It is an honor to write you Mr. Emilio. I am a college student who is interested to pursue real estate investment as a career. I am interested to start with wholesaling real estate in that area to assign contract. The first question I would ask for your assistance is to say, “How do I exit such a real estate wholesaling contract?” For example, if I don’t find an investor… Thank you for your response and looking forward to hear from you. (M.M.)
If I understand correctly, you are asking how to exit a real estate wholesale contract if you don’t find a investor before the contract closes.
Well first things first. You have to say to yourself:
Why can’t you find a buyer for this wholesale property?
1.The property is in an undesirable neighborhood – making it very hard to sell! Even if the numbers add up to a great investment, most potential buyers are very wary of undesirable, or “bad”, neighborhoods. As you may know, “bad apples” in the neighborhood tend to drive down (and keep down!) market values surrounding them. Now, if you have entire blocks of these badly maintained neighborhoods, then you have the makings of a terrible neighborhood! Some investors might not even want to get out of their cars to look at your property because they are literally scared to do so!
2.You didn’t give yourself enough time in the inspection period to find a buyer for your real estate wholesale property. You need to have a bare minimum of 10-15 days to locate a buyer! Of course, many times wholesaling can be done much sooner but you need to give yourself this head room – sometimes just for your own sanity!
3.Your numbers are off. Make doubly sure that your estimates of repair and the value of the home are right. Make sure there aren’t any incurable aspects in the home! If you have a horrendous floor plan in the property then that could be a major sore spot. Does the home stick out like a sore thumb – a run down wooden home surrounded by modern brick-and-mortar homes? All these logistics can affect your potential market value!
4.You have no network. You MUST have a ready list of able buyers that are looking to work with you in wholesaling houses and properties. There’s no way around this – unless you have a professional on your team that has a list of buyers ready to purchase. You want to find properties for buyers, not the other way around! Of course, once you’ve developed a large network, you can go out directly for properties and you have a general idea what your investors like individually.
What can you do if you can’t sell – no matter what!
If it’s a matter of a structural problem with the property that you weren’t aware of then you can speak with the seller and renegotiate or possibly cut the contract by using your partner approval clause or inspection clause. Otherwise, your network contacts come into play here. Contact your partner if you have one or a private lender who can assist you with upfront cash to close on the contract. So you own the property – now what? You can offer it for sale, offering creative financing deals to buyers to entice them to purchase the property.
It’s all about the real estate knowledge
Continue focusing on learning about real estate investing, learning about agreements for wholesaling, and expanding your real estate network. Surround yourself with knowledgeable experts that are on your side. Armed with continued real estate knowledge, whether you’re wholesaling commercial properties or wholesaling houses, your investments will be very lucrative.
Ever been to the Design District?
If you’re going to build big in Miami, build green or don’t build at all, Mayor Manny Diaz says.