Have you been thinking about investing in real estate? You must have heard other people’s stories about how great of an idea this could be. You could have also heard some things from the investors themselves, and they may have convinced you that this could be the perfect move for you. The great thing is that you don’t need to give up on your current job to do it, meaning that it can be the perfect side hustle, which is the perfect solution for beginners. Read more about how to get started.
Now, if you’ve already read up on all of this, chances are you have become a bit overwhelmed. This because you’ve realized that there is much more to it than simply buying real estate and then selling or renting out. There are various different strategies to consider, and you are bound to be confused about what the right one for you could be.
One of the things you have definitely come across during your research is the concept of wholesaling houses. Does that sound interesting? It most certainly does. Yet, you don’t want to jump on board before you get better acquainted with the actual process, before you understand what it is, how it works, whether it is a good strategy at all, and how to do it right. Those are the questions we’ll answer for you below, so get ready to do some learning.
What Does Wholesaling Houses Entail?
Starting with the basics, we have to make it clear what wholesaling houses entail. The guide I’ll provide you with here is made for beginners, meaning that the explanations will be very simple and easy to understand. In short, you’ll get a wholesaling houses guide for dummies, and further meaning you’ll comprehend the process even if you’ve never heard of this concept before.
This will shed some light on the topic as well: https://www.lendingtree.com/home/mortgage/what-is-real-estate-wholesaling/
Now, real estate wholesaling is basically a short-term strategy, aimed at getting quick returns. This is probably why it is such an appealing strategy, especially for beginners. It consists of you, as the wholesaler, finding properties for sale, putting them under contract and then selling them to a third-party buyer for a profit. The profit, of course, comes from the difference between the actual contract price with the seller and the price that the buyer will ultimately pay.
Why Is It a Good Strategy?
As the concept of wholesaling is becoming clearer and clearer to you, chances are you can, at least vaguely, understand the benefits of the strategy. Yet, we need to make things a bit clearer here, which is why I will now talk about why this actually such a good strategy. There are numerous benefits to consider, so let us discuss some of them right now.
First off, there are the quick returns I’ve mentioned already. If you’re looking to make some money in a short amount of time, say in a few weeks, you should definitely take a closer look at this strategy and start using it to your advantage. The amounts you will earn that quickly can be used for whatever you want, but if you’re serious about becoming a real estate investor, you may want to use them to build liquidity, aiming at doing bigger deals later on. Wholesaling is the perfect strategy for beginners, as it eases you into the world of investing, not requiring you to invest huge amounts of your own money and still leading to making a profit.
Speaking of not needing to invest a lot of your own money, that is another benefit to consider. In short, the entry investment is low, since you need much less upfront capital than with traditional real estate investing. Since you’re making a contract with the seller, you are not actually required to pay the full amount for the property. It is the buyer that pays the entire amount, and you are just there to profit from it.
One more thing. When you learn more about wholesaling, you’ll also understand that it is not a risky strategy, which further makes it perfect for beginners. Since you’re not investing your own money, you are not risking great losses. Plus, as a wholesaler, you are much better protected against market fluctuations and price depreciations, which is definitely a great thing. So, if looking for a quick and safe way to earn some money from real estate investing, this is the right strategy for you.
How to Do It Right?
Having figured out that this could be the perfect way for you to join the world of real estate investing, without assuming too many risks, you’re now curious about how to do it right. There are a few steps to take in the process, and while they are not difficult, they could take some time, depending on your searching and negotiating skills. In any case, the entire process is usually completed within a few weeks.
First off, you search for motivated sellers, those that want to sell their houses quickly and without too much hassle and that could, for those reasons, be ready to lower the price a bit. You make them an offer and you enter into an agreement with them, with the contract stating that you are permitted to assign the property to a third-party buyer. After that, you find the buyer, assign the contract to them and earn the assignment fee. It is as simple as that. Although, as a beginner, you should approach the process carefully and slowly, aiming at doing everything right.