Wholesaling real estate properties is similar to house flipping. Flipping houses involves purchasing real estate well below market value, fixing it up and selling it for profit. With wholesaling, investors assume the mortgage note under contract and sell the property “as-is.” The new owner purchases the property for less than “after-repair” value and rehabs the house using their money.
Wholesaling can be a dream come true for real estate investors. Anyone aged 18 and up can participate in wholesale real estate transactions because there is no obligation to obtain financing. Instead, investors locate motivated sellers and sell their property to rehabbers and private investors.
There are four basic steps involved with wholesaling real estate property. Step one involves locating sellers who need to sell property quickly. This could include homeowners who are facing foreclosure, have filed for bankruptcy, own a second home they can no longer afford, or relocating to another city or state.
Once properties are located, investors negotiate the purchase price to obtain the lowest cost possible. Next, the property is placed under contract until it can be sold to a real estate investor or rehabber.
The primary objective of wholesaling houses is to quickly flip the property and turn a profit. This is best accomplished by locating distressed properties such as foreclosed homes and real estate owned (REO) properties.
A prime target for wholesale real estate is property offered as “For Sale by Owner.” Most FSBO property is sold at lower prices than properties offered through a realtor. Many FSBO properties are placed on the market in order for the homeowner to avoid foreclosure.
Experts recommend seeking out real estate where homeowners provide seller carry back financing. This type of real estate transaction allows the homeowner to carry all or a portion of financing. If sellers carry 100-percent of financing, the need to obtain financing through traditional mortgage lenders is eliminated.
Wholesaling real estate property eliminates the challenges and costs generally associated with flipping properties. Investors are not required to spend money on repairs or locate qualified buyers. Instead, wholesale investors become real estate matchmakers. They locate sellers who own the types of properties buyers are looking for.
Wholesaling for quick cash can be a rewarding and profitable career choice. The Internet provides a plethora of resources which provide an abundance of information on wholesaling strategies. By understanding and implementing wholesale real estate strategies, anyone can create a profitable business that offers solutions to financially-strapped sellers.
Although the real estate market is in a slump, history shows real estate survives nearly any economic catastrophe. There has never been a better time to get started in wholesaling because this style of real estate investing provides a win-win solution to all parties involved.