Pretty House Wholesale Deals

fell pretty You know a pretty house when you see one. And you definitely know an ugly house when you see one…

In my previous lesson, I discussed in detail about the ugly house side of wholesaling. I explained that this is by far the most common business model used by beginning investors.

Why?

Because the properties are not difficult to locate, and the deals require very little money and/or experience.

So, now it’s time to dig in and learn about the pretty house side of wholesaling.

Hi there, Moguls, Jamel Gibbs back with you, bringing you yet another in-depth lesson to help you grow your real estate investing business.

See, wholesaling pretty houses is a model that’s often overlooked or avoided by beginning investors. Usually, that’s because they simply don’t understand how to take advantage of this business model.

But I’m going to show you the advantages of the pretty house model and also ways to create deals.

Let’s get to it…

More Exit Strategies

When it comes to the pretty house business, you have many more exit strategies than the ugly house business.

For instance, you have:

Seller financing
Land contracts
Wrap-around mortgages
Lease options

And others...

What I’m saying is, you have a wide array of creative real estate investment strategies with the pretty house business.

And, here are some other advantages of the pretty house business model:

The houses can be bought creatively.
They may need very little, or no work, to get them ready to sell.
Many have a good amount of equity.
Some may have little equity, but you can still create a solid deal.

With pretty houses you might have the same profit spread, but you’ll be paid multiple times. You’ll be paid up front, you’ll be paid every month, then you’ll be paid on the back end when you sell.

Basically, expanding out from the ugly house business over to the pretty house business allows you diversify, which offers many more opportunities.

How to Set Up a Deal

Here’s an example…

Let’s say there’s a house with no mortgage, it’s in a nice area, in a good school district, and the owner has lived there for many years.

pretty They are looking to downsize and want to get rid of the house. It’s a $100k home and the owner is asking $85k, and the house doesn’t need any work.

In a situation like this, what would most real estate investors do?

Most of them wouldn’t know what to do with it, so they’d set it aside or pass it by.

Here’s what I’d do...

I’d talk to the seller about holding the financing at 100%, or something close to 100%, of his asking price at 6% interest over a 15-year period. It’s possible I might pay $2,500 down.

How would I make money on this example?

I will turn around and flip the house for $100k. I’ll offer no-bank qualifying on a seller-financed note, and ask for $5k down. Or even $10k down.

Right there, I’ve already put cash in my pocket.

I will create a note with my personal buyer and sell it at 8% interest, and I’ll set it up for 10 years. I’ll be bringing in more cash each month from the buyer than I’ll be paying out to the seller.

When I sell the house, I’ll still have 5 years to pay off the original note. All the while I’m creating equity in this house.

Think about this exit strategy...

You don’t even have to hold onto the property. You can create the note, find a note buyer, and sell the note to them. That creates income right up front. You can even sell a partial note and still collect money on a monthly basis.

See, because you are the bank, there’s no bank qualifying. No underwriting. You become the underwriter. Of course, it’s important to qualify the buyer so you know the payments will be made. Make sure they have funds, a job and a good credit history.

But do you now see what I mean about the many options you have with pretty houses and creative financing?! It’s pretty great, if you ask me.

Saving You the Headache

The point here is that you don’t need to stay in the ugly house business just because that’s how you started out.

I encourage you to implement all of these strategies so you can diversify your investing. I don’t want you to get caught like I was a few years ago, when I was only rehabbing homes and not implementing any other strategies…

My business flopped!

Hopefully, I can save you the headache by teaching you better strategies.

From my experience, I want you as an investor to focus on multiple ways of investing to maximize your profit potential in the real estate investing business. When you diversify, you’re setting up different ways to achieve your end result.

Remember, multiple ways are always better than one.