Tips for Wholesale Homes with Renters

Many new investors expect to start selling empty homes in bulk when they get into the business, but quickly find that a large percentage of real estate is occupied today, even foreclosures and REOs. So how does this change the rules of the game and what tips can help wholesale tenant homes to better navigate the process and make more profit?

While many, especially new real estate investors, may find it easier to wholesale vacant homes, there are many advantages to selling tenant-occupied properties in this market.

First-time home buyers still make up a small percentage of the market in most areas and certainly do not provide the constant volume and speed that home sales provide to investors hungry for rental units.

Real estate that already has tenants takes the guesswork out of end investors and gives them the confidence and advantage of an asset that is already generating positive cash flow and profit. This can help increase profits and move into your home faster.

Of course, with a real estate wholesaler that is busy, there may also be a need for additional due diligence and several issues. Today, first of all, this means finding out who exactly owns the property and what the deal is about.

Today, in many cases, even if the property was seized and classified as an REO owned by a bank for years, the previous owners still live there. This is a big problematic situation for investors. While this might not seem like a big deal to those who are in the wholesale business or violate real estate contracts, it could mean that you are stuck in a deal that no one else wants to touch.

Before closing, make sure there are no previous owners and squatters on the property, or be prepared to stay with them indefinitely.

Even when there are real tenants, it is important to accurately check rents, rent status and deposits. Never take the seller’s word for it, even his agent or tenant. Formal disclaimers must be received from all verified units and numbers.

Keep an eye on this when closing to ensure that any disbursed funds are prorated and the corresponding amounts are transferred to the new owner. As the buyer or reseller will remember that closing the deal cash back on deposit and rent prepaid is not a profit. Some bragged about walking away from the closing table with thousands of cash, but in reality it needs to be kept for deposit refunds or sent to new customers.

The buying and selling process, especially when there are several sales in a short period of time, can be very stressful and annoying for tenants. Be friendly, be as transparent as possible, and make sure they understand the benefits so they don’t get complicated or block potential trades.

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