Learn How To Start Investing In Real Estate
Learn How To Start Investing In Real Estate

Overcome Your Real Estate Investing Fears By Wholesaling

Written by Than Merrill

Has it always been a dream of yours to be your own boss? Do you want to enter into the real estate investing world, but don’t know where to get started? Is fear standing in the way of you taking the plunge? If you answered yes to any of these questions, now is the time to defeat that little voice in your head saying “you can’t.” Instead, silence the anxiety and make the decision to take action.

Even the most successful real estate professionals will tell you that they were terrified when they started in the business, and that the whole investing industry seemed rather intimidating. However, Sam Zell – the well known real estate mogul – once commented in an interview that, “fear and courage are closely related.” While this sounds counter intuitive at first, Zell explains that fear inspires action, and is actually a call to courage to wake up and get in the game. So if you are simply afraid to launch your real estate business, you already have something in common with a pro.

5 Common Fears That Keep People From Investingwholesale deal

According to psychologists and human behavior specialists, there are two opposing forces that account for why people make every decision in their lives: the desire to gain pleasure versus the desire to avoid pain. These forces encourage people to either make some kind of change or do nothing at all; unfortunately, it tends to be the later. The key is to start by making minor changes, which ultimately leads to one big change. That way, when you complete small tasks and experience the feeling of success, you will be motivated to continue. Your desire to gain pleasure will suddenly become more important than your desire to avoid pain.

If you suffer from any of the following fears, you are not alone:

  • “I don’t have enough money to start”
  • “I don’t know where to find deals”
  • “I don’t understand the process”
  • “I don’t think I’m a good salesperson”
  • “I don’t think I have enough time”

Fortunately, with the right education and resources, you will be able to turn most of those “don’ts” into “do’s”.

Why It’s Time To Consider WholesalingForeclosure relief

If insufficient capital is your biggest worry – which for most people it is – wholesaling is the perfect way to get your foot in the real estate investing door; that when opened, leads to a world of endless possibilities.

A wholesale deal can get you a profit much faster than a rehab, buy and hold, or rental property. Keep in mind, however, the profit check you’ll receive after completing your first deal will be far less than a rehab, but multiple wholesales will give you the money you need to start your first house flip – if that is the route you aspire to take.

If “the inability to find deals” is your biggest fear, you just need to understand where to look. The key to profiting on a wholesale deal is to find a motivated seller. Motivated sellers are individuals who need to sell their homes quickly. Perhaps a person’s home is nearing foreclosure. Maybe a parent passed away and entrusted a property to three siblings whom are just looking to get the home off their hands. Another individual may have received a job offer that requires him or her to move across the state in a week, and therefore must find a buyer immediately. Whatever the reason may be, these individuals need to sell their homes quickly and are more likely to sell it for a lower cost – especially if the property is not in the best condition.

The next step in any wholesale deal is the negotiation process. If you are worried because haggling is not in your area of expertise, you just need to be confident in your calculated numbers. Once you’ve found the right property, it is time to begin your initial inspection. Walk through the property, estimate the repairs, and come up with your approximate ARV (after repair value). Typically, it is best to try and offer anywhere between 40 and 60 cents on the dollar of whatever the seller is asking for. If the property is listed for $100,000 and you assume the ARV will be $150,000; start by offering $50,000. As soon as you have your seller under contract, it’s time to find your buyer. If you present an investor or rehabber with a property worth $150,000 after repairs and ask for $60,000, they will likely be interested in the deal.

While you can make a decent profit from a wholesale deal, it won’t be as much as a rehab because you are not actually performing any of the dirty work. It is best to view a wholesaler as a middle man: they are selling the deal (or assigning the contract) to someone else who plans to fix it up.

Entering into the real estate world is scary because it means doing something different. But if you are able to look at those fears from a different point of view, you will be able to confront them. There will always be an excuse for not making a change, usually because it is the easy way out. So if the real estate investing industry as a whole seems threatening, ease yourself in and by trying wholesaling. It won’t be easy at first – and there is also a bit of risk involved – but if you do your due diligence and dare yourself to try something new, you’ll start seeing results that inspire you to keep going.

What are your favorite wholesaling strategies?