Real Estate Wholesaling
Real estate wholesaling is simply defined as buying a property below market value and selling it below market value. People sometimes confuse the term "wholesaling" with "flipping".The difference is that when you are wholesale real estate investing you are "buying low, selling low". With flipping you are "buying low, selling high". Flipping also typically involves rehabbing. Real estate wholesaling typically doesn't involve rehabbing. Why wholesale? Why not just flip a property? With real estate wholesaling you have a different strategy. That strategy is to turn more volume. Very similar to a business who wholesales any other type of product. You give up a little profit to turn more volume. I love flipping real estate, mostly because I enjoy rehabbing, but there are advantages to wholesaling real estate. You need to determine which method will work better for you. Here's a few things about wholesaling properties. - Like flipping, you must buy below market value. Since you need to turn more volume, you need good sources to pick up discounted properties.
- You need a buyers list. Your buyers will more than likely be other investors. You can start building a buyers list by networking and running advertisements. There are many free sites such as craigslist where you can place ads.
- You need a good system for informing your buyers. Mailers are too expensive. Better methods are email campaigns, social networking sites such as facebook or twitter, or create yourself a website for your properties. You of course can always use the telephone to call your buyers.
- You need available financing. You will be buying a lot of properties so you need a banker who can fund your deals quickly. There are a few different ways wholesalers finance their deals. Some use cash, some use hard money loans, some use assignments (basically assigning the contract to a third party who will bring the funds to closing and using the contract to close your deal first), and some use private investors.
- Wholesaling is risky in a weak market.
If you are not good with rehabbing properties, wholesaling may very well be a better option for you.Keep in mind that if you do end up having to make any repairs or improvements you must be careful because you are operating on a low profit margin. The most important thing to being a successful wholesaler is networking. You need to be able to find the deals and then find the buyers. This takes a lot of work, but once you have built a good buyers list you can really start to make some money. Scour the market and REO properties in your area. There are deals out there, you just have to find them. Related Articles
Return from Real Estate Wholesaling to Straight Up Real Estate Investing
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