COVID-19 changed the way we do the most business, including buying and selling real estate. Some markets have exceeded expectations, others have come to a complete standstill. Cities are proving to be less popular than the safety of the suburbs, and buyers are looking for contactless ways to complete their real estate deals.
If you’re a real estate wholesaler (or want to be one), you want to understand virtual wholesaling as it’s the new way of doing business and may stick around long after the pandemic is behind us. The only way to stay on top of the game is to know all the new rules inside and out.
Understanding Virtual Wholesaling
Virtual wholesaling has the same premise as standard wholesaling. You buy undervalued properties working out a deal with the owner, and you turn around and sell the home to an investor for a higher price.
You essentially do the legwork for investors so they have viable properties to buy without doing the research. The ‘virtual’ piece comes into play when you conduct business online. Rather than wheeling and dealing in person, you do it over the internet. There are a variety of ways that this is taking place in the light of COVID-19.
How Does It Work?
Virtual wholesalers have one distinct advantage over other types of real estate investments – they have the whole country at their disposal rather than being reliant on their immediate area.
Traditional wholesalers drive around and look for vacant homes or homes that are undervalued and have owners that need to sell fast. This restricts you to the area within a reasonable distance. When you do it virtually, the whole country is available to you. You can follow up on property leads online and diminish the risk for yourself and any potential buyers that can come from personal contact.
Rather than focusing on single neighborhoods, you can look at entire cities or neighborhoods halfway across the country without any restrictions.
Do Your Research
One key area that remote wholesaling requires more work than in-person wholesaling is neighborhood research. This will take up more time than a single, in-person investment may.
You probably know a lot more about your area than you do an area halfway across the country. Before you invest virtually, do your research. Look into the area’s crime rate, school grades, and accessibility. Going the extra mile with your homework here will spare you the cost of making a bad deal later.
For example, you’ll want to look at the properties’ values and taxes. Have the values regularly increased or has it been kind of up and down for a few years? Looking at historical data will help you understand what you should do especially if you’re selling fix-and-flip properties. You ideally want to choose an area where the properties perform well, demand is high and there isn’t a big supply of new housing developments.
You’ll also want to understand the target demographic of the neighborhood. If you’re going for a younger crowd, they may want amenities like public transportation, nightlife options, and more, whereas more established buyers will prefer child-friendly options.
Buy Properties As You Would Normally
Virtual wholesaling only changes how you see and find properties – everything else is the same.
You’ll negotiate with the owner to strike a deal that’s attractive to both of you, but leaves you plenty of room in the value to turn around and sell it to investors. The key is to work with a licensed real estate agent. You want to partner with someone who knows the area and can help you with the most important numbers. Many realtors have introduced virtual methods of signing and closing the deal, which will keep with the contactless trend that we’re currently seeing in real estate.
If you’ll fix up the home before you sell it, you’ll need the help of a licensed appraiser. You need to know the home’s after-repaired value to make sure there’s enough room in the value. You also need someone who is in the thick of things – checking on homes in person for you so you know if the home is worth what you’re offering.
Pictures on the internet are one thing, but seeing them in person could be a completely different story. You don’t want to get taken advantage of because you’re dealing online.
The Benefits Of Virtual Wholesaling
Is virtual wholesaling better than traditional wholesaling? Sometimes, it can be, especially in areas with high rates of COVID-19.
Here are the most common benefits:
- You get a much greater selection of markets so you can maximize your investments. Sometimes your local market isn’t good enough, but markets somewhere else may be great. Your ROI may be much better if you opt to go out of state.
- With the right personnel working with you, it’s easy to close the deal from anywhere, including virtually. Having the right realtor and appraiser can go a long way towards securing the right property to wholesale.
- You’ll be forced to work with more people. It’s easy to take on all the work yourself in regular wholesaling so you get it done. That’s sometimes too much. With virtual wholesaling, it’s impossible NOT to lean on other professionals if you want to make money. This is especially true if you’re buying into another location a long way from your own.
Virtual wholesaling is a great way to expand your real estate portfolio. If you’re looking to buy more properties and help more investors, virtual wholesaling is the way to go. Just make sure you have a reputable team on your side – a team that will be honest with you, help you make good investment decisions, and let you know when something is amiss so you don’t risk your investment.
Remember that your team will be your eyes and ears on the ground, and you’ll want to be sure you can trust their opinions when it comes to investing.