How to do due diligence on a wholesale or foreclosure property?

[Aditya Sharma]

Hello everyone!!

I am brand new RE agent in Fredericksburg, VA. I joined BiggerPockets to learn everything about real estate investing. I have been looking at so many properties online. I have researched and talked to multiple wholesalers. There are some properties that I am really interested in but,I am just scared to take any action because most of these deals are "as is" and I don't really know what to look for before making an offer (I do check the comps in the area, etc.) I am really excited and curious to learn everything about real estate investing. Any advice is much appreciated. Thanks.

[Randall Alan]

If it’s a wholesaler you should hopefully get to do a walkthrough... or at least a drive-by.  

In that case your eyes are your best asset.  If you feel unqualified, find an inspector that you can pay to go with you... could be the best $75 you ever spent!  Tell them you don’t need a report, just their opinions. 

Quickly you will be able to do it yourself... it’s not hard to spot cracks in walls and concrete... signs of leaks, water damage on ceilings, termite poop on window ledges, Age’s of systems like ACs and hot water heaters, insulation in attics, termite damage, etc. 

A wholesale deal should ideally be priced to make you say to yourself, “this is such a great deal I would buy it even if it needs X and X and X.  

Don't be tricked by someone else's ARV and repair estimates. A deal that says there is $20,000 profit potential is never going to be one that interests ME. Keep in mind that depending on what you are going to do with the property you may have to close twice, plus do the repairs, plus pay seller commissions, etc. your $20,000 potential profit just became maybe $10,000. That's just not enough meat on the bone for all the risk.

The last wholesale deal I did was a purchase  for $44,000 that Zillowed for $112,000 and needed only about $3 - 5,000 in improvements to be very rentable.  That one made me say, “I don’t care if it needs a new roof, has to be tented, and has $10,000 in unseen whatever!!!   when we go to eventually sell that one we will double our money! 

So the point is: buy smart and compensate for what you don’t know with someone who does!

Randy