Define "Good Deal"

[Kyle Thomas]

I'm new to the world of real estate investing but I have a lot of experience with negotiations. For that reason I think I'd like to try my hand at wholesaling properties but first I must be able to identify a property worth pursuing.

What criteria do you use to determine a good candidate? 

What variables help you decide between a good property and a bad one? 

What red flags can turn a good deal into a bad deal?

[Edward Zachary Samperio]

To determine whether a property is a good candidate for wholesaling, investors typically consider factors such as:

1. Motivated sellers: Wholesale deals often involve motivated sellers who are willing to sell quickly for a discounted price. This may include sellers who are in financial distress, facing foreclosure, or simply looking to sell quickly.
2. Equity: Properties with a significant amount of equity may be good candidates for wholesaling. This allows the investor to purchase the property at a discounted price and assign the contract to another buyer for a profit.
3. Desirable location: Properties located in desirable areas with high demand can often be sold quickly to end-buyers or other investors.
4. Condition of the property: Properties that require minimal repairs or renovations may be easier to sell quickly and for a higher price.

Variables that can help you decide between a good property and a bad one include:

1. Purchase price: A good wholesale deal should be purchased at a price that allows the investor to assign the contract to another buyer for a profit.
2. After-repair value (ARV): The ARV is the estimated value of the property after repairs or renovations are completed. A good wholesale deal should have an ARV that is significantly higher than the purchase price.
3. Repair costs: The cost of repairs or renovations can significantly impact the profitability of a wholesale deal. Investors should have a good understanding of the repair costs associated with a property before pursuing a wholesale deal.

Red flags that can turn a good deal into a bad deal may include:

1. Overpriced properties: Wholesale deals that are purchased at an inflated price may be difficult to assign to another buyer for a profit.
2. Properties with significant structural issues: Properties with significant structural issues can be difficult to sell, and repairs can be expensive.
3. Properties with liens or other legal issues: Properties with liens or other legal issues can be difficult to sell, and resolving these issues can be time-consuming and costly.

It's important to thoroughly research and analyze potential wholesale deals before pursuing them to minimize the risk of a bad deal.