How Wholesaling Works in Real Estate
Wholesaling can work well in real estate investing. You might have more in common with a real estate investor than you think. If you’ve been considering a career in real estate investing, real estate wholesaling might be just the thing for you!
Similar to turnkey investments, real estate wholesale is a great way to get started in real estate investing. As with any investment opportunity, there are both benefits and disadvantages. Make sure to evaluate all the pros and cons before getting started.
What is Real Estate Wholesaling?
Real estate wholesaling is how an individual, aka. ‘Wholesaler,’ acquires a contract from the seller of the property and assigns that same contract to an end buyer. Wholesaling is considered one of the best short-term investment strategies and is a great way for individuals to get started in real estate. This is because wholesaling doesn’t require significant capital to get started. Wholesaling can also help beginners learn quickly about the real estate market and gain major negotiation skills.
Here’s an Example:
The real estate wholesaling concept is simple. Let’s assume there’s a homeowner wanting to sell but their property is distressed and unable to be sold at market value. Instead of rehabbing the home themselves, the homeowner has another option. They can enter into a wholesale agreement with an investor. Whether the homeowner can’t afford to make the upgrades or they don’t want to, they can agree to enter into a wholesale contract with a wholesaler. The contract will give the wholesaler the right to buy the property at a specified price which is often much lower than market value due to the rehab needing. The wholesaler will then find an end buyer willing to pay slightly more than the wholesaler’s original contract and sell their rights to buy the house to the new investor. Remember, wholesaling isn’t selling the property, but rather the right to buy the property.
How Effective is Wholesaling?
- Be ready to put in the work! Wholesaling requires sweat equity. You must identify properties, negotiate deals and then target cash buyers.
- Do your due diligence. While it is relatively risk-free, wholesale requires plenty of due diligence and effort to see a healthy return.
- To be successful in wholesaling, prepared to invest a lot of effort in building strong lead lists, as well as networking and curating your buyers list over time.
Those who are willing to master the process in such ways are sure to experience the benefits of wholesale real estate.
I hope you found this information on real estate wholesaling useful. Real estate wholesaling can be a useful tool for investment. There is an entire arsenal of techniques and strategies to help along the way. This is just one of many ways to further your investment portfolio. For more educational content, check out our YouTube channel. Subscribe in order to stay up to date with our latest videos. Thank you for taking time to read our blog!
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