What is Wholesaling Real
Estate?
Wholesaling is a term used
by real estate investors to describe the action of buying a property
(technically getting it under contract) and selling the property for more than
the contract price.
Who can Wholesale Real
Estate?
Everyone who wants to be a
real estate investor starts off wholesaling to some degree. The barrier to
entry is zero, meaning there is no license, college degree, and more
importantly no cash. Some of the most respected and high earners use none of
their own money. You simply have to buy a property under value, and find a
buyer. That being said, a wholesaler needs to have equitable interest in a
property. So you must have it under contract. In other words, you are not entitled
to earn any money in a real estate transaction as an investor where you don’t
have an interest. The idea of selling real estate without a contract may get
you in hot water. Consult a real estate attorney that works with investors. A
closing attorney may or may not have the information and contracts you need. It only takes a little dedication to learn how to wholesale real estate.
When can You Wholesale Real
Estate?
You can Wholesale Real
Estate the same day the property goes under contract. We had purchased a
property from an estate (probate). The closing date was about 1 week out. While
we were taking measurements of the windows, a woman pulled up and asked if the
house was for sale. She had seen the dumpster outside the building while they
were cleaning the house out. She called her daughter who was looking in that area
and she bought the house the same day I closed which netted over $20,000 in
profit.
How to Wholesale Real
Estate.
The key to Wholesaling
real Estate is marketing. If you want to make easy money then take 4 hours and
develop a marketing plan. Write out your goals. White out how many hours you
will spend per day and write out each activity. Be as specific as you can.
Focus on 1 city. Learn
where the hot selling properties are. Have a realtor help you determine what
areas are selling quickly (compare the average days on market between different
cities). Find out what school districts
are the best. If you do not have a construction background, make sure to bring
one out when you inspect the home. Have him give you estimates. Although you
are not the end purchaser, you will need to figure out whether the property is
undervalued. In other words, don’t waste your time.
Start working on a buyers
list. Everyone you run into that buys property should be in your rolodex or in
a database of some sort. As soon as you get these hot properties, send it out
to your buyers list.
How much can You Expect to
Earn Wholesaling Real Estate?
The average wholesale deal
is $5,000. Good wholesalers can do 3-4
deals a month. Remember the amount needed to start the business was very low.
Some things you will need do cost money up front. If you plan to put up signs
“We Buy Houses,” they cost $1 a piece, and are illegal in most areas. That’s
how they got the moniker Bandit Signs.
You can go through realtor.com. The best source of leads, are probate
leads. If you can find sellers that just inherited the property and they live
out of state, you’ve just found a very motivated seller.
One
of the quickest ways to jump start your wholesaling business and find motivated
sellers is to buy probate leads. There is a complete marketing section on
probate lead marketing at Hot Probate Leads.
