Getting started in real estate investing by wholesaling is generally easier than starting with other investing strategies.
I was fortunate enough to get into real estate investing at the ripe age of 20 years old. Within 45 days, I completed my first wholesale, which profited $22,000. The best part was that it only took 8 hours of work. So, at age 20, I learned how to make $2,750 per hour! You may be wondering, “What exactly is Wholesaling?”
Wholesaling real estate is the practice of acquiring properties at discounted prices and reselling them for profit. A real estate wholesaler enters a contract with a property seller, markets it to potential buyers, and assigns the contract to the most appropriate buyer. The profit that the wholesaler makes is the difference between the price that is paid by the buyer and the contracted price. Nevertheless, the wholesaler must sell the property before their contract with the original property seller closes. Essentially, real estate wholesaling is a process of finding a property on sale at a discounted price and finding a buyer that is ready to purchase it immediately at a higher price.
Getting started in real estate investing by wholesaling is generally easier than starting with other investing strategies. The wholesale process does not require a license, a college degree or learning how to fix up or remodel properties. It also involves fewer expenses and working parts. For these reasons, you are able to hit the ground running.
With little research, you can easily learn the basics of wholesaling real estate including what to consider in deals and what to avoid. And, with proper guidance and knowledge, you can learn how to scale to closing multiple wholesale deals per month.
Wholesaling real estate provides the advantage of being paid faster. Holding land or engaging in new construction can take years before it pays off. Holding rentals offers cash flow every month while waiting to sell the property for larger returns. Although these are decent ways to venture into real estate investing, they don’t compare to wholesaling. That’s because wholesaling pays in days, sometimes even hours.
Even if you have bad credit or no credit, you can reap the benefits of wholesaling real estate. That’s because when you engage in real estate wholesaling, you don’t actually have to buy properties. You simply act as a conduit between the property sellers and buyers.
You can literally wholesale real estate deals from anywhere in the world. In most situations, all you need is a laptop and phone to get a wholesale deal completed!
Wholesaling real estate provides a great way to acquire the experience required to venture deeper into the real estate industry. From this experience, you understand the basics of the art of closing deals in real estate. For instance, you learn the criteria of selling and buying investment properties. This way, you can engage in other deals like renovating properties. You also learn to recognize hot opportunities in real estate. This increases your profits in future investments.
All investors in real estate, banks, the government, buyers, and owners of distressed properties depend on experienced wholesalers to get the job done properly. It’s therefore a great idea to venture into a field with a high demand. High demand provides security.
Exact earnings from wholesaling real estate vary depending on property type and the amount that every investor charges. However, compared to property management fees or collecting rent checks, the income of a wholesaler is typically larger.
A real estate wholesaler is in control of his ROI. The wholesaler is not capped like property managers or real estate agents. A wholesaler can choose to mark up properties by 50%, 10%, or 1%. They can also flip multiple properties every month. Even when you use your own cash, this amount is more than the average returns of many asset classes. And, if you do not use your cash, your returns on investment are almost infinite.
Real estate bird dogs or deal scouts are individuals that a real estate wholesaler employs to track down motivated property sellers. They find distressed prospects and deals in exchange for a finder’s fee. Thus, bird dogs or deal scouts provide extremely beneficial information to wholesalers. Nevertheless, licensed realtors typically do not employ unlicensed deal scouts.
Wholesaling real estate is a business that involves direct contract assignment. Thus, there is no need to list properties for the public. Essentially, this business involves a motivated seller, the wholesaler, and the final buyer.
A real estate wholesaler is not required to join any association. Thus, they don’t have a legal obligation to pay dues to any association. This is different from realtors that are required to pay association membership fees.
There is no limit to the number of properties that you can wholesale. Some wholesalers turn more than ten properties per month. Others wholesale several properties in a week. That’s more than most rehabbers handle.
Some people see wholesaling real estate as a zero risk investment strategy when fully leveraged. Generally, no investment is 100% risk free. However, when you do not hold onto properties, use financing, and ensure that you are in and out of property deals within days, the risk is relatively lower yet the upside potential is incredibly massive.
In most cases, a wholesaler has a list of buyers that are ready to purchase properties. These are mostly investors in the real estate industry and they take even properties that need repair or rehabilitation. Thus, wholesalers do not incur the cost of repairing properties because they sell houses that need repair to investors that take the risks and costs of rehabilitating properties and resell them at higher prices.
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