Make Money With Real Estate: Introduction to Wholesaling
Real estate investing can be a lucrative and rewarding way to invest and grow your money compared to stock trading. Unlike stock trading, however, real estate investing often requires a lot more time and patience — buyers need a down payment, financing, lots of paperwork, etc. Not to mention the funds necessary to perform repairs and updates when flipping a home.
Flipping homes isn’t the only way to make money in real estate, however.
My name is Brian Oen, and today we’re going to talk about a real estate investment strategy that requires no down payment, no formal training, and no property of your own: wholesaling.
What is Wholesaling?
At its core, wholesaling is connecting a seller to an interested buyer and making money on the transaction. Usually wholesalers work with distressed properties, connecting sellers who are sitting on a property they don’t think they can sell with motivated investors who can flip that property for a profit.
Think of wholesaling like trading in your car versus selling it yourself. You know you could probably get more money if you sell your car yourself, but you need to list it online, host showings, deal with negotiations, have strangers coming to your house, etc. Or you can just bring it in to a dealership, receive a reduced amount, and let the dealer handle the rest.
The wholesaler is the dealer — they put in the legwork of connecting a seller to a motivated buyer, and turn a profit while completing the transaction without ever owning the property.
How Do I Make Money?
When wholesaling, you are performing a service for both the buyer and the seller. Let’s say a seller is interested in listing their property, and you approach them with a deal for $90,000. You and the seller agree on the price, and you put the house under contract for $90,000. You come along and present the property to an interested investor who will happily buy it for $100,000. You assign the contract to the investor who pays you $100,000 for the property, and you pay the seller $90,000, pocketing $10,000.
Success in Real Estate Wholesaling
Like I said before, in order to wholesale real estate there is no required license, test, or training, but it does help to be patient, charismatic, and have a network of people who would be interested in buying distressed homes.
The right property is also key to succeeding in wholesaling. Distressed properties are usually the best for this type of deal, and it helps when that property has a great location and some desirable features to offset the work that needs to be done on it.
And of course, knowing the right asking price for the property can make or break a deal — too low of a price may scare off the seller, and too high of a price will make finding a motivated investor difficult. Knowing the right market value and the After Repair Value (ARV) will help you pitch the property to your pool of investors.
Also, to protect yourself when wholesaling, be sure to include a contingency in the purchase contract that allows you to back out of a deal if you are unable to find a buyer before the expected closing date.
To Sum Up:
Wholesaling is a great way to get involved in real estate without needing a lot of funds or even real estate.
The best way to succeed at wholesaling is knowing how to spot a good deal, knowing how to set the right price, and knowing where to find interested investors.
You don’t need a license or training to start wholesaling — but it is good to familiarize yourself with your local real estate market, and make connections with motivated investors who would be interested in purchasing the properties you show them.
And lastly, protect yourself when wholesaling. Be sure to include contingencies in any contracts you enter into that allow you to back out of a deal if you are unable to find an investor by the expected closing date.
Wholesaling can be a rewarding way to make money in real estate. If you want to learn more about wholesaling, real estate investing, flipping properties, and more, visit my website and reach out to me at BrianOen.com.