Wholesaling Real Estate to Overseas Investors
Over the last week I did something new. I wholesaled a property to an overseas Real Estate investor. It was an interesting experience with some nuances in getting the deal to the closing table. But this article isn’t about every detail of the transaction. It’s about why it took me so long to work with foreign investors and why this will not be my last time working with someone across the border.
I’m a firm believer in a handshake. My ability to gauge someone’s trustworthiness seems to increases exponentially as their proximity gets closer. That’s one reason I never before worked with investors from overseas.
The fact is that I really never saw the benefits. I had (and still have) plenty of buyers for my wholesale deals. Most these people are in my own back yard. I thought, “Why would I add the additional hassle of overseas phone calls, different time zones and thousands of miles, to a process that is already strewn with possible landmines?”
Well a month ago my mind was changed.
My business partner got a visit from an Israeli gentleman looking to purchase 10 investment properties in the immediate future. Of course the opportunity caught my eye. But I wanted more information. After providing his buying criteria and some initial discussion, the buyer left. A few days later he returned to Israel. Usually that would have been the end of the story.
It just so happened that within a day of our meeting, I contracted a property that fit my criteria as a wholesale deal. I didn’t want to buy the building, but within the deal there was money to be made. The only problem was the time frame. It needed to close within 3 weeks.
Lucky for me, the deal fit my new buyer’s criteria perfectly.
In the past 3 weeks I’ve identified some excellent opportunities that this new buyer, and others like him, can offer my wholesale business. Settlement on this first deal is as strong a confidence builder as any handshake. Here are some of the benefits I’ve seen to working with overseas investors:
Repeat Business: The day after settlement on this first transaction, I had an email from the seller asking when I was going to send him the next property. He performed on the first one, so he’s moving into my inner circle of buyers. I’ll be sure to send him the next deal as soon as possible.
Most overseas buyers are not simply looking for a second home. Their goal is to take advantage of a weak dollar and maximize their return. If you treat them well and only sell them deals, they’ll come back for more.
Referrals: Wealthy people have wealthy friends. When you treat them well and provide a good return for their investment, they will tell their friends. If you don’t believe me, think about the last “secret” stock pick you got from your friend or relative. If you had some extra money sitting around, you probably bought some.
Minimized Competition: Referrals from overseas are unlikely to shop around. You become the only game in town. But this doesn’t just happen with referrals. Clients that perceive value from your service tend to stick around. Since overseas buyers are thousands of miles away from your competition, it’s unlikely they’ll wander if they’re getting the service that they want.
More Deals with Less Marketing: I know people that make a living on 2-3 buyers. They don’t market for deals. They don’t negotiate with sellers. But they do present deals to their buyers. How? Their buyers trust them and will only work with them. So they become a middle man.
The same concept applies with an overseas buyer. Once you’ve gained their confidence and they trust you, you become the go between. It’s an opportunity to team up with other wholesalers, Realtors and other industry professionals. Let them do the leg work. Filter through their deals and present the ones with the most potential to the buyer. It’s a win for everyone.
Additional Income from “Add-On” Services: You might not have the expertise to make repairs on a property. But it’s likely that you know someone who can do those repairs. If you can’t find tenants for a rental, you probably know someone who can. For every service, there’s a fee. When you facilitate the success of your buyer by offering add-on service beyond the initial sale, referral fees go right to the bottom line.
It’s important to try new things. Who knows, you might just find something you like. In the last few weeks I worked with an overseas buyer for the first time. It’s been a successful and lucrative endeavor – something I’ll be sure to do again.