The 3 Types of Buyers for Wholesale Deals
February 26th, 2021
There are three different target buyers to wholesale houses to. Knowing who they are and what they are looking for is crucial to your success.
The 3 Types of Buyers for Wholesale Deals:
- Fix and Flip Investor
- Buy and Hold Investor
- Retail Buyer
Your wholesaling strategy will vary depending on which buyer you sell to. You need to understand your target buyer by creating a niche and then dominating that niche. The better you understand your buyer and the types of deals he or she wants, the more successful you will be. Let’s break down the anatomy of each of the three buyers.
Fix and Flip Investor
A fix and flip investor buys distressed properties, fixes them up and then re-sells them to retail buyers or homeowners. This type of investor focuses on areas that have strong retail values, such as good schools, shopping, downtown, and proximity to transportation. Some fix and flippers focus on first-time buyer markets. Others focus on higher income markets. Some do very light renovations (just carpet and paint), while others do full blown rehabs and update everything. Your job as a wholesaler is to identify the fix and flip investor you want to work with, and find deals that fit their criteria.
Also, fix and flip investors are often cash buyers. Finding cash buyers sounds intimidating, but with a few simple tools it’s actually easy. By far, the easiest way to find cash buyers is to join www.flipstersoftware.com. If you haven’t heard of Flipster, it is a cloud-based software that helps you organize, streamline and automate all the steps to wholesaling houses. It also comes with cash buyers in every market.
For more info on finding cash buyers watch Jerry Norton’s YouTube video HERE on How to Find Cash Buyers for Wholesale Deals. Once you know how to find cash buyers this is one of the easiest ways to wholesale real estate.
Buy And Hold Investor
The second type of investor is a buy and hold investor. A buy and hold investor buys properties with the intent to rent them for cash flow. Typically, they do this in lower income areas where the rental market is popular. Buy and hold investors look at their business completely differently than fix and flippers. They want to do the bare minimum to make the house livable. For example, they won’t install granite or change out the cabinets. The nature of their investment is very different.
Watch Jerry Norton in this YouTube video HERE to learn the ins and outs of wholesaling to Buy and Hold Investors in low-income areas.
The third type of buyer to wholesale deals to is a retail buyer (a regular homeowner). This is sometimes referred to as “whole-tailing” because it’s wholesaling directly to a retail buyer. There are retail buyers in every market looking for distressed properties at a discount. These people plan to live in the home and do repairs themselves over time. But, obviously, the house still needs to be “livable” when they buy it. In other words, if the roof has a hole in it and the furnace is missing, you can’t wholesale to a retail buyer. The reason for this is most retail buyers need to get a loan, and you can only get a loan on a house that is livable. In most cases, this works best when the home is functional but outdated.
Watch Jerry Norton in this YouTube video HERE to learn exactly how (and why) to wholesale to Retail Buyers.
Determine Your Ideal Target Buyer
Now that you’ve learned about the 3 types of buyers, you need to pick your ideal buyer to focus on. Ideally, you want to wholesale multiple deals to the same buyers over and over again. This works best with fix and flip investors and buy and hold investors. When you do this right, the possibilities are endless. Imagine having 10 buyers that purchase 5 properties every year. If you earned on average $5,000 per wholesale deal, you would make $250,000 per year! Now, imagine having dozens of buyers who purchase 5 properties every year!
I hope that I’ve piqued your interest in wholesaling to cash buyers. Don’t forget to work smarter not harder, and check out Flipster at www.flipstersoftware.com.