Should I Wholesale Deals in Warzones?

Howdy, folks. Today we have another great question from one of our esteemed investors. Christy from Florida asks:

“I’m thinking about doing some virtual wholesaling in Ohio, but I’m worried because all the properties that I want to wholesale are in warzones. Should I still continue?”

Well Christy, I think virtual wholesaling is awesome and it’s a great opportunity – especially if you live in a smaller market or in a market that’s really saturated. But, with virtual wholesaling, you’ve just got to make sure that your systems are really solid and that you have somebody in that local area (that you’re virtually wholesaling in) who’s going to be your eyes and ears on the ground.

Whether it’s a real estate agent, another investor you’re partnering up with or you’re just putting out ads and hiring people off Craigslist to be your eyes and ears on the ground, I would highly suggest you have somebody in that market to help you. I would highly recommend you team up with a real estate agent who’s in that area to help you do market research and those local properties quickly in that area.

Segmenting your Market: Time for War

As far as doing deals in a warzone, you’ve got to know how to segment a market and understand the differences.

There are warzones that are:

• Low Income
• Working Class and Middle Income
• Upper Income

When you start segmenting a market, wholesaling works in every single market segment. The reason is that, with wholesaling, you’re always trying to minimize your risk by the terms in your contract and by the amount of earnest deposit you put up.

So as long as you can get into a deal, whether you’re doing wholesaling in your local area or if you’re doing it remotely in another state, if your terms are protecting you, the investor, AND your earnest deposit isn’t at risk (or there’s not a lot of an earnest deposit to begin with)… I’d say go for it. It doesn’t matter if it’s in a warzone.

You just need to make sure that you have cash buyers who like that type of product. If you can get your eyes and ears on the ground, put up bandit signs and sell warzone products – great. Good for you…

A lot of people I know work specifically in warzone areas. The properties are usually easy to sell and you don’t even have to do a lot of seller marketing or creating notes to sell them.

So, you might buy it for $5,000 and then sell it for $25,000. Putting 5K down on a note or just 2K down and then carrying that note for the other 23K (or something like that), makes for a great opportunity because the properties are so cheap.

But you’re going to deal with all the drama it comes along with when dealing with warzone properties. Your properties are going to get broken into; they’re going to get vandalized. There might be drug activity in the neighborhood.

So you got to know what you’re getting into… and then I say, go for it.

As long as you’re protecting yourself and taking minimal risks – it doesn’t matter what market segment you’re in.

Until next time…

Keep it real.