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BusinessWhat is wholesale real estate investing?

What is wholesale real estate investing?

Nowadays, more and more people are interested in real estate. Many people think that the real estate market is not for them, but what they don’t realize is that there are many avenues to explore. For example, do you know of a concept known as wholesale real estate? This is really something you might want to consider looking into, so here is some more information:

What is wholesale real estate investing?

Wholesaling real estate is known as a short term business strategy where real estate investors can make huge profits. The first thing you need to understand is that real estate wholesaling is very different from retail wholesaling.

Wholesale Real Estate Investment - 49,839,848
Image created by Market Business News.

In retail wholesale, a wholesaler sells a large amount of goods to a retailer, and then the goods are repackaged and sold to a consumer at a much higher price. On the other hand, wholesaling real estate is a whole different matter. In this business, the main goal of the wholesaler is to find a property that he can sell to an interested party before the original contract with the previous owner is terminated.

No money will be exchanged between the wholesaler and the seller until a buyer has been found by the wholesaler. Well, all of this begs the question, how does a wholesaler make money? In a nutshell, they do this by finding a buyer willing to buy the house for a much higher amount than the agreed price. So this difference is the price that was paid by the buyer is the profit that will be made by the wholesaler.

What are the advantages and disadvantages?

Of course, like everything else in life, there are pros and cons to being involved in wholesaling real estate. First of all, one of the main advantages of this real estate method is that the capital required to do wholesale real estate is minimal. With wholesaling, you don’t have to worry about having big capital, a good credit rating, or the money to make a big down payment. All you need to do is have the ability and discipline to do your research and commit to a lot of sweat equity.

Finally, you will have the opportunity to earn a large amount of money in no time. Basically you are trying to find a troubled property and you act as a middleman and sell it to someone else who in turn will fix the property and return it.

For example, you could be driving and you could see a property in distress, and you could go home and search for it and see that it’s worth $ 75,000. You convince the owner to sell you the house for $ 60,000, then you turn around and sell it to a real estate investor for $ 65,000, allowing you to make a quick profit of $ 5,000.

Of course, this method also has many drawbacks. First of all, a downside is that income can be unpredictable. You need to understand that wholesaling real estate is not a 9 to 5 job where you get a check every two weeks. It is more of a feast or famine type of work. Also, another downside is that you might have a hard time finding a buyer.

Finally, you should never go into wholesaling real estate without knowing some of the basic rules first. Yes, you do need a small amount of money to be a wholesaler, and you need to make sure you are fit for the practice. Currently, wholesaling real estate is illegal in the states of Virginia, Illinois, and Oklahoma.

You need to know the best practices for wholesale

Of course, you will need to know the tips on how to be successful at wholesale real estate consistently in 2021. First, you should consider some of the best ways to find real estate deals consistently. Seasoned real estate wholesalers will look at sources such as using MLS; “Drive for dollars”, meaning where you walk or drive to find properties that look distressed; network; sue websites; and looking at the FSBO (“For Sale By Owner”) signs. Finally, are you relocatable? Some areas are better than others at wholesale real estate.

According to DealMachine, a location must have a “high number of distressed homes” in order to be a good candidate for a real estate wholesaler. In this regard, the best cities for wholesale would include places as diverse as Indianapolis, IN; El Paso, Texas; St. Louis, Missouri; Kansas City, Missouri; Fort Worth, Texas; Tucson, AZ, Las Vegas, NV and Dallas, Texas. As always, it’s important to do your homework in order to find the best wholesale real estate opportunities.


Interesting related article: “What is flipping?” “

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