This is an often misunderstood aspect of Real Estate. A property’s usage is often confused with the highest & best use of a property. Usage is a part of the highest & best use but there are many other factors that go into determining the highest & best use of a property. Hopefully, we’ll be able to explain it in a way you will understand and recognize in your next deal to make more money.
I have been in Real Estate for 15 years. I’ve been on the side that held a license and the side of wholesaling houses. There are vast differences between the 2 sects of the industry. I have learned an incredible amount in my time in Real Estate. The successes are not the moments that stick out though. They are the moments when I couldn’t help a homeowner. Those will likely be the moments you remember the most as well. So if I was to do it all over again where would I start wholesaling Real Estate?
In Real Estate the property usage is sometimes referred to as the highest and best use. They are different things and should be treated as such. Property usage is what a property is being used for or should be used for to acheive the highest and best use of the property. There are 3 basic types of property usage in Real Estate. As soon as you learn to become the usage mediator and sell positive and negative property usage in your deals you will increase your spreads.
This may sound like something involving high school but it involves economics. We use the Principle of Substitution every day in our lives. Many times we don’t realize it’s what we are doing. The principle of substitution applies in every deal in Real Estate. As a wholesaler that is your focus when you put a property under contract. It’s important to understand how to value Real Estate so you can explain why a property is only worth so much.
Inspecting a property is about your comfort level not checking boxes. Each house is different. That means each house will have different issues and amenities that the neighbors don’t have with their house. The condition of each house is going to be different because no two people are the same. You’re almost playing a game trying to find what the owner is hiding. Trust me, they all try to hide something. I’ve inspected thousands of houses as an appraiser and investor. If you look hard enough you’ll find what they are hiding. That can be fun!
We have all seen Where Can I Find Comps posted in Facebook groups more often than it should be asked by the industry. There really isn’t too much to finding comps on Zillow however, many people struggle to find comps. This is one of the first things any Real Estate Wholesaler learns how to do. If you can’t determine value it will be difficult for you to close any deals. You can easily find comps on Zillow. Here’s how
So what do you have to lose?
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