When you wholesale real estate, there are houses, and then there are opportunities. If you’ve ever driven by an empty home that’s waiting for someone to breathe new life into it, then you’ve seen an opportunity.
After all, no one is living in them, and in some cases, the owners don’t want anything to do with the houses. They’re usually willing to sell for far below market value. So if you’re looking for a property that you can easily assign to a cash buyer for a large assignment fee, vacant and abandoned properties are a great place to start. And in this guide, we’re going to show you how to take advantage of them.
What makes a house vacant or abandoned?
For starters, vacant and abandoned properties are two separate categories. Legally, vacant houses have been unoccupied for 60 days. In some states, they also need to be empty of all furniture or personal belongings. An abandoned house is similar, but it generally takes a year for a property to be considered abandoned.
Properties become vacant or abandoned for a number of reasons. One common reason that a house may be vacant is that the owner is struggling to find tenants for an extended period of time. Properties may also become vacant when the owner has defaulted on their mortgage.
Instead of dealing with the foreclosure process, they may simply leave. Another common situation is that the owner can’t pay their property taxes and has received a lien, which stops them from selling on-market for full value.
In other cases, such as after a death or after the owner moves to an assisted living facility, a home can sit vacant for a long time. In these cases, it may be considered abandoned if no one tries to maintain the property or the lot. As you can imagine, the line between the two terms can be blurry, but if a property is sitting empty, it may make a great wholesale real estate deal.
Despite these general guidelines, it’s important to know that the official definition of a vacant or abandoned house may differ depending on state and local laws. It’s essential to check with a local real estate professional to determine what legal qualifications must be met for a house to be considered officially abandoned before you make an offer.
Using technology to find and evaluate vacant homes
The good news is that vacant and abandoned homes are a matter of public record, so they’ve always been relatively easy to identify. However real estate lead generation technology has simplified the search process even further by letting investors search for them using a single tool.
Because wholesaling can be competitive, especially in saturated markets, this ability to find leads fast is crucial. By simplifying the lead discovery process, property technology has given wholesalers a competitive advantage because they can locate opportunities in a matter of seconds. So how does it work?
In BatchLeads, an investor starts by selecting the area they want to search. Then they’ll apply a quick filter to isolate the vacant or abandoned properties in their area. Then with the click of a button, they can save all the results to a list, which they can export into BatchDialer or a direct mail campaign.
However, the capabilities extend far beyond generating a list. With BatchLeads, wholesalers can use a mix of 300+ demographic, property, and financial data points to evaluate their leads, craft marketing messages, and negotiate with motivated sellers. They also have access to a built-in ARV calculator that automatically finds comps and uses them to calculate a property’s ARV.
Instead of simply marketing to every property owner with a “vacant” or “abandoned” label, wholesalers using modern real estate technology can quickly identify properties that are worth presenting to a cash buyer.
What to do after finding a vacant deal
Finding deals is only the start of investing in vacant and abandoned properties. Once you identify a few properties that you’re interested in, it’s time to connect with the owners. This can be a tedious step, because not everyone you reach out to will be interested in selling, but it’s essential to keep trying.
Once you find someone, it’s time to make an offer on the property. In many wholesale deals, negotiating is one of the hardest parts of the process, because you’re trying to convince someone to sell for less than their house is worth.
However, since you’re working with houses no one lives in, it’s usually a lot easier to buy them at a low price. If you’re new to wholesaling, figuring out this price can be challenging. However, with the right tools and data, it becomes a lot easier. The most important factors to keep in mind are that you’re going to assign the contract to a cash buyer, so the less you pay for the house, the more profit you’re going to make.
It’s also important not to sign a contract with a price that’s too high or you’ll have a hard time finding a cash buyer who will buy the contract from you. The most important thing you can do is know what a house is worth before signing a contract.
Once you have a deal under contract, it’s time to assign it to a cash buyer, who will pay you an assignment fee for finding a deal for them. If the vacant home that you got under contract is in great condition, then selling it to a buyer will be easy. In fact, you may be overwhelmed with offers! However, you may have a harder time if the house has been neglected and needs work. That’s why it’s essential to do your due diligence and get the property under contract at a price that will make the deal attractive to investors.
Pros and cons of wholesaling vacant homes
Vacant homes may be easy to find and evaluate, but as with any other investment strategy, they come with their own set of pros and cons. For starters, they give wholesalers the chance to make a lot of money at once. Just because a house is vacant or abandoned, that doesn’t mean it’s distressed or severely neglected. Some move-in-ready vacant homes sell for pennies on the dollar when they’re worth infinitely more.
Wholesaling vacant and abandoned homes also requires very little initial investment. Because you’re finding these houses for a cash buyer who will close on them, the only investment you need to make is the earnest money. In some cases, the assignment fee you make from the deal could be enough to buy the next abandoned property for yourself!
Another benefit of wholesaling these homes is how much the process will teach you about the real estate industry. If you plan on flipping houses or building a rental portfolio in the future, then wholesaling is a great way to educate yourself while you’re making money. Because of the benefits we’ve already discussed, vacant homes are a great place to start.
However, nothing is perfect. Unlike working a 9-5 job, wholesaling won’t always give you a consistent, predictable income. It can generate large amounts of revenue at once, but deals are sometimes hard to come by. Just because you make $10,000 or more in a week, there’s no guarantee that you’ll get paid again two weeks later.
Another drawback is that sometimes it is hard to find a buyer, especially when the economy is uncertain. You can avoid this problem by reverse wholesaling, but if you’re going about it the traditional way, you may sometimes find yourself stuck with a deal that you can’t offload easily. Thankfully, this is rare, especially if you price your deals the right way. However, it’s a situation that you should be aware of.
Key takeaways
In general, wholesaling is an excellent way to make money in real estate without the inherent risks of other investment types. When you start wholesaling vacant and abandoned properties, the benefits increase exponentially. Now you’re working with property owners who likely don’t have much of an interest in the property, so you can buy them for less and make significantly more from your assignment fees.
The best part is that finding these properties is very easy. All you need is a real estate lead generation platform that is powered by data you can trust. Just remember to be careful when you get deals under contract. The sales price of a property will determine how easy it is to offload and how much money you can make.
While wholesaling vacant and abandoned property is an exciting venture, getting too emotionally invested in a deal can get in the way of making money. Always do your due diligence, comp your deals, and carefully evaluate the profit potential. If you do these three things, you’ll have everything you need to turn vacant properties into assignment fees
