Real estate wholesaling might sound like something you can’t do or even consider doing. Not because you can’t learn it, but because it sounds like you would need a whole lot of money to even get started. But there’s always more than one way to do something, and that includes venturing into the world of real estate. You can be a wholesaler and even start with small capital. Like everything else in real estate, it all starts with finding a great deal.
What is Wholesaling Real Estate?
Basically, it’s finding a deal, then selling it to a third party. The basis of it is that you’re not selling the property itself, but you’re selling the position you have in the contract. In other words, you’re the middle person who finds the deal, puts it in a contract, assigns the contract to a potential investor, then charge the new buyer (investor) a fee. In other words, in wholesaling real estate you’re making money by flipping contracts, and not through the actual property. You typically don’t need more than a few hundred dollars to get into wholesale real estate; an amount almost anyone can afford.
Where Can I Find Deals?
Typically, wholesaling involves distressed properties. Distressed properties often need major repairs, or the person who owns it is in a rush to sell, so in both cases, the price of the property will be lower than the usual market prices. These individuals wanting to sell might be those who have to foreclose, benefactors of a property, or absentee owners.
Then What Do I Do?
Now it’s time to make an offer. In wholesaling, your negotiation skills need to be honed, and you need to be transparent in your role. Explain to the seller why working with you, as a wholesaler, would be beneficial to them. Explain the process of how you plan to handle the deal. When the seller agrees, you then need to find a buyer.
Do I Need Other People to Work with Me?
Wholesalers need a title company, an appraiser and a contractor. The title company assures the buyer that they’re buying a legitimate property. The appraiser will make sure that you’re paying a reasonable price for the property, while the contractor will help you in the next step. But before you move into the next step, make sure the contract allows you to assign the contract to another buyer. You also need to get a good assignment contract that allows you to get paid from the buyer.
What’s the Next Step?
This step involves assessing the property and the repairs that would need to be done. The estimated costs of repairs will then be passed to the buyer, which includes the ARV; after repair value. You then negotiate and confidently close the deal with the buyer.
This is a very brief guide of what to expect. If you’ve done your due diligence, it’s a very lucrative business. Relatively, it’s a risk-free business, but needs a lot of work on your part. Be prepared to invest a lot of effort to be a successful real estate wholesaler.