Real estate wholesaling is one of the most powerful strategies for investors. How does it work? How can you get started, and be successful at it?
ALL ABOUT REAL ESTATE WHOLESALING
Wholesaling is often promoted as the fast and easy way to get into real estate. This is especially true for those seeking no money down real estate deals, or who have less than perfect credit. It can work for you if you are in this group, but it is a lot bigger than this too. Many regular individuals and experienced real estate investors from other facets of the industry can benefit from wholesaling property.
Specifically; wholesaling is great for those that want to get paid quickly. And that often becomes a chain of sizable and frequent paydays if you get it right.
So what are the real benefits of this real estate investment strategy? How do you do it? What resources can come in handy? What do the successful do differently?
HOW TO START WHOLESALING REAL ESTATE
There are many reasons to choose wholesaling, including…
EASY WAY INTO REAL ESTATE
Wholesaling is a faster and easier way to get into real estate, and to begin enjoying the rewards than many other strategies. You don’t need a real estate license. You don’t need to join the local Realtor association. You don’t need a fancy office. You don’t need a new college degree. If you need to improve your finances and you want to get into real estate then this is a great way to get started.
LIMITED RESOURCES NEEDED
Wholesaling generally doesn’t require as much in terms of resources as other paths do. Becoming an agent or property manager or builder can require a lot of additional training, costly licenses, and upfront investment. Rehabbing houses or buying rental properties can also require a lot of cash, learning additional skills, having access to credit, and setting aside a reasonable amount of capital reserves. While as with anything else; more money and better credit can make things easier, but it’s not needed. There are ways to wholesale property without even having your credit score checked, and without putting significant down payments on your deals.
Whether you have another real estate business and investments or are brand new to real estate wholesaling can deliver cash pretty quickly. So if you need money, and can’t afford to go too long without an income, wholesaling is worth checking out. Many wholesalers are able to turn around their deals in as little as three days. Even if it takes 30 days to get paid that can sure beat a lot of other efforts to find a new source of income.
One of the big attractions to wholesaling real estate is the amount of time it takes. This applies to both how much time you have to put in, and how much you get paid for your time. As a wholesaler you are your own boss. You set your own schedule. Whether you have no job, are retired, or need to find a way to make more money while juggling an existing part time or full time job, you’ve got time to wholesale. You can make it a 6 day a week, 8 hour a day mission. Or you can just put in a few hours on the weekend. And you can always switch it up. That means you can travel when you want, take holidays off, and spend time with those you love when you need to. Once you really start doing deals, and do the math, you’ll probably be blown away by how much you can make an hour compared to what you dreamed of before.
One of the most amazing parts of wholesaling is how scalable it is. This makes is great for both those just looking to get started and to supplement their incomes, as well as those that want to grow a big business and breakthrough the largest financial goals. Wholesaling scales well, both up and down, and rapidly. If you need a break or want to head off to Antarctica for a season you can scale down easily. If you have some big ticket items looming on your goals list like college for your kids, a new home for your parents, or that yacht you’ve been eyeing; then just scale things up.
THE ADVANTAGES OF WHOLESALING
In addition to the above wholesaling offers some pretty attractive benefits in comparison with other investment strategies.
All the potential profit promises in the world don’t add up to much if investments are highly risky. In comparison wholesaling is about as low risk as you can get. Some call it the “no risk” strategy, but to be responsible let’s say it’s the lowest risk option. Very short holding periods if any at all, the deeply discounted assets, the minimal if any of your own cash on the line, and multiple exit strategies mean wholesalers have the least risk. They are in, they are out, and they are paid quickly.
GREAT PROFIT MARGINS
Wholesaling offers great returns too. Unless you choose otherwise the overhead is low, with big upside potential. When fully leveraged with other people’s capital wholesalers are earning an almost incalculable rate of return. It’s all profit. And you get to choose how much profit you want to make on each deal. There are no limits.
Rehabbers are very limited in their volume potential. The best might juggle 3 projects at a time. That may turn out to be about 12 deals a year. Any landlord with that many properties is also going to need to turn to either a professional property management company or stick to turnkey real estate investments. Yet, for wholesalers, doing 12 deals a month isn’t unheard of. Even if you do 2, you are doing 2x what the house flippers are. Sometimes your profits may not be too much different, and that’s without all the extra time and risk involved.
WORKS IN ALL MARKETS
What’s really important is that wholesaling works in all markets. You don’t want to get into something only to find out it doesn’t work in your state or has run out of gas for the next 10 years. That happens with some real estate investment choices. Not with wholesaling. This strategy works great in both the most prosperous times, and the toughest economic times. It works anywhere too. It doesn’t matter if you are in San Francisco, New York City, or in a small town somewhere in the middle of the country. It still works.
TYPES OF PROPERTIES YOU CAN WHOLESALE
What types of property can you wholesale?
SINGLE FAMILY HOMES
Single family homes are the most obvious choice for most wholesalers. They are plentiful and the most understood property type for most people. Individual condos and townhomes also fall into this category.
Small duplexes to large apartment buildings can be wholesaled too. Just note that once you reach 5 or more units it is classified as a commercial property.
MOBILE & MANUFACTURED HOMES
Mobile homes are becoming popular amongst sophisticated investors again. Wholesale individual units or entire parks.
Wholesale vacant infill lots, acreage, or large commercial property parcels.
WHERE TO FIND REAL ESTATE WHOLESALE DEALS
There are a variety of ways to find properties to wholesale.
REAL ESTATE BROKERS
While many properties publicly listed on the MLS may seem overpriced agents can have access to off-market properties, additional information on how motivated sellers are to negotiate, and can market for deals on your behalf.
Banks, mortgage lenders, credit unions, special servicers, and the government can all be sources of real estate deals. These are often properties taken back in foreclosure and which need to be liquidated.
There are various types of auctions around the country where investors can bid and win deals on wholesale priced property.
For Sale By Owners can be spotted marketing their homes online and by driving your local neighborhoods.
Homeowners can be distressed and motivated to sell for an array of reasons. They may be going through a divorce, have legal troubles, have inherited property, or simply have to move fast to relocate or purchase another home. These are often found by reaching out through marketing and via lead lists.
REAL ESTATE WHOLESALING FOR BEGINNERS
Real estate wholesaling is really very simple. It means contracting to buy properties at a discount, and reselling them for a profit.
Find the properties you can negotiate good discounts on and you’ll find financiers and buyers. The key to success is to invest in building your knowledge quickly, leverage other experts where possible, get the best proven tools and systems to plug right in, and to set strong goals. Then just start taking action.
Take action today. Every day you wait is another day someone else is wholesaling the properties you could have done and earned a great living from.