How To Wholesale Real Estate In Rhode Island: Step By Step (2023)Jun 16, 2023
The Rhode Island economy is relatively insulated from economic uncertainty. While most of the country is witnessing unemployment rise in the wake of historic inflation and the Fed’s decision to deliberately slow the economy, Rhode Island has seen its unemployment rate drop year-to-date—albeit modestly.
Rhode Island's economy is firing on all cylinders relative to its peers. As a result, the local housing market has seen an influx of activity, and wholesalers look like the primary beneficiaries. Today’s trends bode well for those who know how to wholesale real estate in Rhode Island.
Are you interested in learning how to wholesale real estate in Rhode Island? This guide aims to provide you with a clear understanding of what to expect when wholesaling in Rhode Island. By the end of this article, you’ll have everything you need to wholesale real estate in Rhode Island, including:
- What Is Wholesaling Real Estate?
- How To Wholesale Real Estate In Rhode Island (9 Steps)
- Is Wholesaling Real Estate Legal In Rhode Island?
- How Much Do Real Estate Wholesalers Make In Rhode Island?
- Do You Need A License To Wholesale Real Estate In Rhode Island?
- Is Wholesaling In Rhode Island Easy?
- Final Thoughts On Wholesaling In Rhode Island
What Is Wholesaling Real Estate?
On the surface, wholesaling is a real estate investing strategy that's become synonymous with building wealth over a short period of time. Due to its short-term nature, minimal capital requirements, and relatively low barrier to entry, wholesaling has developed a reputation as an entry-level strategy that serves as a stepping stone into every other real estate investing opportunity in the housing sector.
Beneath the surface, wholesaling awards opportunistic investors the ability to bridge the gap between sellers and buyers to facilitate a transaction. As the term “wholesaling” suggests, bridging the gap refers to acting as an intermediary between each party. In doing so, wholesalers will acquire the right to buy a house at a discounted price, only to sell their right to an end buyer (usually other flippers) for a profit.
It is important to note that wholesalers aren’t buying the investment property (with a few exceptions); they merely acquire the right to buy it. With the sole right to buy the home, the wholesaler will sell their contractual right to an end buyer for a fee. That way, the current owner receives the sales price they agreed to with the wholesaler, the end buyer acquires their next rehab deal, and the wholesaler gets a profit proportionate to their involvement in the transaction—everyone wins.
There are many more moving parts to the wholesale process, but this should serve as an excellent introduction to this incredibly lucrative investment strategy. For a more in-depth look at how to wholesale real estate in Rhode Island, reference the nine-step process outlined below.
How To Wholesale Real Estate In Rhode Island (9 Steps)
Having a step-by-step process, then following it consistently, and fine-tuning along the way can lead you to success in real estate wholesaling. Check out our in-depth video on how to wholesale step by step in 21 days or less!
With that in mind, allow us to present a straightforward, step-by-step process for wholesaling real estate in Rhode Island:
- Partner With A Wholesale Mentor
- Learn Rhode Island Real Estate Wholesaling Laws & Contracts
- Understand The Rhode Island Real Estate Market
- Build a Cash Buyers List
- Find Motivated Sellers & Distressed Properties
- Put Distressed Properties Under Contract
- Assign The Contract To The Cash Buyer
- Close Deal & Collect Assignment Fee
- Double Close Or Wholetail When Necessary
1. Partner With A Wholesale Mentor
Wholesaling is generally considered a beginner strategy, but no rules require investors to do it alone. New investors are strongly advised to seek the assistance of a wholesale mentor. With the help of someone who is already an accomplished wholesaler, investors will gain an immediate advantage over the competition. The knowledge and expertise of an experienced wholesaler are invaluable and often capable of setting the tone for entire careers.
Under the careful guidance of a seasoned mentor, even inexperienced investors can mitigate risks, boost efficiency, and improve their chances of success. More importantly, novice investors can avoid the costly trial-and-error period that accompanies most first deals by learning from their mentor's experiences.
Above all, a mentor instills confidence, empowering new investors to take that crucial first step. With proper guidance, those initial steps become more approachable and manageable, unlocking the true potential of aspiring investors and encouraging them to improve their wholesaling skills with each subsequent deal.
2. Learn Rhode Island Real Estate Wholesaling Laws & Contracts
A genuinely accomplished mentor can give investors all the tools they need to wholesale in Rhode Island. It is worth noting, however, that anything a wholesaler does must abide by local laws. Transparency and integrity are paramount when wholesaling Rhode Island real estate.
Wholesaling is legal in Rhode Island as long as investors abide by the local laws. Therefore, investors of every level must learn and familiarize themselves with Rhode Island real estate wholesaling and contract laws. To better understand how to wholesale real estate in Rhode Island legally, consult the following sources that help oversee regulations in the state’s real estate industry:
- Rhode Island Department Of Business Regulation: The Rhode Island Department of Business Regulation oversees real estate regulations, not the least of which may include laws relevant to wholesalers.
- The Rhode Island General Assembly: The Rhode Island General Assembly grants visitors access to the state’s laws. Wholesalers can search for real estate regulations related to contracts, wholesaling, or real estate transactions.
- Rhode Island Association Of Realtors: Real estate professionals associated with the Rhode Island Association of Realtors will be able to answer any questions regarding the legality of wholesaling practices. Realtors and real estate agents must disclose their status as real estate professionals when wholesaling, so networking with the local association will help investors understand the regulations they need to know.
- Local Real Estate Attorneys: Wholesalers should consult with a qualified real estate attorney in Rhode Island if they have questions about wholesaling laws.
Remember, Rhode Island real estate wholesaling laws may change with time, so staying current on the latest developments is critical. Above all else, seek professional legal advice to ensure compliance with Rhode Island’s wholesaling regulations.
3. Understand The Rhode Island Real Estate Market
Investors must familiarize themselves with the local market to wholesale real estate in Rhode Island. To get things started, here’s a list of trusted sources that will help investors understand the local market and how it lends itself to wholesaling:
- Zillow Housing Data Research
- Zillow’s Rhode Island Market Overview
- Redfin’s Rhode Island Housing Market Overview
- Rhode Island Realtors Association Market Data
- Realtor.com’s Rhode Island Market Overview
- ATTOM DataSolutions’ Rhode Island Real Estate & Property Data
- SoFi’s State Foreclosure Data
- U.S. Census Bureau’s Rhode Island Data
- Bureau Of Labor Statistics’ Rhode Island Economic Data
4. Build A Cash Buyers List
A cash buyers list is one of the best tools wholesalers can use. In its simplest form, a cash buyers list is a list of potential buyers to wholesale deals with. At its pinnacle, however, a buyers list is a network of investors who have already expressed interest in buying properties in the future. That way, wholesalers in possession of a quality buyers list can assume that at least one of their contacts will be interested in their next wholesale deal.
Buyer lists are invaluable to wholesalers, but they are challenging to come by. Wholesalers must construct and maintain a network of dependable contacts to build a buyers list. The most tried and true methods of making a buyers list include but are not limited to:
- Implementing an email marketing campaign to reach a large audience and convince visitors to leave their contact information.
- Distributing business cards to communicate investment objectives.
- Developing a compelling website to generate potential leads.
- Strategically placing well-designed bandit signs in targeted areas to capture buyer leads.
- Utilizing online platforms like Craigslist to identify real estate investors actively searching for new investment opportunities.
- Attending networking events and trade shows to connect with investors who are actively seeking opportunities.
- Initiate a direct mail campaign to identify potential buyers and establish connections.
- Utilizing online content creation to attract potential leads.
- Engaging with social media platforms to build a like-minded audience.
- Keeping an eye out for "for rent" signs in the neighborhood, as they may indicate potential investors seeking new wholesale properties.
- Collaborating with a real estate agent who possesses knowledge of interested buyers.
You can also check out this video on how to find cash buyers!
5. Find Motivated Sellers & Distressed Properties
Investors must find motivated sellers, preferably of distressed properties, for wholesale deals to transpire. While there are plenty of strategies to find possible deals, anyone learning how to wholesale real estate in Rhode Island should prioritize the following:
- Leverage the expertise of local real estate agents and Realtors who possess unparalleled knowledge of their respective markets.
- Access the Multiple Listing Service (MLS) with a real estate license or by partnering with a real estate agent.
- Take part in foreclosure auctions organized by banking institutions, offering the opportunity to bid on off-market homes.
- Visit the local Recorder's Office to identify Rhode Island homes at risk of foreclosure.
- Implement a targeted direct mail campaign to connect with homeowners in a specific area.
- Explore neighborhoods by driving around and identifying neglected properties.
6. Put Distressed Properties Under Contract
In the event investors find a homeowner willing to work with them for the right price, the next step is to get the deal in writing. More specifically, investors will sign a real estate contract with the homeowner, giving them the right to buy the house and nobody else.
Entering into a contract with a homeowner gives the wholesaler the right to purchase the property at a predetermined price, which is often below the market value due to the distressed nature of the subject property (not unlike a rehab). Remember, the contract is for the right to buy the property, not an agreement actually to buy it.
7. Assign The Contract To The Cash Buyer
Once the seller has signed a purchase agreement, the next step is to secure a cash buyer; this is where step four comes into play. If investors already built a cash buyers list, all that’s required in this step is to market the signed contract to the buyers on the list.
When a suitable buyer is identified, the next step is to get them to sign an Assignment of Contract agreement. This legal document allows investors to transfer their purchase contract to the buyer, effectively transferring the rights and obligations of the first contract to the end buyer.
8. Close Deal & Collect Assignment Fee
With all the parties on board and each signature in the right place, it’s time to close the deal and collect an assignment fee. While fees will vary, depending on the individual variables, most investors charge anywhere from 5% – 10% of the total property price. There’s also the possibility of demanding a flat fee, usually between $10,000 – $15,000. While less common, some investors are justified to charge up to 50% of the projected profit for the end buyer.
There are several ways to calculate an assignment fee, but the fact remains that investors have a lot of room for profits. Ultimately, the assignment fee is relative to their negotiation skills and how much they can convince the end buyer to agree to pay.
9. Double Close Or Wholesale When Necessary
On the off chance the home seller is reluctant to allow an assignment of the purchase contract to an unfamiliar party, wholesalers can conduct a double close. As its name implies, a double close will require wholesalers to purchase the property, only to resell it shortly after—appropriately dubbing this strategy the double close. This strategy involves the investor closing two separate real estate deals: one with the original seller and another with the final buyer.
While technically a wholesale strategy, double closings are less popular than their traditional counterparts. Not only are they more involved, but investors will have to come up with their own money or use a lender (maybe hard money) to facilitate a transaction complete with closing costs and more. Nonetheless, it’s an option for those who run into reluctant sellers—one that’s better than losing a deal altogether.
Is Wholesaling Real Estate Legal In Rhode Island?
Wholesaling real estate in Rhode Island is legal. Not only is it legal, but countless investors have made a very lucrative career by wholesaling real estate in The Ocean State while respecting local laws. Therein lies the secret: investors can wholesale in Rhode Island if they abide by local rules and regulations.
Again, wholesalers must exercise transparency and integrity. That’s why, when entering into a bilateral contract with the seller, investors must disclose their intentions to buy an equitable interest in the home—not the house itself. That’s important; investors aren’t buying the property in a traditional wholesale deal, and their contract needs to suggest as much. At the same time, they must include a proof of “funds letter,” which discloses the intent to buy, and they must act as the principal buyer and sell the contract to an end buyer.
Again, there are many moving parts to a wholesale deal. Investors need to consult a qualified real estate attorney to ensure they follow the laws in their respective markets when attempting to wholesale.
How Much Do Real Estate Wholesalers Make In Rhode Island?
How much a wholesaler can make in Rhode Island depends on several variables, including their individual experience, current market conditions, how much the home sells for, and how much the end buyer is willing to pay to take over the contract. In short, there’s no universal answer. Several factors determine how much a wholesaler in Rhode Island can make on a single deal.
That said, it’s possible to estimate how much the average wholesaler can make on a deal if we assume wholesale fees can cost end buyers anywhere from 5% – 10% of the total property price. Therefore, if the median home value in Rhode Island is about $418,708, according to Zillow, a 5% wholesale fee would net investors approximately $20,935.40.
Again, that’s just an estimate of how much a wholesaler can make if they charge a 5% fee on the state’s median home value. Subsequent deals may net more or less, depending on the abovementioned factors.
Do You Need A License To Wholesale Real Estate In Rhode Island?
Wholesaling real estate requires an acute attention to detail and a mind for due diligence, which begs the question: Do you need a license to Wholesale real estate in Rhode Island? The short answer is “no.” Investors do not need a real estate license to wholesale real estate in Rhode Island.
Investors with a real estate license will be held to a higher standard because of their status. Most notably, licensed investors must disclose their status as an agent, real estate broker, or Realtor to all parties involved in a wholesale deal. In Rhode Island—and most states for that matter—wholesale investors must disclose their status as licensed real estate professionals when they contract with the buyer and seller. At the same time, they must reveal that they are not the owner and are instead selling their right to the subject property.
No laws require a real estate license to wholesale in Rhode Island, but those with one must exercise complete transparency to comply with local regulations.
Is Wholesaling In Rhode Island Easy?
The answer to the question “Is wholesaling in Rhode Island easy” is entirely subjective and relative. On the one hand, learning how to wholesale real estate in Rhode Island is typically “easier” than learning how to rehab or scale a portfolio of rental properties. If for nothing else, wholesaling is generally less involved than its other exit strategy counterparts.
Despite most investors viewing wholesaling as the most approachable real estate exit strategy, it’s irresponsible to assume it’s easy. The amount of laws and regulations that investors need to know is intimidating. There is no room for complacency in the wholesaling community; saying it is easy is the quickest way to undermine your expertise and expose yourself to unnecessary risk.
Here at Real Estate Skills, we offer the Pro Wholesaler VIP Program, a world-class program that has seen thousands of beginners learn the business and make a lot of money along the way.
The Pro Wholesaler VIP Program is designed for the modern entrepreneur to learn the basics and how to help new real estate wholesalers avoid the pitfalls typically found by beginners. It is 100% online and is used for local and virtual real estate wholesaling.
Instead of assuming wholesaling in Rhode Island is easy, respect the process and take every precaution necessary to realize a safe, successful, and law-abiding deal. It’s only when you mind due diligence and mitigate as much risk as possible (which is ironically hard work in and of itself) that wholesaling becomes “easier.”
Final Thoughts On Wholesaling In Rhode Island
Learning how to wholesale real estate in Rhode Island may coincide with a significant upside, especially in today’s market. However, the upside isn’t guaranteed; aspiring wholesalers must respect the process and mind due diligence at every step to increase their chances of success. Better yet, following the nine steps outlined above can give new investors the edge they need to realize their potential.
At Real Estate Skills, our team of experts is ready to provide you with the tools you need for wholesaling houses in Rhode Island. We're committed to providing the knowledge, resources, and support you need to navigate a Rhode Island wholesale successfully. So avoid common mistakes and maximize your returns by leveraging our expertise.