Is Wholesaling Houses Easy?
Are you curious about how to be successful in real estate wholesaling?
Then you’re in the right place!
Wholesaling houses is a popular way to earn money, but how easy is it to get started?
What is wholesaling real estate, and is it right for you?
Let’s explore how this investment phenomenon will benefit your bank account and the steps on how to start wholesaling real estate where you live.
Table of Contents
- What is Wholesaling Real Estate?
- Examples of Wholesaling Real Estate
- Is there A Difference Between Flipping and Wholesaling Houses?
- Will I Need a Real Estate License to Wholesale Houses?
- Is Wholesaling Houses Easy?
- How to Start Wholesaling Real Estate
- Putting It Altogether
What is Wholesaling Real Estate?
Wholesaling real estate is the process of selling houses for profit. Wholesaling real estate for beginners is a less daunting prospect than other types of real estate investment and selling.
Essentially, to wholesale real estate, you’re looking at a short-term strategy that immediately makes a profit.
You’ll be the middleman of real estate. Motivated sellers permit you to manage a sales transaction with the final buyer. As a wholesaler, you’ll simply acquire a contract and sell it to the end buyer who wants to buy the property. It’s that simple.
In most cases, no money is exchanged between the wholesaler and the seller since wholesalers don’t purchase the property.
The wholesaler then gets a portion of the sale, known as the assignment fee. If you have some patience, are passionate about marketing, and understand the basics of human psychology, wholesaling houses is a great way to dip your toes into the real estate market without much risk.
Examples of Wholesaling Real Estate
Curious about what wholesaling real estate looks like in practice? Take a look at the following.
Jessica is a beginner wholesaler who found a distressed property for $200,000. She offers the homeowners $190,000 for the property. The owners accept the offer because they need to get out from under their mortgage quickly.
Jessica then gets the house under contract. She gets to work searching her network for real estate investors searching for a similar deal and is willing to take on the task of making improvements to the property.
Once the contract is finalized, the end buyer will pay $210,000 for the home. Jessica gets an assignment fee worth a few thousand dollars, and the end buyer fixes up the house and sells it for $250,000, making a profit of at least $30,000.
This formula positions you for a successful real estate business.
Is there A Difference Between Flipping and Wholesaling Houses?
For some investors, flipping houses seems more interesting than wholesaling them. However, wholesaling houses is different. Both strategies require you to find and purchase distressed homes and sell them for a profit, but the process doesn’t look the same.
With flipping houses, for example, you purchase a property that requires some work and then turn around and fix it up. As the value of the home increases, you can sell it for profit.
Wholesaling houses, on the other hand, requires you to simply find a buyer for the property, and you don’t do any hands-on work at all, and you charge a wholesale fee to the final buyer. This means you get less money, of course, but you’re also investing a lot less time and money into the property.
Wholesaling is the obvious choice if you’re looking to reduce the risk associated with real estate investment.
Will I Need a Real Estate License to Wholesale Houses?
This question is essential if you want to learn how to start wholesaling real estate. The answer, quite simply, is no. You don’t need a real estate license or any experience with real estate to start wholesaling.
Anyone can wholesale real estate and make money. This is especially great for new investors because you don’t need much capital to start.
While you don’t need a license to wholesale houses, you do need some patience. Making mistakes is easy, so connecting with a network or mentor is a good idea to ward off serious mistakes.
Is Wholesaling Houses Easy?
This is a question that doesn’t have a black-or-white answer. Wholesaling houses as a beginner requires quite a bit of work, and you must know what you’re doing and be willing to work hard to sell contracts.
If you’re not experienced in marketing or, at the very least, interested in it, you might find wholesaling houses challenging. The process requires understanding how to successfully sell a product—in this case, a home contract—and be willing to take on some risk.
Additionally, because it is real estate, you do need to make sure you’re doing it legally, correctly, and fairly. You don’t want to get into trouble and end up owing more than you thought on a sale.
That’s why blogs like this are so important in educating yourself before you jump into the process.
How to Start Wholesaling Real Estate
Wholesaling houses step by step guide for beginners:
Step 1. Know Your Local Laws
Yes, some states have odd real estate laws. Be sure to read up on local laws to ensure you’re not missing any critical steps in the sale process or regulations. It does vary from state to state. Do your research before you start selling in your area.
Step 2. Start Searching for Potential Properties
Next, you’ll need to start searching for potential properties. You’ll also want to consider other specs of real estate, including:
• Comps
• Repair Value
• Price Margins
These numbers are critical to marketing your property to buyers.
You can check out the local real estate listings to begin your search for appropriate properties to purchase. These listings should have the property value as well.
However, your best place to search for properties includes foreclosures and pre-foreclosures, real estate auctions, banks who have repossessed properties, Zillow, and RedFin for starters.
Step 3. Determine Your Budget
Curious if you can start wholesaling real estate without cash on hand? The answer is a bit complicated. Like flipping a property, you need to crunch the numbers to determine the maximum offer you can comfortably send to a seller. Since you’re selling the contract, not the property, you don’t have to have much upfront cash or any! The cash you’ll need is what you’ll pay for marketing your property to buyers. Some wholesalers invest a few thousand into marketing their property, but you don’t have to. Your strategies don’t have to involve expensive marketing techniques.
Step 4. Get Your Property Under Contract
Once you’ve crunched the numbers, it’s time to present an offer to the seller and get the property under contract. Present the contract to the seller and ensure that it includes an inspection contingency to protect yourself. This allows you to cancel if there are any hiccups during the inspection process. You also need to guarantee that your contract allows you to assign it to another party—this is how you wholesale the property.
Step 5. Sell Your Contract
After the inspection process clears, your next task is to sell the contract. This is why your network is so important. You need a list of interested investors or cash buyers ready to go. This is where marketing comes into play. Connect with a realtor in your area who can help with cash purchases or connect with buyers over social media. You’ll spend a bit of money on marketing the property, but if you sell it for a $5,000-$10,000 profit, it’ll be worth your investment!
Step 6. Reassign The Contract To The End Buyer
Once you find an interested cash buyer, the next and final step is to assign them the contract and close the deal. You can even use online tools to sign the contract virtually, so you never have to leave your couch to do this!
Estimated Cost: 1000.00 USD
Supply:
- Computer, internet, and phone.
Tools:
- Real estate investor software, FreedomSoft, Realeflow, REIPro, or PropStream. Motivated seller leads & cash buyer list.
Materials: Marketing, direct mail, bandit signs, or digital ads. Purchase and Sale contract & Assignment of Contract.
Putting It Altogether
If you are eager to start investing in properties, wholesaling real estate could be right for you. It’s a low-cost way to get started, and once you know what you’re doing, it’s a pretty simple process. To learn more about wholesaling real estate, stay tuned to the blog or check out a few of our most popular posts, including:
About Author
The South Texas Wholesaler
JR Medrano is a real estate investor who specializes in wholesaling inherited homes. He has been wholesaling real estate in the Corpus Christi, TX area for the past 7 years. If you would like some honest advise about wholesaling houses. Feel free to contact him at anytime.