The Basics in Real Estate Wholesaling

Getting into Real Estate Business without Making an Investment

“I would love to enter the field of real estate but I just don’t have enough money for it. Is it possible to get started?”

Have you ever asked yourself this question at some point? Have you ever thought about finding, negotiating and profiting from real estate deals?

Yes, it’s possible to make money from real estate investing. However, the process can be slow and risky at the same time.

Getting into the real estate industry requires you to explore a variety of options for your investment. If you are a beginner, you can start with real estate wholesaling.

And, there are a lot of aspects you can explore such as fixing and flipping, contract flipping or long-term rentals among many others.

Any of these might appeal to you but just like any other business, they all require an investment. Some people want to try out real estate investing but they find the process quite overwhelming.

And, they need to build a network of contacts and establish connection with a credible Miami real estate agency.

While for some, they like the idea of making money out of real estate but they hate the idea of being a landlord.

So given these circumstances, what are the other possible means of getting into the real estate business without facing a lot of risks and without having to spend a lot of money?

Real estate wholesaling requires minimal to no investment. Instead buying and selling a property, you are actually selling a contract to another party.

Introduction to Real Estate Wholesaling

When it comes to the subject of real estate, there are many opportunities that you can explore. One of them is Real Estate Wholesaling.

The business concept behind Real Estate Wholesaling will actually allow you to create leveraging powers.

This is by way of making a good deal work to your advantage so you can make money out of it with little to no investment.

There is no need for financing, no need for labor-intensive repairs and no need to perform landlord duties.

You can accomplish these within just weeks as long as you find a good deal and as long as you play your cards right.

Sounds good to be true? Let’s explore the idea further.

In real estate wholesaling, the wholesaler puts the subject property on contract with the home seller and then looks for potential investors who are willing to buy the property.

What is Real Estate Wholesaling?

Real estate wholesaling is one way to get into the real estate industry without investing a lot of money or without having to apply for a loan.

It is a short-term business strategy that real estate investors utilize to generate huge profits.

Real estate wholesaling does not relate to “retail wholesaling” wherein the wholesaler put into sales a huge quantity of goods to a retailer who then repackages and sells it to potential buyers at a higher price.

Wholesaling real estate does not involve sales of multiple houses or properties at a low price. It is an entirely different field with a different set of sales strategies.

In real estate wholesaling, the wholesaler puts the subject property in contract with the home seller and then shops that property around to potential investors and home buyers.

The wholesaler assigns the contract to the one with the best price offer.

In this process, instead of buying a property and then selling it, a wholesaler actually contracts it with the home seller and then seeks for a party who is interested to buy the property

Selling the contract to another party means negotiating for the best deal. Having the right connections can help you find suitable buyers who are willing to invest on the property.

An interested party is usually a direct investor or realtors that fix and flip houses for profit.

What is the goal in real estate wholesaling?

If you’re going to enter the field of real estate wholesaling, your goal is to sell a property (usually a distressed home) to an interested party even before the contract with the homeowner expires.

With this business strategy, you have to understand that there is no money involved between the homeowner and you, as the wholesaler – not until you have found a sure buyer for the property.

How are you going to make money from real estate wholesaling?

You can make a profit by finding an investor or interested buyer who is willing to buy the property at a price that is higher than the amount you have agreed upon with the home seller.

The difference in the price serves as your profit. From a wholesaler’s perspective, the difference in the amount paid by the buyer is the wholesale profit which you are going to retain as the wholesaler.

Wholesaling real estate is suitable for entry levels in real estate. It guarantees good profit as long as you know how to create effective strategies.

Real estate wholesaling is ideal for individuals who want to get into the real estate business but do not have enough money to get started.

All it requires is guts, sales prowess and good communication skills. A lot of aspiring realtors get into real estate wholesaling because there is no need to take a course or to pass an exam in order to get started.

A real estate license is also not a requirement to become a wholesaler although it can be a major advantage.

As long as you have excellent people skills, passion for selling real estate properties and a bucket full of patience, wholesaling can be a promising venture to consider.

Sample Case: Real Estate Wholesaling Scenario

If you think that real estate wholesaling is a complex subject, you need to view the general picture first before making a conclusion.

Just like with any other business, it has a typical model for you to understand how it works.

For instance, a homeowner wants to sell a property that he thinks is not saleable due to its distressed state and poorly maintained condition.

The homeowner may have insufficient resources for the necessary repair which is the reason why he refuses to sell it thinking that he will not get a fair price for it.

Then comes the real estate wholesaler who talks to the homeowner about an offer to sell the property.

They would agree to put the property under contract for a price of say, $80,000. The real estate wholesaler will then explore his network of investors and property buyers to sell the contract for $90,000.

He then assigns the contract to the most suitable and favorable buyer – usually one with a promising venture such as flipping properties.

The wholesaler then earns $10,000 without even buying the property but for merely selling the contract and finding an investor who’s willing to pay the price.

Real estate wholesalers earn money from the contract with the home seller. There is no actual exchange of cash between the home seller and the wholesaler.

How a wholesaler claims his profit

Based on this scenario, it is apparent that there was no exchange of money between the homeowner and the wholesaler.

There was no sales transaction between the two parties. The homeowner got into an agreement with a wholesaler to put the house on contract to an interested party.

Under the contract, it is stipulated that the buyer/investor pays $90,000 to the wholesaler who then pays the homeowner $80,000 (the amount they have agreed on).

And then keeping the difference for himself as his profit from the transaction.

Helpful Resources for Real Estate Wholesaling

It takes experience and excellent social skills to become a successful real estate wholesaler.

Ideally, you would need to establish a network of contacts to maximize your chances of becoming profitable in this venture.

The wider your network and the more information you acquire, the higher your chances are of mastering the ins and outs of the business.

Database of Real Estate Professionals

Since you would be dealing with home sellers, various investors and property buyers, you need quite a handful of information from various professionals.

This will enable you to understand how the business works in all its aspects.

It would be an advantage on your part if you can consult insurance providers, a Public Adjuster Miami can offer, restoration specialists and real estate agents.

Connection with Various Homeowners Association

Real estate business is a form of “people business”. This means that you need other people in order to succeed in the venture.

To get the best deals and contracts, you must establish connection with various people including homeowners associations, other people within the neighborhood, small business owners and even social organizations.

Having a wide network of contacts is a major advantage in wholesaling properties.

The wider your network the more chances of you landing on great opportunities.

Professional Representation

You would naturally want to promote yourself as a real estate wholesaler with good credibility and track record.

Aside from good communication and negotiation skills, a professional web page can convince more home sellers to get into an agreement with you.

This can also help you get in touch with more property investors. In this modern time, people rely mostly on the internet for information.

Therefore, your online presence is highly significant. Promote your web page by contacting a reliable SEO Miami company to power-up your online presence.

For professional representation, it is important to have a good web page. This can help establish your credibility in real estate.

Complete and Reliable Contact Details

Make sure that you have a business phone number, email address and social media accounts where people can easily contact you.

You might also want to consider having a toll free phone chatline where you can entertain questions, inquiries and other concerns.

Make sure to have reliable contact details where potential clients can contact you for questions and inquiries.

Having a complete line of reliable contact information can add up to your credibility as a real estate wholesaler.