Real estate wholesaling is one of the lesser understood and least leveraged methods of investing in real estate. But, many wealthy investors in the United States earn a great deal of profit using real estate wholesaling.
This article explains what Wholesaling Houses is and highlights the benefits of wholesaling houses as well as answers the question: Is wholesaling houses easy?
What is Wholesaling a House?
Wholesaling houses is a real estate investing strategy that many new investors utilize. It is a very low risk and high reward strategy. One in which no experience or personal capital is needed.
What are the Benefits of Wholesaling Houses?
Some of the added benefits of wholesaling houses include the following:
You can get started quickly
A key benefit of wholesaling houses is the ability to make a good profit without risk. It is also easy to get started and does not require formal education or any type of real estate license.
You will be paid faster
There are no barriers to entry in real estate wholesaling. The process from start to finish is quick and simple.
Unlike real estate agents and property managers, real estate wholesalers have the ability to control their own ROI. Wholesalers have the luxury of deciding whether they want a 1%, 10% or even 50% return.
How Does Wholesaling Houses Actually Work?
Its simplicity is perhaps the most appealing factor to investors. The following are the 4 basic steps to wholesaling houses:
Market for motivated sellers – The first step in wholesaling houses is to find properties that can be acquired at a deep discount. In order to find these types of properties you must generate motivated seller leads. The more seller leads you generate the better chance you have at securing a deal.
Get a property under contract – Present a motivated seller with a cash offer. Once a motivated seller accepts your cash offer, you need to get the seller to sign a Purchase and Sale agreement. When you are new to real estate wholesaling, it will be easier to start wholesaling houses with a simple one page purchase contract. Before getting a property under contact, make sure you read and fully understand the contract. Also be aware that real estate contracts and disclosures vary from state to state. Make sure the contract you use incorporates terms that are allowed in the state you are investing in.
Flip your contract to a cash buyer – Now you market your property to a cash buyers list. You should be able to find a buyer fast as long as the numbers make sense. There are other variations of wholesaling too. Some wholesalers may assign and “flip” their contracts; others may decide to double close. Alternatively, investors may “prehab” the property, meaning the wholesaler (you) may touch up or clean the property to increase the likelihood of a higher profit.
Close the deal – Last you need to send your purchase contract and assignment contract to an investor friendly title company. The title company will then get all the required documents prepared for closing. After the closing process takes place, the seller will receive their proceeds, you will receive your assignment fee, and the buyer will receive the keys to the property.
Wholesaling houses is a highly effective way to get started in real estate investing. Real estate wholesaling requires little to no cash or experience. It is by no means however, a “get rich quick” hack. It takes a lot of hard work and dedication.
Take the time to study and understand the market you are investing in and the type of properties your end buyers are interested in buying. This will help you create a long-lasting and successful real estate wholesaling business.
The South Texas Wholesaler
J.R. 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 6 years. If you would like some honest advise about wholesaling houses. Feel free to contact him at anytime.