How to Wholesale Real Estate

If you’re looking to make some quick cash in the real estate market, wholesale real estate may be just what you’re looking for. Wholesaling is a type of real estate investing where you find deeply discounted properties and then sell them to another investor for a profit. It can be a great way to get started in a business with little capital and no experience.

To be a successful wholesale real estate investor, you need to understand the market, know how to find good deals, and have a solid marketing strategy. You also need to build a network of buyers who are interested in purchasing properties.

The first step to wholesaling real estate is finding good deals. You can find these by looking for properties that are in foreclosure, have been damaged or need extensive repairs, or are being sold by motivated sellers. Once you’ve found a property that you think would be a good deal, you need to get in touch with the owner and negotiate a price.

Once you’ve negotiated a price, you’ll need to find a buyer for the property. You can market the property to your network of buyers, or list it on a real estate website. Once you’ve found a buyer, you’ll need to negotiate a price with them and then close the deal.

How real estate wholesalers make money

Investors who don’t have a lot of money for a traditional 25% down payment are often attracted to real estate wholesaling. That’s because a distressed home can normally be put under contract for a small earnest money deposit, usually less than 1% of the purchase price. 

The wholesale fee received when the real estate contract is assigned to another investor varies based on the wholesaler and the specific property, but might range between $5,000 and $10,000 or between 5% and 10% of the property value.

Although there is the possibility of making a lot of money with wholesale real estate, there is a high level of risk as well. 

For example, if the wholesaler can’t find another investor to assign the contract to, the wholesaler has to come up with the cash or financing to close on the property, or walk away from the deal and lose the earnest money deposit. 

Also, real estate wholesaling isn’t as easy as it might seem at first glance. 

Within a short period of time, a successful wholesaler has to:

• Locate motivated homeowners who are willing to sell for much less than the property is worth.
• Accurately estimate the number of repairs and updating needed.
• Find another investor to assign the purchase contract to who has the money and expertise to make the needed repairs and still turn a profit.

However, for buy-and-hold real estate investors, purchasing wholesale real estate may be a good way to find off-market properties at an attractive price. 

With the right wholesale opportunities, an investor willing to take over the purchase contract and pay a fee to the wholesaler could end up with a property with instant equity, even after all repairs and updating have been done. 

How to wholesale real estate in 6 steps

Now that you know a little more about wholesaling real estate, let’s look at how to wholesale real estate in six steps.

Find deeply discounted properties

The first step to wholesaling real estate is finding good deals. You can find these by looking for properties that are in foreclosure, have been damaged or need extensive repairs, or are being sold by motivated sellers. Once you’ve found a property that you think would be a good deal, you need to get in touch with the owner and negotiate a price.

Get the property under contract

Once you’ve negotiated a price, you’ll need to find a buyer for the property. You can market the property to your network of buyers, or list it on a real estate website. Once you’ve found a buyer, you’ll need to negotiate a price with them and then close the deal.

Assign the contract to another investor

The next step is to assign the purchase contract to another investor who has the money and expertise to make the needed repairs and still turn a profit.

Close the deal

After you’ve found a buyer and negotiated a price, you’ll need to close the deal. This usually involves going to a title company and signing some paperwork.

Make money

The final step is to make money! Once the deal has closed, you will receive your wholesale fee and can move on to finding more deals.

Pros and Cons of Real Estate Wholesaling

Pros Explained

• Little upfront investment required: Real estate wholesaling doesn’t require that you purchase the property. The only upfront investment required on your end is your time, your marketing efforts, and, in some cases, earnest money.
• Potentially large profits in a short period: A wholesale real estate deal might not take more than a few months to complete and could result in a substantial profit.
• Gets your foot in the door of the real estate industry: Wholesale real estate can be a great opportunity for those who are trying to break into the real estate industry. You’ll learn a lot about the business and have an opportunity to network with other investors.

Cons Explained

• Lower profit margin: Real estate wholesaling can be profitable, but it often has lower profit margins than other forms of real estate investing such as flipping. This lower profit margin reflects the lower risk and financial investment required on the part of wholesalers.
• Dependent on other buyers and sellers: You’ll need property owners who are willing to sell via a wholesale real estate deal and investors who are willing to buy.
• Unpredictable income: There’s no guaranteed profit with wholesale real estate. You may lose out on the deal if you don’t sell the home within the time period in the contract. You may also find that you go through seasons of lower inventory to sell.

What It Means for Individual Investors

Now that we’ve looked at how to wholesale real estate, let’s take a closer look at what it means for individual investors.

For most people, wholesaling will just be one small part of their overall real estate investing business. However, if you’re looking to get started in the business with little money and no experience, it can be a great way to get your feet wet. Wholesaling can also be a great business for those who are already experienced in real estate investing but are looking for a less risky investment.

If you’re thinking about wholesaling real estate, it’s important that you understand the process and the pros and cons before getting started.

Conclusion & The Main Lesson 

HAVE YOU SEEN THIS: More Video on our YouTube Channel

Marketing is a skill set that you can transfer to any other types of business even if real estate doesn’t work out.

You can do it 100% from home as your job is not to represent the interest of buyers and sellers. 

That’s what licensed agents do and I encourage strategic partnership with them.

In due time, a lead generating website and LLC that protects your business will solve real problems; just not yet. 

Don’t engage in solving non-existing problems.

The first step and first problem to solve now is to find deeply discounted properties…. and may be the first real problem to solve is to learn how to do it properly.

To learn more, go ahead and download my 2 books

SMART REAL ESTATE WHOLESALING and

REAL ESTATE MONEY SECRETS

for free at:

www.SmartRealEstateWholesaling.comFor a quick start guide, go to www.11DaysChallenge.com to set up a lead pipeline in 11 days.