What You Need To Know About Wholesaling Real Estate
For the most part, real estate investing takes two forms. Some investors buy properties to rent out and make passive income with. Others, called "flippers," buy and sell properties for a profit. In this blog post, we’re going to dive into a third strategy, often referred to as wholesaling. It’s less common than buying and flipping houses, but it can be a great way to make some big profits—sometimes without paying much out of pocket at all. Let's get started!
Not for the faint of heart
Wholesaling is not for the faint of heart. It’s a competitive business and you need to be able to negotiate, sell, find good deals and manage your time. You will also have to handle rejection. Wholesaling is an art form that takes years of practice and experience to master, so don’t expect overnight success or immediate profits.
What is Wholesaling Real Estate?
Wholesaling real estate is the process of finding an undervalued property and selling it to another investor at a higher price. Wholesalers do not have to do any work on the property in order to sell it.
Wholesaling differs from flipping in several ways:
- Flippers purchase properties with the intention of renovating them before reselling for a profit. They might then rent out or occupy the property until they can sell at a profit. This is usually done with properties that need repairs or renovation, but sometimes flippers will buy homes already renovated and ready-to-go—though this can be risky since you're competing with other investors who are also looking for low priced houses they can flip quickly!
- The wholesaler has usually already done their own research on whether or not this type of deal will make sense financially before getting involved (which means they won't need as much help from others). This also means that if something goes wrong during this process, such as an appraisal coming back lower than expected due to unforeseen problems at closing time, someone needs only look within themselves rather than blaming anyone else because everyone involved did their best given their knowledge level at time."
The difference between wholesaling and flipping
Wholesaling is a way to make money. Flipping is a way to make money. The difference between the two is simple: wholesaling involves buying and selling property without ever owning it, while flipping is buying and then quickly reselling real estate for a profit. In this sense, wholesaling is easier than flipping because you never actually have to own the property you're working on—you only need enough cash to cover closing costs and other expenses associated with getting an assignment from your client (usually around $5,000). However, flipping requires significantly less up-front cost as well as less time commitment since you'll be able to sell your properties within months rather than years like with a wholesale deal (which could take years!).
When deciding between these two options for investing in real estate, consider what kind of return you're looking for: if you want steady returns over time (rather than quick ones), wholesaling may be better suited; but if you'd prefer more immediate returns on investment without having that much risk involved (like if there's no guarantee whether or not someone will buy from your client), flipping could be better suited for your needs!
How to find the deals
- The first step in wholesaling real estate is finding the deals. There are a few ways to do this, and which ones you use will depend on your approach to wholesaling.
- If you're more of an aggressive buyer/seller, then you'll want to find motivated sellers who have motivated buyers already lined up. This may mean going through foreclosure or trustee sales where people have already been evicted from their homes and are looking for help selling it quickly and efficiently.
- On the other hand, if you're more of a passive investor who wants to build their business over time with buy-and-hold deals then finding motivated sellers who also have motivated buyers can be beneficial as well because it means they aren't expecting thousands of dollars off the top when they sell their property and can work with someone who won't give them too much grief during negotiations or inspection periods.
The exit strategy
The exit strategy is a crucial part of your real estate wholesaling business. You need to know how much money you will make from each deal, and how long it will take to get the property sold.
If you don't have an exit strategy, you won't know when to quit. For example, if your goal is $100k in 12 months but one property costs $75k and another one costs $85k but it would take 6 months longer because there's more competition in that market right now—you're going to have problems!
You must also figure out how much money you'll need for each deal and how much profit margin can be made on each transaction.
Wholesaling isn't for the faint of heart. It can be complicated but it's always worth it.
Wholesaling is a lot of work, but it's not for everyone. If you're looking for an easy way out, wholesaling isn't the right fit.
Wholesaling isn't a get-rich-quick scheme. The process takes time, dedication and hard work, but it can be very rewarding if you're willing to put in the effort.
It's not for the faint of heart or lazy person; if you don't want to do your homework then this might not be for you!
We hope this article helped to give you more clarity on the topic of wholesaling real estate. If you have any questions about how the process works, feel free to contact us for more information or check out our blog for more great content!
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