We are reader-supported. When you buy through links on our site, we may earn an affiliate commission.
Real estate investment is attractive for many who want to make more money. There are many options, but one of the best is to go wholesale. Here is everything you need to know about the practice.
What is Wholesaling?
Wholesaling places you in the middle of the seller and future buyer. You enter into a contingency for a property before selling the contract to a new seller.
You get into the contract for a small amount of earnest money and profit when you sell the agreement before closing. It’s a quick way to enter real estate investing and earn thousands of dollars per wholesale. You can do this by lining up a list of clients wanting to invest in or flip low-quality properties for which you serve as a provider. You find and take temporary ownership of the building before getting on profit through the sale to one of your buyers.
Find properties or hire a deal scout to do it for you in exchange for a finder’s fee.
Many wholesalers find different benefits throughout the process, but three stand out.
1. It’s Great for Beginners
Wholesaling real estate is excellent for someone who wants to get into real estate but isn’t sure where to start.
The process is relatively straightforward, and you can quickly earn much money. You don’t have to have a college degree or even a license to get started, making it a great option for someone unsure whether or not they want to continue with real estate investment.
With just a bit of research and guidance from successful wholesalers, you could end up with multiple deals each month, earning a steady passive income.
2. High ROI
You can get a high return on investment by wholesaling properties and you don’t have a price cap like a real estate agent or property manager. You also get to mark up the property as much as 50%.
There is no limit on how many properties you can wholesale at once, opening up your options. You can earn significant earnings and even more through other asset classes with cash.
Less legal issues can arise from wholesaling than other real estate elements. You aren’t required to join an association or pay any dues. You’re also less likely to get a fine for a wrong move. However, you want to be careful to preserve your credibility.
3. It’s Fast Money
Wholesale is a quick-paying option for someone who wants or needs extra funds. It allows anyone who does some research and explains their intention to the seller— the transaction should go smoothly.
Once you and the original seller agree on the contract, you can get a large return on a home with minimal fees. Your credit score won’t affect your ability to score a good deal, making it easy to profit from wholesaling.
The Cons of Wholesaling
While wholesaling can get you a lot of quick success, it is still risky. You must ensure you’re in the right market for it to work. If you don’t have a lot of low-cost homes or other structures in the area, you might not benefit from this investment.
In most cases, you don’t need formal education, but you still need to learn about wholesaling independently to succeed. Many resources can help you understand exactly what you need to do to wholesale successfully. If you go into the industry blind, you could set yourself up for failure.
Many resources are available to prospective wholesalers, so you can easily learn.
Trying Out Wholesaling
Wholesaling is a great opportunity for anyone wanting to enter the world of real estate. If you’re looking to wholesale, ensure that you research your area properly to know the best practices to earn you the most income legally and ethically.