subject: What Due Diligence Should You Consider Before Doing A Wholesale Real Estate Deal? [print this page] Wholesale real estate deals are great opportunities for a savvy investor to acquire a handsome profit with a relatively low amount of effort. Many properties can be purchased at a price which is below the market value; nevertheless, sometimes a wholesaling deal is simply too good to be real, and a perceived bargain can turn out to be a flop or even a fraud attempt.
Therefore, it is crucial for any real estate investor who wants to stay on the winner"s side of the real estate wholesaling game, to perform at least some basic due diligence before engaging in any kind of deal. This is especially important when you are lacking experience in real estate, or when you are dealing with wholesaling transactions which are outside your area of expertise.
What is due diligence in real estate?
Due diligence involves gathering information on both the property you are interested in buying in a wholesale deal and the owner of the respective property. This double check allows you to correctly evaluate the value of the property, to determine if the owner is honest in his or her intentions and to determine if there are any liens pending on the respective property.
When is the moment to perform preliminary due diligence?
You should begin making your diligence right after you have established a serious contact with a potential seller or buyer. Preferably, when meeting with the person you are dealing with, you should have already gathered some preliminary information on both the wholesaling property and the individual. Thus, you will see if the person you are dealing with is honest, and also, all that information will provide you an upper hand in the real estate wholesaling negotiations.
Let"s check out what is the minimal preliminary due diligence that you should perform before attempting to make a wholesale real estate deal.
Check the property records at your local property appraiser. Determine the ownership of the property, the sale history and the tax assessment. Also check if the owner has paid his or her taxes for the property.
Make a basic search online after the name of the owner of the property. Try to find if the person is involved in any civil or criminal trials.
Go through a database of similar sales "" seek some comparable properties, in terms of size, positioning and condition, and check the prices of sale for those properties. This is a great way to establish a preliminary base value for the property you are interested in.
Look up the address of the property on the websites of local institutions "" check the crime index of the area, determine if the property is located in a flood zone and see if the property is violating any civil codes. Any problems found here can help you assess the actual value of the wholesaling property.
This may seem excessive at first; nevertheless, as experience accumulates you will begin to understand that a successful real estate investor needs to be thoroughly prepared when engaging in real estate wholesaling.
