San Diego Creative Investors Association

 When it comes to acquiring properties, rehabbers have different potential avenues to pursue for good deals: buy direct from property owners, purchase from a wholesaler (who is flipping the contract to you via assignment or a double close), buy at auctions, etc.

 When a wholesaler flips a real estate contract, he is transferring the rights of a purchase agreement to another buyer (you). The process involves finding a property for sale, signing a contract for the real estate, then flipping that contract to a new buyer to make a profit.

 Rehabbers looking for good real estate leads, i.e. identifying motivated sellers who are prepared to sell  their property below current fair market value, can be very expensive. High qualify leads can cost hundreds of dollars each. Unless you have a highly sophisticated lead-gathering system in place, you can spend large amounts of money and wind up with bad or no results. So, one big advantage of buying from wholesalers is that they do all the legwork finding deals, for which you pay them a fee. That way the rehabber can concentrate on what he does best: rehabbing (repairs, painting, cleaning up).

 A. Dealing with Wholesalers

Suppose you find
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Housing prices, according to Goldman Sachs, Fox Business News and Zillow have dropped more than $2 trillion dollars, nationwide, since the summer of 2022. This equals an equity reduction rate of almost 1% per month. This is of course a nationwide average. Some regions of the country are faring better than this, some worse. However, the important thing to watch is the trend, which is being driven by higher interest rates (bad news for real estate sales) and the fear of a looming recession. The result, not surprisingly, is that the number of foreclosures is growing. However, for every dark cloud, there is often a silver lining. And for Real Estate Investors (REIers) with access to cash--their own money or OPM (Other People’s Money), the coming months and years could portend some very good investing opportunities. As the number of foreclosures increases, we can expect housing prices to continue to decrease as DMF (Distressed, Motivated & Flexible) property owners are forced to make the difficult decision to sell their property, often at bargain basement prices. Smart REIers, who know their markets and are prepared with the appropriate resources, can reap good benefits from a down market.  

The start of the foreclosure process in most states begins with the property owner receiving a NOD (Notice of Default). Depending on the laws in the state in which the property is located, and the for
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