When it comes to wholesaling real estate, niche markets can offer some of the best opportunities. One such niche is burnout properties—homes that have suffered fire damage. Whether it’s a minor kitchen fire or a total gut rehab, burnout properties can present lucrative opportunities for savvy investors.
Meet Sandra Nesbitt: The Burnout Property Expert
Sandra Nesbitt has been investing in real estate for over 19 years. Originally from New York City, she moved to the Dallas-Fort Worth (DFW) market in 2007 and has since become a go-to expert in wholesaling burnout properties. Sandra didn’t plan on specializing in burnout homes; she fell into it by accident. But her knack for turning these properties into smoking deals has made her a standout in the industry.
Understanding Burnout Properties
Burnout properties are homes that have suffered fire damage. The extent of the damage can range from minor kitchen fires to total gut rehabs needing demolition. The key is targeting properties where sellers are highly motivated to sell due to the damage.
Why Target Burnout Properties?
- High Likelihood to Sell: Homeowners dealing with fire damage often look to offload their properties quickly.
- Less Competition: While the competition might be fierce in more common wholesaling niches like pre-foreclosures and probates, burnout properties offer a gentler landscape.
- High Profit Margins: With fewer investors targeting these properties, the potential for high profit margins is substantial.
How to Find Burnout Properties
Finding burnout properties involves more than just a blanket marketing strategy. Sandra recommends focusing on open records. Here’s a step-by-step guide:
- Contact Local City Secretary: Make an open records request for fire-damaged properties within a specific date range.
- Target Multiple Cities: Sandra targets 73 cities in the DFW Metroplex, which increases her chances of finding viable properties.
- Use Multiple Marketing Channels:
- Direct Mail: This has proven to be the most effective method for Sandra.
- Cold Calling: Get phone numbers through skip tracing and make the calls.
- Door Knocking: Sometimes, directly approaching the neighbors can yield valuable leads.
Marketing to Burnout Property Owners
Marketing to the owners of burnout properties requires a compassionate approach. These homeowners are going through a tough time, dealing with both situational and property distress. Here are some tips:
- Personalized Letters: Send letters acknowledging their situation and offering your help.
- Highlight Your Value: Explain how you can assist them, whether they decide to sell or rebuild.
- Be Transparent: Offer resources and guidance on what to expect during the process.
Profitability of Burnout Properties
The profit you make from burnout properties can be substantial. Sandra’s smallest deal made her $1,600, while her average earnings are in the five-figure range. The potential is there for high five-figure deals, depending on the severity of the damage and the property’s After Repair Value (ARV).
Estimating Repair Costs
Estimating repair costs for burnout properties can be tricky. Here’s a rough guide:
- Minor Damage: $15-$20 per square foot
- Moderate Damage: $20-$35 per square foot
- Severe Damage: $35-$55 per square foot
These estimates can vary based on the extent of the damage and the overall condition of the house.
Building Relationships with Buyers
One of the keys to success in this niche is having a reliable list of buyers interested in burnout properties. Sandra has about five or six pocket investors. She often sells properties before even making formal offers because she knows exactly what her buyers are looking for.
Tips for Success
- Reverse Wholesaling: Know what your buyers want before you make an offer.
- Quality Over Quantity: Focus on a few reliable investors rather than blasting your list to hundreds.
Challenges and Safety Considerations
Like any niche market, wholesaling burnout properties comes with its challenges. Safety is a major concern, especially when inspecting vacant homes. Sandra always advises going with a partner and taking necessary precautions, like carrying a flashlight or a makeshift weapon for self-defense.
Conclusion
Wholesaling burnout properties can be a highly profitable niche for those willing to put in the Wholesaling burnout properties may seem daunting, but with the right approach and resources, it can be a highly profitable niche. Sandra Nesbitt’s journey from a general real estate investor to a burnout property expert highlights the potential of this market.
By understanding the unique challenges and opportunities burnout properties present, you can carve out a lucrative niche for yourself. Remember to approach each deal with empathy, precision in estimating repair costs, and a strong network of buyers. With these strategies, you too can turn burnout properties into “smoking” deals.
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