Wholesaling Real Estate: Properties for Under 10 Cents on the Dollar
Wherever you are in the country you have no doubt seen banks selling REOs and investors wholesaling real estate at 30, 50 and probably even 70% discounts over the last 7 years but what about properties going for 10 cents on the dollar?
Who said real estate deals where getting scarce? Lehman Brothers is doing just this with a commercial office property in Detroit. In fact they are letting it go for less than 10 cents of the dollar of what they loaned on it in 2007.
What’s more incredible is that local comps have been selling for 9 times that amount per square foot in the last three months and that number has jumped 50% from the first quarter of this year. On a 251,000 square foot property, no matter how you slice it and where it is that is some serious change to be made for some investor and this is just one example.
Wholesaling real estate like this with even a 10% margin is huge money. They can be straight flipped, assigned, prehabbed or reinvented and marketed as a new product after the election to cash in on the new flux of capitol at the end of year. It’s millions in minutes for those with a creative streak.
Yes, demand and competition for some forms of properties in some areas has increased dramatically but that hardly means a lack of incredibly attractive and profitable opportunities for investors who are flexible.
Deals running out soon? No way. Big financial firms like Lehman Brothers have said they plan to continue to slowly sell off REOs and are happy taking until 2015 to do it, spreading out plenty of discounted, distressed property deals for the next few years. However, savvy investors know that they don’t have to wait for REOs to get publicly listed on the market for the sharks to swarm over. Those who are proactive can jump the line and go after distressed assets even before they hit the market.