The Basics of Wholesaling Real Estate

If you want to break into the real estate investment business without having to invest large sums of money, wholesaling real estate could be the perfect opportunity for you. I believe it’s the safest, fastest and easiest way to getting your feet wet in this profitable industry that has helped many people achieve wealth and freedom.

In simple terms, wholesaling real estate is when you purchase a property well below market value and then quickly re-sell it to an investor cash buyer at a reasonably marked-up price.

Here is a quick rundown of how a successful real estate wholesaler usually operates:

Locate a distressed property

You will eventually began to locate distressed properties owned by people who are motivated to sell. These properties will fit your wholesale purchase criteria as well as your rehabbers and buy & hold investors investment criteria. The magic word here is “motivated.” You will need a motivated seller in order to negotiate a profitable wholesale deal.

A motivated seller is someone who needs to sell their property, and is more concerned with a quick sell as opposed to receiving top dollar for their house, apartment building, land, commercial strip and or portfolio of real estate. Often times a motivated seller could be someone who is going through a divorce, someone who needs to relocate, landlord with bad tenants, property owners who are facing foreclosure or behind on bills. You should also inspect the property and make sure your offer for the property is below market value.

Put the property under contract

Although every market is different, there is a popular formula that successful real estate investors and wholesalers use in order to determine the Maximum Allowable Offer (M.A.O.) to make on a property. This maximum allowable offer is determined by discounting the after repaired value (ARV) of a house up to 70% and then subtracting the costs of any repairs that need to be made to the property as well as closing and holding cost. Many sellers will reject your offer, but if you focus on dealing with motivated sellers that need to sell their house, you will begin to see your offers accepted in no time.

Locate a cash buyer

The easiest way to find cash buyers for your wholesale deals is by simply driving the nearby neighborhoods and locating any home that is currently being renovated. Often, you will find that the owners of these homes are real estate investors that are looking to acquire more properties in the area. You can also market your wholesale deal by placing classified ads online or through a variety of other social media platforms and implementing marketing strategies such as direct mail and bandit signs.

Closing the deal

Once you have a profitable deal under contract and you have a qualified and interested cash buyer, you simply need to hire a title company to open up escrow and schedule a settlement date to close the deal in order to receive your check. The beauty of wholesaling real estate is that you don’t need cash or credit, and you never have to worry about renovating a property or dealing with tenants. You simply find a good deal and a serious cash buyer that my friend is a winning combination for quick cash. Wholesaling real estate may seem intimidating at first, but it doesn’t take long before it becomes very enjoyable and even addictive. The amazing thing about wholesaling real estate is that you can do it anywhere be it in your own hometown or in another city. Rest assured that you can wholesale anywhere in the country! What matters is that, whatever location you choose, you must focus on two things: finding motivated sellers who are willing to sell their property at a deep discount and serious investor buyers who will quickly purchase the property from you. Any place that has these two ingredients is the perfect place for wholesaling houses!

I”ll See you at the closing table,

Marcel Umphery the “R.E.I. Successmaker”