Wholesaling 101 – Part 1 (How Wholesaling Works)

Getting Started in Real Estate Wholesaling:  What is Wholesaling and How it Works:

If you’re getting started in real estate but have limited capital or credit, or simply want to explore a path that avoids, rehabbing or tenants and toilets, wholesaling properties is an excellent opportunity for you.

Wholesaling real estate will require some ambition and a bit of specialized knowledge, but is one of the most tried and true methods for generating cash quickly. Learn more with this Wholesaling Real Estate 101 article.

In the real estate market of 2015-2016, where demand from investors for good real estate deals continues to grow, effective wholesalers who can bring these deals to investors are in high demand and can make a lot of money in almost every market in the US.

Here’s real estate wholesaling explained…

What Is Wholesaling Real Estate?

To put it simply, wholesaling real estate occurs when a property is available to be bought for less than it’s worth—often because it’s in bad condition or because the seller is motivated to drop their price.

Your job is to get it under contract at that “wholesale” price. Then, you sell it “as-is” for a little bit more to a cash buyer, who makes a substantial profit when they resell it again someday, or by keeping it in their portfolio as a rental property.

How do you make money? Simple…you make the difference between the contract price (between you and seller) and what your buyer agrees to pay for it. This usually means $3,000-$10,000 or more!

How Does Wholesaling Work?

As a wholesaler, you’re focused on finding two things – a good deal and an investor to buy it. Finding a great deal often means looking at distressed properties that require a significant investment to renovate or improve, and making offers to buy them, typically for around 70% of their future value, minus any repair costs.

Watch this Max Offer tutorial video to learn more about calculating the cost of your real estate rehab projects.

Think of all the boarded-up, junky houses you might have seen in your city or county while driving around. If the price is low enough that an investor feels he or she can make a healthy profit, the property’s condition becomes irrelevant.

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