Apr 29

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Real Estate Investing- Wholesalers Need to Recruit Speculative Buyers in 2015

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house-dollar-signSince the real estate mortgage crisis of 2009 produced an unprecedented number of foreclosures across the country, real estate Investors were able to scoop up discounted inventory and many took advantage of foreclosures and short sales.

This wave of real estate activity enabled the real estate market to slowly rebound as these discounted properties were rehabbed and flipped at market prices.

During 2012 to 2014 – this rebound effect drove the recovery. Now, though, the rebound effect is fading. Price levels and price changes are both approaching normal and foreclosure inventories are dwindling. This is inevitable as the market improves and therefore shifts to price increases and a healthier mix of home sales. With housing prices increasing, real estate Investors are now finding it hard to find flip inventory that will produce a quick return on their investment. As a result, this lack of flip inventory has made way for a new pool of real estate Investors to begin to drive the real estate market, “Speculative buyers”.

Speculative investment: to speculate + to anticipate a great return.

Speculative real estate buyers purchase a property with the intent of holding the property ( renting it out) until the market prices fully rebound and then sell the property for top dollar. Speculative investing works best when a market is positioned at the rebound stages of a seller’s market. After a market goes through a buyer’s market phase and the market is transitioning to a seller’s market will provide the upswing necessary to capitalize on as speculation. When a market is positioned correctly, the speculator has the best chance of capitalizing big-time on a speculative investment.

These speculative real estate investments can come in many forms and all of them are betting on one primary objective. Buy a property at a low price with the anticipation of selling when the market fully rebounds for top dollar. Speculative Investors will generally purchase a property with cash, do some rehab and place a tenant in the property. They will then do a cash out refinance, pulling their cash back out, and hold the property until the market reaches a point of high return.

The next stage in the housing recovery depends on fundamentals such as job growth, rising incomes, and more household formation. Importantly, the share of young adults with jobs is still less than halfway back to normal, many young adults are still living with their parents, and income growth is sluggish. This means that housing activity in 2015 might disappoint by some measures. Since many young adults today are currently carrying a large amount of student loans, qualifying for a mortgage is near impossible. Therefore today’s young adults along with those who have lost their home in the recent foreclosure crisis, have caused the rental market to explode. Since the demand in rental properties is higher than the supply, the rental market will remain vigorous for years to come.

Since speculative real estate buyers are willing to pay a bit more for their real estate Investments it should be easier for real estate wholesalers to find properties. Many wholesalers have been experiencing a shortage of inventory as the sellers are not accepting offers low enough for a wholesaling spread. Much of this resistance to low offers is the result of the mortgage balance on a property being the same as or over the market value of the property. This does not leave much room for negotiating the price. But, with speculative buyers willing to pay a bit more for a property ( because they will be able to reap a nice cash flow with the booming rental market) wholesalers can increase their offers on properties resulting in a higher success rate of accepted offers.

The key to successful real estate wholesaling in today’s real estate market is to recruit more speculative buyers. This will enable you to increase your offers resulting in a higher influx of wholesale properties.


To Your Success,

Carol Stinson

About the author


Carol Stinson is a Real Estate Mentor, Author and Entrepreneur who continues to thrive in today's real estate market. Her concept of success is to never stop learning new techniques and then put what you learn into action expecting results. She is dedicated to helping others succeed by sharing what works in today's real estate market. Her strategies are effective, her techniques work and she is always updating them to conform to the ever changing real estate market.

Carol's biggest passion is people! Her love for others and dedication to help them succeed is genuine and ongoing. She created Real Wholesaling in an effort to help others find their way to financial freedom through real estate.

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