Wholesaling bank owned properties has become a popular strategy for real estate investors looking to make quick profits. But can you really wholesale these types of properties? Let’s dive into the details.
Understanding Bank Owned Properties
Bank owned properties, also known as real estate owned (REO) properties, are homes that have been foreclosed upon by the bank. These properties are typically sold at auction, and if they fail to sell, they become bank owned.
When a property becomes bank owned, the bank takes over ownership and tries to sell it to recoup their losses. These properties are often priced below market value to attract buyers quickly.
Wholesaling Basics
Wholesaling, on the other hand, is a real estate investment strategy where an investor finds a property at a discounted price and then assigns the contract to another buyer for a fee. The wholesaler never actually takes ownership of the property.
The key to successful wholesaling is finding properties that are significantly below market value. This allows the wholesaler to sell the contract to another investor at a higher price, making a profit in the process.
Can You Wholesale Bank Owned Properties?
The answer to this question is not a straightforward yes or no. While it is possible to wholesale bank owned properties, there are several factors to consider.
Bank Restrictions
Some banks have restrictions in place that prevent wholesalers from assigning contracts on their bank owned properties. These banks prefer to sell directly to end buyers or through real estate agents.
However, not all banks have these restrictions. Some banks are more open to working with wholesalers and allow the assignment of contracts on their bank owned properties.
Building Relationships with Banks
If you want to wholesale bank owned properties, it’s important to build relationships with banks that are open to working with wholesalers. This can be done by reaching out to local banks and establishing a rapport with their asset managers.
By demonstrating your expertise in wholesaling and understanding the needs of the banks, you increase your chances of finding banks that are willing to work with you.
Proper Due Diligence
When wholesaling bank owned properties, it’s crucial to conduct thorough due diligence. This includes researching the property’s title, liens, and any other potential issues.
Since bank owned properties are sold as-is, it’s important to assess the property’s condition and estimate any repair costs. This ensures you can accurately determine the property’s value and negotiate a suitable wholesale price.
Marketing Your Wholesale Deals
Once you’ve successfully contracted a bank owned property for wholesale, it’s time to market your deal to potential buyers. This can be done through various channels, such as real estate investor networking events, online platforms, and social media.
Effective marketing will help you attract buyers who are interested in purchasing discounted properties for their investment portfolios.
Conclusion
While it is possible to wholesale bank owned properties, it’s essential to navigate the complexities involved in this strategy. Building relationships with banks, conducting thorough due diligence, and implementing effective marketing strategies are key to successfully wholesaling these types of properties.
Remember to always check with individual banks regarding their specific policies on wholesaling bank owned properties. With the right approach, wholesaling bank owned properties can be a profitable venture for real estate investors.