Wholesaling Real Estate
Wholesaling real estate is the opportunity for people to earn steady income without risking major personal investments or putting their credit in jeopardy. To put it simply, the real estate wholesaling business is based on effort – the harder you work, the more money you can make.
You can even jump into the real estate wholesaling market today – it doesn’t require a license to sell real estate or any other special permit.
Invest in Wholesale Real Estate And Keep Your Day Job
Another benefit of wholesaling is that it allows people to build large real estate investment portfolios AND keep a steady income from their regular job. There are many examples of successful wholesale investors who only work on a part time basis.
How Does Wholesaling Work?
In short, a real estate wholesaler looks for a distressed property, puts the property under contract and then assign or resells it to another investor. How this works it by allowing the property sale to close quickly, letting the new buyer get to work on making repairs need to flip the house.
The mindset of a wholesaler is that the price of a property will always determine the sale. For example, selling a property for a profit, no matter how small or how much work the property requires, it the key – someone will always buy the property. So, a property wholesaler is really an investor who can find a great deal and has a group of investors always willing to buy.
How To Start Real Estate Wholesaling
In the beginning, A wholesaler will never actually buy a piece of property. What happens is the property is placed under contract; the deal is pending on a number of contingencies. While the deal is being finalized, the wholesaler works to sell the property to a secondary investor for a profit. In order to maximize the profit margin on a quick sale, many wholesaling professionals use a house flipping spreadsheet to maximize their profit margin.
If the wholesaler can’t flip the property by closing time, as the potential buyer, the wholesaler will fall back on the contingency and end the deal – free and clear.
Basically, a real estate wholesaler is mid-level broker. As they network and determine quality investors, wholesalers tend to become well compensated for their effort. To better understand how a wholesale house flipping deal will look, consider the following example:
The wholesaler is able to secure a contract for $80,000 for a house that will sell for $150,000 (also known as After Repair Value) and only requires $15,000 worth of repairs. The wholesaler knows he has investors that will pay him cash for this property, so he sells it to the investor for $90,000; clearing $10,000 in only a few days.