Getting involved in real estate investing doesn’t have to mean having a trust fund income or a millionaire’s bank balance. Becoming a property wholesaler is ideal for the would-be real estate investor with plenty of drive and ambition but not so much capital or credit. This real estate investment strategy involves one investor (the property wholesaler) securing the right to purchase a property, and then selling that “right to purchase” to another investor.
Wholesaling Real Estate Basics
A property wholesaler doesn’t need a real estate license. When buying or selling property that you have (equitable) interest in, whether you have a contract with the owner to buy or own the property yourself, a real estate license is not required.
A wholesaler finds property, usually distressed or damaged, and contractually agrees with the owner to purchase for “X” price by a certain date. Having secured the property, he then assigns or resells the property for “Y” price to another investor who will use cash, credit or hard money loans to make the purchase from the wholesaler. This allows quick closings on properties that sometimes need extensive repairs.
The Property wholesaler is a middleman
A wholesaler puts properties under contract with a contingency and concentrates on quickly selling the property for a profit to other investors. If the property doesn’t sell before closing is due, the property wholesaler can utilize the contingency.
Because property wholesalers deal with real estate usually in need of repair, they tend to sell to other investors such as those who specialize in flipping houses. Wholesaling is a full time job; requiring time to find new properties, keep on top of industry trends and news and cultivating a strong network of potential buyers.
A good wholesaler can become a popular middleman with established investors out there who’ll be glad to purchase the good deals he has under contract. Finding the best deals and building a network of investors, to sell those deals to, is vital for those just starting out.
For a property wholesaler, the concept is that the right price overcomes all objections. No matter what the problems are with a property, if the price is low enough, somebody will buy it.
A property wholesaler needs a thorough knowledge of the sale prices of their real estate market to be able to identify a well-priced property. They also must have an understanding of real estate transactions and a network of ready buyers.
This is one way anyone can get involved with real estate investing; no need for a special license, no specialized experience, or gigantic savings account.
Wholesaling property is a potent tactic for novice investors. There’s no large capital layout for purchasing the property, but the wholesaler is still able to realize a substantial sum of money in the transaction.
To be a successful property wholesaler requires motivation, an entrepreneurial spirit and some focused familiarity with the workings of the real estate market. The more ambition and drive to succeed, the bigger the paycheck.