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How to Evaluate Wholesale Real Estate Properties

Learning how to invest in wholesale real estate properties can provide you with crucial income and opportunities. Of course, that would work only if you know what you’re doing. However, prospective wholesale real estate buyers are inundated with seminars and sales messages. Those are geared at getting you to buy systems to get started with real estate property investment. Ben’s here to tell you that there’s an easier way to evaluate wholesale real estate properties. That is to say, just by using simple evaluation and decision-making methods. Over time, you can build your robust real estate investment portfolio into a real money-making opportunity. 

Main concepts

There are three ways to approach how to evaluate wholesale real estate properties:

  • Sales Comparison Method: With the sales comparison method, you use a competitive market analysis to determine whether a property is worth the investment. This means comparing it to other properties nearby that have sold in the last year. This is a common method real estate agents and agencies use. They use it to advise their customers on the price at which their clients should list homes. As a wholesale buyer, a key to understanding how to evaluate wholesale real estate properties relies on the competitive market analysis, or CMA, for judgment.
  • Income Method: With this method, you can evaluate properties meant for investment that contain over five units. It’s pretty simple: Use the property’s value and the amount it’s capable of producing soon to determine whether it’s good to invest.
  • Cost Method: With the cost method, figure out whether creating the property from scratch on an empty lot would cost more or less than investing in this wholesale real estate property. You’ll need to consider the value of the lot itself (without a structure), and what the structure adds to the lot. Plus the level of depreciation the property has experienced since the structures on the property were built.

These three methods are the pillars of how to evaluate wholesale real estate properties. To sum up, if you’re interested in jumpstarting this process, reach out to Ben to get started.