ECONOMICS - Unlocking Profit Potential: Understanding Wholesale Real Estate Deals

Peace! This is Wise Righteous One! One day I was thinking about how I do something productive with the funds I had accumulated from years of financial growth. So I asked my queen about real estate and if she would be interested in getting her real estate license so we could buy, fix, and flip houses. She agreed and it came to the point of how would we purchase a house with cash!

We came across a class that was given by a guy who was locked up and was teaching classes on how he used his funds to purchase houses. And he mentioned a (hard money lender). A hard money lender is someone who has access to millions of dollars and is willing to agree with the terms of funding 65% of a deal and obviously, you have to cover the 35%. They then started to drive around looking for old run-down houses and built up a list of over 30 houses. We then download an app named (batchleads). And put the houses we found addresses in this application to get the number for the owners of these properties. It took months to figure out how to get someone to listen to us on wanting their house. Then we figured it out. We came up with a script by looking on YouTube on how to (cold call). We then saved the best part of each video and created our script. It finally worked! We were now walking into our first deal. So now I went online to see if I could find someone to fix this house on a budget so that we could actually make a profit. Contractors are extremely expensive! So I started looking for handymen! I understood that they are the jack of all trades and have plenty of connections! I then found a guy who has served 10 years in the feds who changed his life around older with a wife who owns plenty of properties! He gave me a great budget based on having the same background as being incarcerated before just like the guy who taught me the game!

THIS IS HOW IT WORKS! 65% of $250,000.00 is $162,500.00. This means you have to be able to buy and fix up this house for $162,500.00 to make a profit after paying your (hard money lender) 10% of the loan he gives you. We went over $162,500.00 by $10,000.00. This means we had to bring $10,000.00 to the table being the budget went over. We purchased the house for $125,000.00 and spent $47,000.00 on fixing it up for a total of $172,000.00. If you notice I said 65% of $250,000.00 is $162,500.00. This is because your real estate agent will let you know the comps of said property. Comps means what the value of this house is after it is repaired. Which was $250,000.00. Now at this point, we have to talk numbers and profit. The lenders want 10%, and the real estate agent gets a 6% commission. My queen is an agent so that came back to the pot (smart move), and the rest is all profit as you can see I only spent $10,000.00 of my money! This is how we turned $10,000.00 into $61,750.00! 

• After repair value... $250,000.00

• Purchase and repair... $172,000.00

• 10% fee to lenders..... $16,250.00

• $172,000+$16,250=$188,250.00

• $250,000-188,250=profit $61,750.00

We brought $10,000.00 to the table so our actual profit was $51,750.00.

As long as you gain capital to start! keep driving around looking for homes! use batchleads to get the home number.. Find a private lender and reliable Handyman... You can do it! I'm currently on my 3rd flip and have 3 wholesale deals under my belt! 

The question then is asked what is a wholesale deal? This is when you find a property someone wants to sell. Find an investor who wants to buy it and do the repairs and you put it under contract with the owner, then you put it under contract with the investor for a higher amount.. Example... I found a house for $100k I told/ the investor I was going to wholesale it to him for $110k he agreed.. I walk away with $10k! Easy money and also a way to get started to gain capital if you don't have any so you can start flipping houses! This was all done while in the interior cipher and this is how I maximized my time successfully to unlock profit potential by investing wisely in real estate.

Peace,

Wise Righteous One

The opinions expressed within the content are solely the author's and may not reflect the opinions and beliefs of the website or its affiliates.