Wholesaling to Owner Occupants: Big Profits or Just Big Headaches?

Wholesaling to Owner Occupants: Big Profits or Just Big Headaches?

Is wholesaling real estate to owner occupants the path to bigger real estate profits or just more headaches?

For many investors, wholesaling to owner occupants is a conundrum which while promising appetizing paydays also goes against the very reason they chose wholesaling properties as their preferred strategy in the first place.

Why Even Consider Wholesaling to Owner Occupants?

For most, this certainly seems like a complete reversal of the nature of this form of flipping houses for quick cash. Wholesalers typically choose this model so that they can be in and out of deals quickly for fast paychecks with the least amount of hassle, while driving up deal volume.

In short, wholesaling normally relies on buying low and selling low to those who will turn around and retail these homes as turnkey rentals or owner occupied homes after doing repairs. So can you even take these types of properties and turn them around on the retail market without having to dig into nightmare rehab projects and all of the expense, risks and headaches they bring?

‘Wholesaling’ to owner occupants can be done and in fact, it could prove to be an incredibly powerful and profitable niche for many real estate investors. Instead of having to sell cheap to a middleman, it can mean dramatically increasing spreads for far larger profits on each and every deal (which also reduces the number of deals needed to hit income goals), and yes there is a market for it.

Who doesn’t want a deal? Instead of flipping at 65% ARV for someone else to rehab and retail, there are end buyers who are happy to pay more for a new residence for even a 10% discount and doing their own fixing up if they don’t plan on moving anytime soon.

3 Challenges of Flipping Ugly Houses for Top Dollar

  1. Versus the usual suspects, these are not repeat buyers, creating a need to constantly be filling the pipeline with new prospects
  2. Many end buyers will rely on financing, meaning homes must be in good enough condition to be financed or enough cash buyers must be found
  3. Retail buyers are far more picky and easily frightened off, so you must get good at sales and recognizing how to overcome their fears

4 Tips for Getting Top Dollar for Your Ugly Houses

  1. They don’t have to be ugly; can you flip nice homes faster and still profit?
  2. Hone in on those frugal buyers who are looking for ‘forever homes’ they can grow into
  3. Consider virtual staging to show the home’s potential
  4. Consider offering to help with custom finishes or provide credits for repairs

Not Sure if This a Good or High Volume Strategy?

If you aren’t ready to take the leap and focus on wholesaling to owner occupants, consider using this as a back up exit strategy and to create more urgency among your front line prospects.

Consider marketing homes to your investors as exclusive, off-market deals for several days first, then take them public and, if still not under contract within your time frame, either drop them or weigh the pros and cons of closing and renting them or converting them into turnkey rentals yourself, depending on how sweet the opportunity is.

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