Wholesaling real estate business is largely gaining popularity among the investors of real estate. Learn more about the business and how you can get started with it here.
Are you looking for a way to step inside the real industry and make money? Are you short of the huge amount of money that a real estate business may require? If yes, then we have a perfect real estate business for you that doesn’t need plenty of money and yields handsome profits. The business of wholesaling real estate is gaining popularity among investors to earn quick profits without putting in a lot of investment. Let’s find out more about wholesale real estate in this article and how you can get started as a real estate wholesaler.
What is wholesaling real estate?
Wholesaling real estate involves a set of simple processes like finding a property for sale, putting the property to be sold under contract with its seller, finding a suitable buyer for the property, and then finally assigning the contract to the buyer. The properties which are considered for wholesaling are mostly sold under the market value. This poses a challenge for the wholesaler to find an investor who must be interested in buying a property listed under the market value.
It may sound easy, but the business of wholesaling real estate requires a keen examination of the market trends, maintenance of a strong database, and then matching the property requirements of the buyers with the description of the property on sale.
You might also like to read Who are the real estate wholesalers?
How to begin your journey with wholesaling real estate?
There are mainly six steps that you must follow to get started as a real estate wholesaler. These steps are discussed in detail below.
- Find the ideal properties
Not every property that you see around you is an ideal property for wholesaling. Since the properties are bought and sold under the market value in wholesaling, look out for properties that are abandoned or whose owners have died. This is to ensure that you earn good profits even after selling the property under the market rates.
- Negotiating the buying price of the property
After finding a suitable property, the next step is to get in touch with the owner of the property and negotiate the purchase price. You must sign the contract with the homeowner for as cheap rates as possible. This is because the deal must look appealing to the buyer even when you sell it at a price lower than the market value.
Negotiation skills are extremely important while wholesaling real estate. At the beginning of your journey as a real estate wholesaler, you may find it a bit difficult to negotiate the prices. However, after closing a few deals, you will get better at it.
- Signing the contract with the property owner
Thirdly, you must put the property under contract. This means that you don’t need to buy the property. It is one of the key advantages of wholesaling real estate that you don’t need to get into the legalities of buying an investment property. In addition, you don’t need a huge amount of savings in your account to buy the property.
- Putting the property for sale
When the property is under contract with the seller, it’s time for you to find buyers who might be interested in buying the property. You should market the property to attract enough buyers. To make the task a bit easy for yourself, you can maintain a database of buyers and properties side-by-side and match the requirements of the buyers with the features of the property. This increases the chances of the deal getting closed quickly without much hassle.
- Agreeing on the selling price of the property
When you are done finding a suitable buyer for the property, you must propose a selling price that is appealing to the buyer. If you list the property at a market price, you are likely to face a lot of competition. Here’s the catch! List the property below the market value and buyers will come running to you. But make sure that you don’t sell the property at too low prices so that it doesn’t earn you significant profits.
- Assigning the contract to the buyer
Lastly, when both the parties agree on a selling price, it’s now time to transfer the contract to the buyer. In this step, the ownership of the property changes from the seller to the buyer.
You might also like to read What is wholesale real estate?
Do you require a license for wholesaling real estate?
No, you don’t require a license for wholesaling real estate. However, if you obtain a license by gaining enough specialized knowledge of real estate wholesaling, it can help you strengthen your credibility in the market. In addition to this, you are likely to find more convertible deals by having a license as people feel more inclined towards getting authenticated services.
The wholesale real estate business involves many risks and doesn’t guarantee a sure shot to success. Therefore, getting a license in wholesale real estate after going through extensive information on the business and getting familiar with the risks, can be extremely beneficial in avoiding the possible problems in the wholesale real estate business.
The potential amount of money you can make with wholesaling real estate
On average, a real estate wholesaler can earn profits of $5,000 per deal. The minimum amount of money earned by closing one deal can be anywhere around $2,000. But if you are dealing in the properties which are more on the expensive side, you may make profits within the range of $5,000 and $10,000.
If you multiply these sums by the number of sales per month, there is a huge earning potential in the wholesaling real estate business. As a full-time wholesaler, you can close five to ten deals in a month, amounting to an earning potential of $25,000 to $50,000. It is totally up to you as a wholesaler to stretch the window of prospective earnings through this business.
You might also like to read Real Estate Investment – How to Maximize?
How to find deals as a real estate wholesaler?
Once you are done grooming yourself as a real estate wholesaler, it is time to begin the hunt for wholesale real estate deals. But how do you do that? Don’t worry as we have listed four of the most effective ways to find out convertible deals for your wholesaling real estate business.
- For Sale by Owner websites
As the name suggests, For Sale by Owner websites list properties that are sold directly by the owner. You will notice that the prices are very cheap, and you may not even find a deal that earns you a commission as a real estate agent. However, if you apply some strategies like owner finance and leasing options, you may find wholesaling real estate deals.
- Putting Ads on Craigslist
Craigslist is a popular website for putting out ads for your products and services. You can use this website for posting ads for rental properties or “sale by owner” properties. It should however be noted here that this method of finding wholesale real estate deals requires a lot of time and effort. As a wholesaler, you will need to dedicate at least two hours of your day making phone calls to the homeowners and invoking their interests in selling their properties.
- By making cold calls
Cold calling is another tiresome method of finding deals but can yield good results. In this method, wholesalers find properties that don’t have an owner. Next, they go to websites where they can extract some basic information about the owners and the properties. Lastly, they contact the homeowners and pitch their deal.
- By contacting the owners
In this method, a wholesaler goes to the owners directly and knows if they would be interested in selling their properties. They may start knocking on doors in their neighborhood or look for targeted properties in a different neighborhood.
You May Also Like To Read: What is a Residential Building & Types of Residential Buildings
Wholesaling real estate requires diligence and time to start giving off outputs in the form of profits. As a wholesaler, you need to have space for gaining knowledge and critical insights of the business to escalate your success journey in this business.
Hope you enjoyed this post on wholesaling real estate, let me know what you think in the comment section below.