When you get into bird dogging or wholesaling directly, there will be a handful of buyers you must find in order to close deals. Obviously they should all be cash buyers, but not every investor will have it on hand. While you may find deals that will work for traditional buyers, you may come across properties that won’t need as much work, and could be signed off to different prospects. Maybe you find yourself looking for purely fix and flip guys, but within the world of REI, anyone who wants a property is a potential investor! Here’s a quick overview of the various types of buyers for your wholesale deal.
- Rehabbers – Rehabbers are your bread and butter!
A typical rehabber is a person who will purchase ugly houses and fix them up to sell. They are looking for the lowest prices because their rehab costs are higher than most other buyers. Make sure you know how much their average rehab job is, even if you do your homework and estimate repairs, they may not buy because it wont fit their model. Rehabbers want a quick ROI – anywhere between 30-50% in this market.
- Landlord Buyers – A landlord buyer is any person who is looking for a property to rent out and keep long term. The landlord buyer will typically pay a higher price that a rehabber because they won’t be doing enough fixing up in order to rent the place out. Landlord buyers are concerned with cash flow, if you are going to find them deals, make sure they cash flow at least $500 per unit.
- Rent to Own – The rent-to-own buyer is anyone who wants to buy but is not ready to do so. This is also called a lease option buyer. This buyer typically has credit issues and will need time to fix it up in order to qualify for a loan. You will run into potential lease option buyers through your bandit sign campaigns. If you get a good system down for lease options, you can make a lot of money using this technique.
- Retail Buyers – Retail buyers are ready to buy a finished product. This buyer is a one-time shot. They normally want 1 house and won’t bother buying again for another 10 years or so. It is suggested that you have your Illinois realtors license so you can work with retail buyers in case they do not want a property you are wholesaling. Since retail buyers are not investors, they just want something within what they are qualified for, and if you find a deal to wholesale to them, they do not question how much you make. Wholesaling a house to a retail buyer will surely make you more money than with a rehab buyer.
