If you’ve been thinking about ways to make a profit in the real estate market, you may be asking yourself “Is real estate wholesaling the way to go?”
Many investors think of wholesaling as a great way to get into the business and raise more capital to investing in additional real estate properties. Because of this, it’s not a likely way to get rich or build large amounts wealth in the long term. However, for beginners, it can be a method of investing that opens doors to real estate investing. After all, one of the biggest barriers to new real estate investors is finding the capital for making their investments.
Wholesaling is a great option for those who want to get started investing in real estate without a lot of money to put down on investment properties. So, what, exactly, does wholesaling entail, and how does it work? When you wholesale real estate, as an investor, you are buy a property or acquire a property under contract, and then sell the house or re-assign the contract as quickly as you can. Wholesaling works especially well in markets where there is growth anticipated in the housing market or in hot real estate areas that anticipate a migration, such as newly developed suburban areas just outside major metropolitan areas.
Sometimes, as an investor, you’ll wholesale the property to another investor who will remodel and then flip the house to turn a tidy profit. Sometimes, you’ll sell the property to a developer who wants to acquire several properties or lots to build new housing or business units. Or you may end up selling the property to an investor that wants to renovate, and then rent out the unit as a long-term source of income.
When wholesaling properties, you will need to be very careful about the types of contracts you enter into and how you advertise a property. Be aware of your local laws. You’ll need to know if you can legally advertise properties in newspapers or via online ads – in some states, you’ll find that these kinds of duties can only be performed by licensed real estate agents. Other states consider the major functions of wholesaling, such as finding a buyer and seller, to be duties that are only carried out by qualified licensed real estate agents.
The most important key to creating successful wholesale transactions is finding properties that are inexpensive enough for your buyers to make a profit once they’ve renovated the property. Once you’ve got a good understanding of your local real estate laws, you’ll want to learn more about the types of properties available in your area.
Many real estate investors find that when wholesaling properties, off-market properties are the best types of properties to invest in, but they’re often difficult to find. You’ll probably need to invest in some directories and databases to find them.
Off-market properties are homes and other real property that the owner wants to sell, but hasn’t made moves to do so, yet. Often this will be inherited property, such as homes that were part of a relative’s estate, or vacant properties that are considered to be capital. Whatever the reason, the owner hasn’t had the time to sell or hasn’t yet made an effort to do so. Many of these property owners hold deeds or liens which give them claims to the property.
It’s up to the real estate investor – you – to offer to take the property off the owner’s hands. By wholesaling the property for them, you will also be eliminating the burdens that come with property ownership, such as property taxes, repairs and maintenance.
If you’re serious about investing in real estate and have little cash flow, then wholesaling can help you get your foot in the door. Of course, you’ll need to learn more about finding properties you can wholesale, and learn the best ways to seek homeowners of vacant properties out. Our database is a great place to find deed owners that want to sell. Looking for a special property or opportunity? Want more information on how The Deed XChange™works? Please feel free to contact us. We’re happy to answer any questions you have about real estate investing and deeds.