Articles For Aspiring & Active Real Estate Investors
Real estate wholesaling is a short-term business strategy that has become quite popular as the underlying strategic goals mesh exceptionally well with the current appreciating real estate market that developed during the pandemic.
Wholesaling is a great tool that can be used for commercial real estate but is mainly employed by wholesalers in the residential real estate market. These potential wholesale deals may include owner-occupied units, investment properties, or rental properties.
Real estate wholesalers act like any other middleman in an economy. However, instead of selling large quantities of goods at reduced prices (like a traditional middleman-wholesaler would), the deal is considered wholesale because the real estate wholesaler is not the end-buyer or final consumer.
The objective of real estate wholesaling is to –
Real estate wholesaling is a short-term investment strategy. Procedurally, wholesaling in Washington DC involves a few but necessary steps –
Like most of the US, the Canadian real estate market has recently appreciated at unprecedented rates. Most real estate gurus have run out of adjectives to describe these defining market metrics, which shattered previous home price records in November.
The Canadian Real Estate Association (CREA) notes that home prices (from the MLS Home Price index MLS-HPI) rose 2.7 percent month-over-month across Canada - this translates to a record increase of 25.3 percent year-over-year. The chart below is an aggregate of benchmark prices for various property types -
The current market was so strong that even before the end of 2021, there were more real estate sales through the Canadian MLS than all the sales transacted in 2020 – another record performance.
The extraordinary nature of the current real estate home price rise has been an ideal backdrop for real estate wholesalers in Canada because wholesaling real estate, as a short-term investment strategy, dovetails with a rising or...
Wholesaling is a wise real estate investment strategy that allows you to get your feet wet in the real estate market in South Dakota without significant capital or time invested. But, similar to any new business endeavor, a real estate wholesaler must understand both the benefits and the areas of concern related to wholesaling real estate in South Dakota, which are discussed below.
A real estate wholesaler’s work resembles that of a flipper but reduces some of the more glaring risks associated with rehabbing real property. This is because there is no need for construction, permits, or time for something to go wrong.
A real estate wholesaler enters into a real estate contract – which can be for owner-occupied property, investment property, or rental property – but typically at a price below market value. The attractive price is usually the result of the seller needing to move quickly or another financial challenge that requires raising cash quickly. Therefore, many...
Wholesaling real estate is currently one of the most popular real estate techniques - reaching the upper echelon of profit-generating strategies, along with its sister strategy, the fix and flip.
What Is Real Estate Wholesaling?
Real estate wholesaling is simply a type of real estate investing strategy in which an investor executes a legal contract to purchase an investment property – single-family, rental property, a multi-unit property, or otherwise. But before closing on the first purchase contract, they choose to assign their right to purchase the property to another end buyer.
The difference that exists between the two sale prices is known as the defined gross profit. Wholesale properties are often sold to other potential buyers from a curated cash buyers list.
A fully executed real estate contract awards the purchaser/wholesaler with a bundle of rights to purchase the property through the Principle of Equitable Interest or the Principle of Equitable Conversion. The sale...
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...