I’m not here to hype up the benefits of real estate investing and to tell people that they can become wealthy quickly in the field. But, some are fairly well compensated when it comes to real estate investing since there are many different methods to enter into the industry. One method to get started and perhaps even make it, in the long run, is to be an actual wholesaler of property. There are a few major advantages of selling real property over selling wholesale for retail.
- It is not necessary to purchase stocks in large quantities from the manufacturers.
- There is no need to purchase or lease the space for warehouses to hold all your inventory until you’ve sorted it out to the retailers.
- There aren’t any trucks needed to move your stock around.
- There aren’t any employees needed to keep track of your inventory, protect it, and move your items.
- There is no need for insurance or taxation from your employer to pay for the cost of this investment.
Your inventory will remain in its location, it doesn’t require to be shipped around and you don’t need employees or insurance to safeguard your investment. Wholesaling real estate typically requires extensive education in the appraisal of property and negotiation and marketing skills. These are all things you can acquire.
So, what exactly is real estate wholesale? You are the middle man who connects an undervalued or distressed property with a happy buyer. Who is the potential buyer? In the majority of cases, it’s going to be a fix and flip investor or a long-term rental investor. What are the benefits you can provide to ensure that you want to make money from this industry? You’ve invested your experience and expertise in finding properties that are undervalued, then managing them, or purchasing them, and then selling to your customers who wouldn’t have heard of them in other ways.
As you’re selling your property as an investment to investors, you must understand that the primary crucial element in the success of your real estate wholesale business is understanding that they’re looking to purchase homes that are below value. The smart investor knows that an investment in real estate that is successful starts with a purchase at a price that is lower than the market value. That is, profits are realized when you are done with the transaction.
With this in mind, it is your responsibility to search for and buy properties that are lower than the current market value to meet the requirements of buyers and still make a profit somewhere in the middle. If you’re selling to a fix and flip investor, it is important to be aware of the expenses of repair and renovation so that you can be confident that it is possible to fix it and that the ARV, the after repair remains sufficient to allow you and your buyer to earn a profit.
If you’re selling to an investment in rental properties, you’ll need to know the market in your area and the demographics of the population, as well as rent prospects for rental properties. You’ll need to determine what the prospective buyer will receive in rent as well as the cost of the property, especially if they’re buying the property in cash or with a mortgage, and also what they’d consider being a sufficient cash flow.
I’ll cover the subject in future posts, but the main factor that makes real estate wholesale appealing is the fact that you can do everything with minimal or no cash out of your pocket. Utilizing Assignment contracts that allow you to manage the sale of a home with the buyer for just an earnest money deposit. Profit could be increased if you sign a contract to purchase the property and then do a “double-close.” This is possible by using transactional financing. These lenders can provide money to complete the purchase for you as the buyer. Moreover, they are paid back within a few hours or two later, when you sell your item to your buyer.
These are the fundamentals of selling wholesale that we’ll go over it more in future articles.