Wholesale real estate investing is one of the best ways to make huge profits in real estate. You don’t need any special education. You don’t need a license. And you don’t have to deal with the hassle or risk of rehabbing or being a landlord.
And you best of all, you don’t have to be rich to get started. In fact, you don’t have to ever spend any of your own money if you don’t want to.
What IS wholesale real estate?
Wholesale real estate investing is nothing more than buying below market value and selling for profit. This includes buying and selling properties on the open market, working with bank-owned properties (REOs), locating homeowners who need to sell quickly and advertising yourself as a wholesaler so that buyers and sellers come directly to you.
What wholesale real estate is NOT.
As a wholesale real estate investor you don’t have to rehab houses, keep properties as rentals or otherwise do development or construction. Wholesale investors work with the people who do this, but as a wholesale investor these activities won’t be part of your business model.
However, it’s helpful to have knowledge of these markets. And some wholesale real estate investors do choose to pursue these activities at some point. But, the bottom line is that as a wholesaler you only pursue these parts of the market if you want to.
Why wholesale real estate is available.
There are many reasons homeowners need to sell their houses quickly. And wholesale investors are doing them a service. When you help homeowners sell their houses you are giving them peace of mind. Knowing they won’t have to worry about their house anymore allows them to focus on life’s other issues.
Some of the situations which create opportunities for wholesale real estate investors:
- Death – The death of a property owner or spouse often creates a situation where either the spouse wants to sell a property quickly or the heirs want to sell it to settle an estate.
- Divorce – A house can’t be divided in half. So, divorcing parties often choose to sell a property rather than assign it to one person.
- Bankruptcy – Impending or active bankruptcies often require a quick sale of property.
- Loss of income – A loss of job or income often means a homeowner needs to downsize or sell a property quickly.
- Health problems – Either doctor’s bills or the inability to continue to care for a property can create a situation in which a homeowner needs to sell quickly.
In all of these cases, a good real estate investor can help the owner by offering a fair price and finding a buyer quickly. Speed is the key factor. If you can find a buyer quickly the owner can then focus on the issues that forced the quick sale in the first place.
No need to risk your own money.
Once you’ve located a seller who you can work with, they key is to sign a contract and then find a buyer. The best part is that you’ve got a deal started and you haven’t spent a single penny!
How deals are made.
Once you have a signed contract to buy the house, the next step is to find a buyer who wants to pay more than your contract price.
There are a couple of common strategies used at this point. First, you can add a clause in the contract that allows you to “assign” the home purchase to another investor. You negotiate a fee with the buyer, and when the deal closes you get paid. It’s that simple.
Another strategy is to work with an investor who will pay cash for the property. You then buy the house and resell it. This isn’t as hard as it may sound. When you locate a great deal investors will be happy to work with you.
No matter how you close the deal, the end result is the same: you bring sellers and buyers together, you make a profit, and you never have to use any of your own money.
Yes, wholesale real estate is a great opportunity.
As you can see, being a successful wholesale real estate investor is about conducting research, making contacts, educating yourself and closing as many deals as you can. If you follow these basic principles you’ll soon understand first hand why it’s a great way to make tremendous profits.