Do you know the most common business model that beginning investors start out with?
If you guessed wholesaling ugly houses, you’d be right. If you’re still a newbie in this business, you can probably relate.
These properties are not difficult to locate, you need very little money and/or experience and there are several strategies that can be used to do deals with these types of properties…
You can rehab yourself, buy-&-hold as a rental, or (as I mention later) – simply flip to another buyer.
Jamel Gibbs here, and in this lesson, we’re going to take a closer look at why so many beginning investors begin their business by wholesaling ugly houses.
The Basics
First of all, let’s consider the basics of these properties...
They are usually older homes; the owner has most likely owned the house for a number of years. And there’s probably a good deal of equity there, and the house may need a lot of work to bring it up to standard.
One of the good things about these houses is that investors can buy them for cash. Because of that equity position, you can pick them up at a very deep discount.
Here’s an example…
You’ve located a house that’s worth $100k after it gets fixed up. You may be able to contract that house for a deep discount. Let’s say this house needs $20k in work. You’ll need to negotiate with the motivated seller, and there’s a good possibility that you can pick up this ugly house in need of work for just $30k.
Quick Money
So, you may not have the funds needed to rehab this house, but you can make some quick money with it… find a buyer and sell that contract to the buyer.
Remember, you’re not selling the house; you’ll sell the contract on the house for $40k. So you’ve just made $10k for selling a piece of paper.
This, in a nutshell, is the wholesaling ugly houses model. Most newbie real estate investors will jump into that type of business first because it’s quick and easy.
All About Marketing
Now, here’s the problem with focusing only on that type of strategy...
It takes a ton of work up front in the beginning if you don’t know what you’re doing. It’s all about marketing. (Remember, you’re a marketer first.)
I recently bought a $150k home for $68k. I bought another $105k for $45k. Purchases like these require consistent marketing, which is what I do. You can do the same thing when you know what you’re doing.
If you spend only $200 a month on marketing, you probably won’t find too many deals.
Ugly Looks Good
Getting started by wholesaling ugly houses just makes sense.
You can buy houses for pennies on the dollar, enjoy nice profit margins, and have several exit strategies open to you. Give it a go!
In my next lesson, I’ll be talking about how to work with pretty houses – stay tuned!
Your Turn
Is the ugly house business model where you started out? Tell us about it in the comments section below. Your feedback can help others!
Learn the fundamentals of wholesaling ugly houses.
Choose your exit strategy early on.
Find a buyer and sell the contract for fast cash.
Remember you’re a marketer first.
Jamel Gibbs
is also a mentor for other real estate investors helping them to achieve their goals. He is the owner of Mill Street Properties LLC and he invests in real estate all over the United States. Jamel's skills and drive were the winning combination to develop his efforts into a repeatable system. This system is now making him as well as many others tons of money.