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Investing Strategies

Warzones: Deal or No Deal?

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incomingHey esteemed investors! Cody Sperber here with another terrific lesson...

A student of mine was asking about an interesting REI topic that's not talked about so often, and I thought it would be great to share with you as a thought-provoking and informative Mogul lesson: Virtual wholesaling in warzones. You know, challenging markets, like Detroit or in certain areas of Ohio, for example.

Well, let me tell you, when properly segmented, warzones can be a market worth tapping into. The challenge often comes with virtual wholesaling, which can produce great results and awesome properties, especially if your market is smaller. But virtual wholesaling can also be a high-risk gamble if you don’t have connections in your target (warzone) market.

So my advice is…don’t go all in until someone you know and trust has checked out the property. You do need boots on the ground for this particular strategy. Team up with a real estate agent who knows the area well and can do your recon on the property and area.

The other factor to consider is if you have cash buyers who are interested in this type of property. Just be sure the interest is there before you invest time and money and before bandit signs are posted.  Once you know what kind of market you’re facing and whether there’s interest, you’ll be better equipped to tackle challenges along the virtual wholesaling route.

All Warzones Are NOT Created Equal

If you’re going to successfully wholesale in a warzone, you’ve got to know how to segment a market. You need to know upfront that not all warzones are the same - they will produce various challenges.

Here’s the difference. Warzones can be categorized three ways:

  1. Low income
  2. Working- or middle-class income
  3. Upper income

detroitWhen you segment a market, you may be surprised to find that wholesaling works in every single market segment. Why? Because with wholesaling, your goal is always to minimize your risk by the terms in your contract and by the amount of earnest deposit money you put up.

With that said, my short response to whether or not you should virtual wholesale in a warzone is…yes, after you’ve done your homework. Here’s why…

Whether you’re wholesaling in your local market or even if you’re wholesaling in another state, if your contract terms protect you AND your earnest deposit, then I say knock yourself out.

Cheap & Easy Always Comes with a Price

Warzones are actually quite the popular market because the properties are typically easy to sell AND they’re cheap. You won’t spend endless hours marketing these properties or creating notes to get them sold.

But be prepared for some headaches…

After all, a warzone is well, a warzone. Your property might get vandalized; you need to be aware of possible drug activity in the neighborhood; and your presence may not be welcome. So be smart when you sell in warzones and be prepared for the worst.

Protect yourself, take minimal risks and do your research before you virtually wholesale in any warzone. If all looks good - go for it.

Have You Done Warzone Deals?

I’d love to hear about it in the comments section below.


Do It To It! Immediate Action Steps

Don’t be afraid to wholesale in warzones.

Do your homework before you get into virtual wholesaling in any market but especially warzone.

Be sure to have eyes and ears on the ground before you get started, like an agent.

Protect yourself – physically and in your contracts.

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