Real Estate Deals for Real Estate Investors in Austin, Texas
While there are many strategies that can be used when investing in real estate, one of the best short-term real estate investment strategies is to use an investor deal or a wholesale deal. The strategy is simple – buy a property at less than the market value and renovate it/sell it on for the maximum profit in the shortest amount of time.
Wholesalers can provide these properties in one of two ways, either through contract assignment or by using the “double close”.
The double close strategy is straightforward. The investor will be matched with a seller and will buy the home directly. This means that they can sell it on to another investor in a very short period of time, producing profits quickly.
As an alternative, the assignment of contract strategy does not require the investor to purchase the house. Instead, wholesalers can obtain the sole rights to purchase the home for an individual investor. This is done through a contract and is also known as a “purchase and sale agreement”. The contract can be sold to a subsequent end buyer to generate a small profit. While the two strategies are similar, it is important to note that with the assignment of contract strategy, wholesalers will sell their rights to buy a property as opposed to selling the property itself.
How It Works
A property in a good neighborhood becomes available due to certain financial situations of the owner. Unfortunately, it’s not in the best state of repair, but this makes it ideal for investment – repair, renovation, or redevelopment will make it a worthwhile purchase.
The wholesaler will approach the family and negotiate a price for the house and will set up a contract. This won’t mean that the wholesaler will purchase the house. Instead, the contract will be assigned to another investor who will renovate the property and resell it later on.
The wholesaler is paid for securing the property and referring the lead.
For the investor, this saves the work and time involved in finding suitable properties. Most properties that are sold in this way are “off-market” which means they haven’t been publicly listed for sale. A public listing would result in the interest of homeowners who are likely to drive up the price. By avoiding a public listing, the price will be lower but remains fair, providing a fast and simple solution for the seller and a good opportunity for an investor.
As an example, the wholesaler may negotiate a contract for a property that needs repair and renovation for a sale at $100,000. The wholesaler shows the property to an investor who understands that around $50,000 of work is required, but the repaired house could sell on for $250,000.
The wholesaler would charge a fee of $10,000 (for example) making the price the investor pays $110,000 in total. The investor stands to make a good profit, the sellers are happy, and the whole process is completed quickly and easily.
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