Wholesale to Cash Buyers

A “wholesaler” is someone who buys property at a low price and sells it at a low price. Both prices are below typical “retail” prices for a finished product. The wholesaler makes money by finding a property and negotiating a very good price for it. He/she gets paid for assigning the deal to a cash buyer who is able to make the improvements and market the property at a profit on the conventional real estate market.

Typically, a conventional mortgage lender will not finance a purchase transaction where the borrower’s name is not listed on the Purchase and Sale Agreement. Most lenders do not consider the Assignment Contract listing an end buyer as being sufficient to lend on the purchase.

That is why most wholesalers look for cash buyers. They also typically get their assignment fee paid in cash up front.

How does the new real estate investor go about building a cash buyers list?

One of the easiest ways is to network at your local real estate investor association to find out who is buying houses to fix and re-sell. Find out where they are looking to buy properties, and what are their criteria? What price range? What condition? What location? What features? How many bedrooms, baths, square footage? Do they want a garage? Any negatives, such as not being close to power lines or not being on an arterial?

Find out how quickly they could have cash available for purchase if you find what they are looking for. Then target your search for properties that meet your buyer’s criteria. In effect, your property will be sold, as soon as you find it.

Another tactic for the assertive wholesaler is to chat up folks at your local county foreclosure auction, as these buyers must have cash to purchase. Bring a list of whatever properties you may have gotten under contract at that point, or ask them the same questions (above) to find out what they buy. Collect business cards, or give them yours.

Happy Investing!