Real estate wholesaling has a reputation as one of the lesser understood and less leveraged methods of investing in real estate properties. Yet, it proves to remain a stronghold of some of the wealthiest investors in the world. So what exactly is Wholesaling Houses? What are its benefits and is wholesaling houses easy?
What is Wholesaling a House?
The easiest way for investors to answer the question of “What is Wholesaling Houses”. Is to consider the general meaning of wholesaling, not just in real estate. Wholesaling is, essentially, acquiring a product at a lower price, and re-selling the product for a higher amount. Often, this is done in larger quantities and to other distributors or resellers, but that is not always necessary.
A classic example of this is the grocery industry. Wholesalers in the grocery industry will leverage their own contacts to acquire goods at a discounted rate. From there, they will deliver the products to the stores. Who will purchase and re-sell the product with an additional mark-up. Many different types and variations are responsible for the creation of some of the wealthiest businesses in the world. Take Amazon, Walmart and Costco for example. They obtain the products for a discount. Then sell them off to others who need it, with an extra fee.
When applied to Real Estate, Wholesaling Houses follows the exact same principles. Wholesalers will get real estate deals at lower, discounted prices, and re-sell those deals to buyers. While taking an extra fee for the service that they offer. They may perhaps sell to the public who need properties and deals to fuel their rental portfolios, or to fix and flip the properties. They buy at a discount, and sell for a fairer price, and take the difference as profit.
What are the benefits of Wholesaling Houses?
More than just the benefits that come with investing in properties. Some of the added benefits of wholesaling houses include the following:
You can get started fast
One key benefit of Wholesaling Houses, is that while profits still remain relatively similar to other forms of investing. It is much easier to get started. While it does require a certain level of industry knowledge and education. There is no need for a college degree, a license or any knowledge in fixing and rebuilding houses. The fact that there are fewer working parts and expenses means. That you can hit the ground running, and start making considerable profits much, much sooner.
You will be paid faster
Real estate wholesaling does not only have low barriers to entry. It also offers the opportunity to get paid much faster than other real estate investment strategies. When you decide to build a new construction site, or opt for the buy & hold method of investment. It may take years or even decades to fully pay off. Wholesaling housing, on the other hand, can generate you cash flow every month while you wait to sell eventually.
While the aforementioned methods of investment are still highly effective. Wholesaling can delivery in just days, rather than months or years. You might wonder, “Is Wholesaling Houses Easy?” The answer is, Wholesaling Houses has been promoted as the: “no credit, no money down, fastest way to get rich” method. Only fools would underestimate the time and work that are involved in successful Wholesaling.
Unlike real estate agents or other forms of property managers. Real estate wholesalers have the ability to control their own ROI. Not only do housing wholesalers have the luxury of deciding whether they want a 1%, 10% or even 50% markup. They also have the freedom to markup several properties per month, or even per year. Even should a Wholesaling investor decide to use his own cash. He is still likely to match, if not, improve upon, the returns of other asset classes. Should an investor decide to use money that is not his own, the ROI is almost infinite.
How does Wholesaling Houses actually work?
It’s simplicity is perhaps the most appealing factor to investors.
Secure a contract- The next step is to secure the profits by organizing a written contract from all the parties involved. When you are new to real estate investment. It can be beneficial to get a hold of some real estate disclosures and contracts and re-read them until you truly know them inside-out. Eventually, you will have the ability to write highly lucrative offers in just a few minutes. Which would allow you to complete multiple transactions per day. However, you should be aware that contracts and disclosures will vary. Depending on what country or county you are dealing in. Before beginning to get started in wholesaling houses, you may wish to get familiar with these variations.
Resell and make profits- Once you finally sent your property to a buyers list. You should get it converted into cash quickly, as long as you have a fair markup for your services. There are other variations of Wholesaling, too; others may assign and “flip” their contracts; others may decide to resell quickly. Alternatively, some buyers may even “prehab” the property, and clean the slate for the next purchaser. This added simplicity is what makes wholesaling houses so attractive to potential investors. There is no need to re-furnish or fix anything; they have no obligation to deal with tenants; there is no need to swing any hammers, and no property management aspects.
Conclusion: Is Wholesaling Houses Easy?
In conclusion, wholesaling houses is a highly effective way to get started in real estate investing. Which requires little to no cash or experience. It is by no means however, a “get rich quick” hack. It takes a lot of work, and if you don’t know what you are doing. You can easily get yourself into trouble. If you are willing to take the time to understand the market, your buyers, and do your deals effectively. You can surely create a long-lasting and successful wholesaling business.
J.R. Medrano is a real estate investor who specializes in wholesaling houses. He has closed several wholesale deals in the Corpus Christi, TX area where he currently resides. If you would like some honest advise about wholesaling real estate. Feel free to contact him at anytime.