wholesaler, you instantly become very valuable in the world of real estate. There are so many buyers out there that are looking for the opportunity to do their next deal. These hungry investors know that timing is everything and that time is now.
The key to wholesaling is building up your list of buyers. As long as you have buyers, you can prosper even in a bad market. This can be done in many ways but one of the quickest and easiest to go about doing so is on the internet. You can explode your list with a few clicks of a button. Social networking sites are an awesome way to build a buyers list. There are programs out there for sites like Facebook that goes out and seeks everyone that is involved in real estate and sends them an invitation, "Hey you want to be my friend?" This email crawler goes through Google and filters through all of the "We Buy Houses" sites and collects all of them. It is like guerilla warfare.
By definition, wholesaling is entering a contractual agreement to purchase property from another party and then assigning your interest in that property to another person. Basically you find deal and then turn around and flip them to other investors.
Some may think that agents do the same thing but there is a big difference between wholesalers finding deals and agents finding deals. Agents work on behalf of others both finding the deals and in selling the homes. Wholesalers on the other hand find deals and sell them to investors on their own behalf. They also don't need a license to do so. Another difference is that when an agent sells a house they make a commission. A wholesaler, on the other hand, has a contract and is selling his/her interest to someone else, and this is an assignment, kind of like a finder's fee.
When you make an offer on a piece of property and it gets accepted, you now own the contract. What you are essentially selling is the contract which is your interest in the property. For example, if a property is worth $300,000.00 and you make an offer for $100,000.00 and the seller takes that amount, then they are officially bound by this contract to sell that house. That piece of paper is what actually has real value. In this wholesale model, you do not really own the physical real estate. That contract is what you turn around a sell to another investor and score your profits.
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