Articles For Aspiring & Active Real Estate Investors
Wholesaling real estate as an investment strategy has become one of the preferred real estate investments in today’s real estate market. Its popularity is because real estate investors who choose to wholesale –
Current Real Estate Market Metrics at the National Level
According to the Core Logic HIP index (an indicator designed to demonstrate early home price trends), prices for real estate and homes in the United States have increased 18% between September 2020 & September 2021.
Remarkably, this year-over-year...
The real estate market in the United States has been firing on all cylinders for the past several years, bucking conventional wisdom in the face of what is usually an extremely disruptive economic pandemic.
And while the cyclical nature of real estate is not front-page news to investors and economists, anyone paying attention to the current market recognizes it for what it is – a seller’s market characterized by expansion and appreciation as noted below in STAGE 2-
A ‘seller’s market’ offers real estate wholesalers a ‘prime time opportunity’ for investing because Stage 2’s property appreciation is robust and meets the most salient requirements of a successful wholesale deal.
Wholesaling real estate is a type of investment technique in which an investor, acting as a middleman, follows these steps –
Wholesaling real estate has become a wildly popular real estate investment technique, primarily due to the fact that it fits hand-in-glove with the current cycle of the real estate market. As noted by FRED (Federal Reserve Economic Data), the third quarter of the median sales price of a home in the US in Q3 – 2021 has hit a new high – of $404,700, as follows (Note – the shaded areas indicate those times when the US economy hit a recession
The pandemic and the resulting shortage of homes inventoried for sale dropped to some of the lowest levels but has since recovered to about 5.7 months, as follows –
Wholesaling real estate as an investment strategy is also wildly popular with new investors for these reasons –
Real estate wholesaling has been splashed across investing headlines as the latest real estate investment strategy. But despite this media-induced hoopla, most seasoned investors know that this investment strategy is anything but new.
What has made real estate wholesaling a ‘hot topic’ is the fact that, as an investment strategy, wholesaling is an excellent fit for the placement of the current real estate cycle.
Understanding the cyclical nature of real estate investing helps real estate investors understand which strategy to deploy based on current market metrics and expectations. The real estate market is inexorably intertwined with the overall economy and is often impacted by domestic and global events – like Covid.
There are four phases to the real estate market’s cycle –
The current market, despite the pandemic, is currently located in Phase 2 – the Expansion Phase, the part of the cycle where prices peak – at the point where there is...
Wholesaling real estate has become a popular investment strategy for both new and experienced real estate investors. However, it is often preferred by newbies because, as a short-term strategy, it requires little in terms of capital investments – just an earnest money deposit that is held in escrow until the transaction is complete.
But, like all real estate investing, there are pros and cons to the practice and market factors that must be understood to be successful.
What Is Real Estate Wholesaling?
Real estate wholesaling is an investment technique in which an investor – aka – the wholesaler, enters into a real estate contract to buy a property - but chooses to assign the “rights awarded by the contract” (known as Equitable Conversion or Equitable Interest) to another buyer – with an assignment of contract, often before they have closed. The final buyer is known in the biz as the end buyer.
Real estate wholesale deals provide new investors the...
Successful real estate investors understand the concepts that define the real estate market’s cycles. This knowledge is pivotal in identifying emerging investment opportunities as the market enters each stage of its cycle.
The significant appreciation that the United States’ real estate market has experienced in the recent past is best understood by its entrance into the second stage of the cycle – Expansion - somewhere near the beginning of the 2020 pandemic.
It is noted that the market, at this time, bucked conventional wisdom as most world events (like Covid) that impact the global economy negatively ultimately impacts real estate in the same direction.
The recent measured growth and appreciation characterize the phase of expansion with robust market metrics that include -
"Stage 2" is defined as a seller’s market, which essentially means that...
Real estate wholesaling is a strategy that is often a preferred investment strategy – especially for new investors because it provides a viable, legal investment technique that only mandates the provision of an earnest money deposit – which is relatively insignificant for real estate.
In addition to the appealing cash flow requirements of wholesaling, its recent popularity can be attributed to tremendous appreciation realized since the beginning of the COVID-19 pandemic, as real estate wholesaling aligns well with real estate prices heading north.
Wholesaling and flipping are sister-investment strategies as both searches for real property that has been priced below market value. Generally, because motivated sellers are facing a treacherous financial path, like foreclosure. In each of these investment strategies, the investor is acting as a middleman.
The primary difference between the two is that the wholesaler assigns the property for a profit (often called the ...
Real estate wholesaling is an investment strategy that has become popular in the current real estate marketplace. For experienced real estate investors, wholesaling real estate deals is certainly not a new investment technique but a strategy that aligns with the current market showing great appreciation. Currently, the national average appreciation rate in the United States is 14.5%, which is in deep contrast from 2019’s national average appreciation rate in the United States of 4%.
Historically, appreciation rates tend to follow significant economic events. The table below indicates a few recent economic events – which generated varying appreciation rates -
Note that a recession does not always result in the same rate or even the direction of housing prices.
But if you want to know why real estate wholesaling has become a preferred investment strategy, the answer is the 13.3% appreciation rate generated during the COVID-19 recession!
The Pine Tree state is renowned for its natural beauty, highlighted by a heavily forested interior, a picturesque coastline, and spectacular waterways that traverse our most northern and eastern New England state.
Although it is sparsely populated with just over 1.3 million people, there is still lots of potentials to do well if you’re considering wholesaling real estate in Maine.
Real estate wholesaling has recently received much media attention as an investment vehicle because the nature of the investment strategy has made it one of the most popular investment strategies in the current appreciating real estate market. Ironically, wholesaling real estate is nothing new, with the principles of wholesaling present in every sector of a capitalistic economy.
The real estate wholesaling business resembles the fix and flip strategy. The primary difference is that a wholesaler generally does not rehab or update the property as their objective is to close as quickly as possible. A reduced purchase price (generally below market value) is desired, with financially challenged sellers often looking to move quickly. It is noted that the type of property is not relevant as wholesaling can be done with rental property, an owner-occupied property, or investment property.
A wholesale deal in North Carolina offers real estate investors distinct benefits, as follows -