Real Estate is one of the fastest-growing forms of investing money these days. The potential for big returns on your investment dollars is really high. With many different ways to make money in real estate and wholesaling real estate is a really good way to be successful quickly. While you can make a lot of money, you also need to realize that it will require you to do a certain amount of work in order for you to be successful.
What exactly is Wholesaling Real Estate?
The term wholesaling real estate is a very simple concept and can lead to a very successful real estate investing business. While it is rather simple, there is an amount of risk, but the potential for profit is quite high. So, what exactly is Wholesaling Real Estate, it involves the assigning of a contract for the purchasing of a real estate property to a buyer (generally, cash buyers). When the deal is closed you make a handsome wholesaler fee. The key to being successful in negotiating a good price from the seller so that you can make the contract as attractive as possible to your list of buyers. The wholesaling fee associated with the closing of the sale is generally a percentage of the overall property cost.
Pros of investing with Wholesaling Real Estate
Little to no startup capital involved – Since you are not actually buying any properties you do not have shell out any of your own money to get started. You don’t have to be able to afford to purchase or even qualify to purchase the home in order to make money. This is because all you are doing is assigning the contract you negotiated with the buyer to the seller that you also found. You, in turn, made a nice little profit when the sale closes.
Make profits much quicker – Depending on how motivated the seller is to negotiate, and how good you did at building your list of potential buyers you turn a profit in 30 to 45 days. The key to the amount of your profit is tied to your ability to negotiate the best deal from the seller and finding the right motivated buyer at the right price to guarantee yourself a tidy sum when the sale closes.
Easy way to dive into real estate – Wholesaling Real Estate is a really good way to jump right into the real estate industry. Since the more, you get to know about the ins and outs of real estate the better you will do. Picking up skills like negotiating, organization, learning about marketing is all part of real estate. The deals that you successfully close the easier it is for you to avoid the pitfalls that frequently cause people to quit real estate investing too quickly.
Cons to consider with Wholesaling Real Estate
Unpredictable Income – Wholesaling Real State does not come with any income guarantees when it comes to making a profit or return on investment. So, it can be a bit scary to take the plunge and quit a 9 to 5 job in order to get involved in real estate full-time. There are is not health insurance coverage, retirement programs to fall back on. Your income is tied directly to your ability to make sound financial decisions.
You have to find your own buyers – In order to be able to get the best possible outcome when you go to assign the contract that you negotiated you have to find the right buyer for the property you are looking to sell to. That means you also need to learn what motivates them to buy certain properties. So, if you will need to get really good at reading people in order to get the most bang for your buck.
Keeping up a good list of buyers is a lot of work – Since your success at wholesaling real estate is tied to finding the right buyers for your specific house sale contract. This means you need to be constantly evaluating your list of buyers. The better you know what motivates them to buy your contracts so that you know who to approach with which contracts in order to get your deals done and closed.
Are there legal concerns when it comes to Wholesaling Real Estate?
When it comes to what is legal when it comes to real estate transactions and wholesaling real estate, it depends heavily on the rules and regulations established in your jurisdiction. In order to be sure that you don’t find yourself on the wrong side of the law, you will want to be sure to discuss your specific situation with a lawyer or attorney that specializes in real estate laws. The worst thing you can do is enter into a contract with a buyer before you know that you are able to actually able to do it in the first place. It is smart to do your due diligence and dot all your ‘I’s and cross all your ‘t’s before you get started.
Wholesaling Real Estate vs. Flipping
When it comes to investing and making money in real estate there are many ways to do it. Two of the most popular ways these days are wholesaling real estate and flipping houses. While both can make you a lot of money selling real estate, they each go about it differently. Flipping involves having much more capital upfront and usually takes a lot longer to see the potential profit. Wholesaling requires little to no upfront capital and the results are generally seen quite a bit faster.
Wholesaling you normally have your buyers lined up before you even secure the contract to purchase the house. Flipping houses, you basically have a good idea of what the homebuyers in a given area are looking for and you remodel the properties in order to maximize your profits. Wholesaling real estate is much less risky from an investment standpoint, and house flipping requires you to possibly carry a mortgage and loans for renovation costs until after the sale of the property.