Wholesaling Real Estate: How To Get Started
Are you among the smart investors who have a burning desire to invest in real estate but are short on funds? You would be pleased to know that you can make lots of money from real estate without having to put forward any down payment. The way to do this is wholesaling real estate.
Real estate wholesaling creates room for investors to reap lots of profit without investing a dime. All that is required is time, effort, discipline and savvy marketing skills. It should however not be confused with the regular kind of market wholesaling.
This article would cover all there is to know about wholesaling real estate and the perfect strategy to succeed at it.
What Is Real Estate Wholesaling?
Real estate wholesaling refers to the involvement of a third party in the buying and selling process of a house. The wholesaler makes a proposal to the house owner to sell the house at an agreed price on the owner’s behalf. This places the responsibility of finding a potential buyer on the shoulders of the wholesaler.
When a buyer is found, the wholesaler puts forward a contract where the house is sold at a price higher than what was proposed to the house owner. If the buyer eventually pays for the house, the added amount belongs to the wholesaler while the house owner gets the agreed amount.
This is common in situations where the owner of the property is finding it hard to find a buyer.
Is Wholesaling Real Estate Legal?
Yes, it is. In the course of reading, you may have raised your brows wondering if the price increase on the property is right. Wholesaling is marked by transparency. The wholesaler and the house owner very often agree on the price each will get. This ensures the owner of the house is not left in the dark or swindled in any way.
The catch is getting a license. To work as a wholesaler legitimately, you must obtain a real estate license that allows you to do so. Obtaining a license is easy and the steps are quite clear. Although the processes may differ among states.
It is also important to design a clear contract between you and the house owner. The contract has to be signed and should explain the roles each party will be playing in selling the property.
How To Start Real Estate Wholesaling
Starting out as a real estate wholesaler is one thing and becoming successful is another. The steps below will help you start out smoothly and position you for optimum success.
Learn The Art
There is no venture that can be started without some level of knowledge about it. Therefore, before jumping headlong into wholesaling, try to get hands on experience. This can come from volunteering or taking up an apprenticeship position. Reading as much as you can and taking courses, free or paid will help in polishing your knowledge.
Do Proper Market Research
After the learning phase, you have to decide what area of the market you will be focusing on. Narrowing down your market changes the dynamics of a lot of things. It also makes the job easier This has proven to be true in the aspect of finding house owners and buyers.
Create a List of Prospective Buyers
Every wholesaler has a buyer’s list and beginning wholesalers must build one before contracting deals. Once a list of buyers are available, half the job is complete. Building a relationship with buyers and investors would most likely be hard for newbies. Attending real estate functions and actively networking via platforms like LinkedIn is a great way to start.
Open and Close Deals
With a list of buyers ready, you can start the hunt for house owners looking to sell their property. Walking around your neighborhood and inspecting the buildings for abandoned ones could lead you to your next deal. Social media is an amazing resource in carrying out an effective search. Using hashtags and search tools can help you find sellers.
Patience is key in wholesaling real estate. Never be in a haste to make a proposal or design a contract. Consent is very important as it is what makes your business legal, get the signatures before making big moves. Be sure to add enough interests on the houses so that a fine compensation for your hard work is secured.
How Much Can You Make From Wholesaling Real Estate?
You can make from a few pennies to six figures. It all depends on the approach. Imagine selling three houses worth $250,000 in a space of two months with an interest of $20,000 on each?
How successful you become is largely tied to your ability to market the houses and interact well with both the seller and the buyer. Also, as the wholesaler, you determine how smooth the selling process will be. So long as both parties are satisfied, you can be certain referrals will be rolling in frequently which translates to more deals and more money.
Is Real Estate Wholesaling A Good Business?
Wholesaling real estate is a great idea and a perfect career option for anyone that is socially intelligent. To decide if this is the perfect line for you, have a talk with a trusted friend, career or business coach.
The following are reasons that makes this a good business:
It costs little to nothing to start
Education can be gotten for free before starting. Asides that, getting a license is not expensive and it is not a requirement to start. You also do not have to purchase the house as you would not be flipping but only acting as a middle man. There is practically no risk involved.
It is very Lucrative
As a real estate wholesaler, you get to work from home. The comfort and flexibility to work when you want and as you wish is just so cool. It is easy to scale up and beat your competition so long as enough research is carried out.
Real estate wholesaling is a rewarding, low risk venture that can be done as a main or side business. The rubrics involved are easy to master. With the right guidance, you can make over a hundred thousand dollars as commission yearly.