Real Estate WholesalingAug 31, 2020
In 2020, often people ask "Is real estate wholesaling a profitable business?"Well, let me get down to business.
My answer will be "Yes" if you're ready to go extra mile for your business and, No" if you fear to put your maximum efforts.
“The only place where success comes before work is in the dictionary.”
You can't run this business only with money, you must do hard work to get long-term success as a wholesaler, you need to continually polish your skill and feed your mind. I repeat continually!
Almost every wholesale deal you get will require you to negotiate the seller down on his or her price. You also need to be prepared to deal with the unexpected.
Clear as mud? No, let’s make it easier.
Can you believe someone who is making thousands of dollars by just making phone calls? ( Even hard to believe?)
But it is possible!
It is a great earning idea if you are ready to put your efforts, even if you can’t invest a big amount of $$$. So if you have marketing skills but you don’t know how to encash them, then congrats! We have great plans for you.
Before We hit the road, bear in mind: Real Estate Investing and Real Estate wholesaling are quite different terms. Unlike Real Estate investing, you need little or no investment in the wholesaling business.
What is Real Estate Wholesaling?
Real estate wholesaling is arbitrage and dealing between three parties or individuals about the same asset. Three involved parties include a trusted seller, a middleman or real estate wholesaler, and a potential buyer.
When someone wants to sell the asset or property, he has a certain estimate about the selling amount and the overall price of the property. Now as the wholesaler, you will fix a face-to-face or online meeting with the seller and know the demand of the seller. After mutual agreement, he will sign a contract. Make sure the assignment will also include the agreed-upon fixed price of the property. Now everything is in order with the seller.
Now the wholesaler will reach out to the buyer and fix the contract of the same place with him. But he will set a higher price than the seller. The difference between both amounts is the profit of the wholesaler.
Sounds difficult? Or got perplexed? Let me walk you through a short example
John wants to sell his house at his desired price and offers $60,000 for his home. He has an emergency like he has to sell his home within 21 days to avoid wasting it in a foreclosure. He wants someone to help in this regard.
On the other hand, David is a wholesaler. He is in search of the seller. When he comes to know about John, he immediately promises to sell his house at exactly $60,000 in less than 21 days. What happens then? John agrees and they both sign a contract. Now David has the right to buy that property for himself or someone else.
Now half work is done. David has the contract and he has to find the potential buyer. He finds a house flipper, Jimmy, and offers him that house for $66,000. Jimmy is an expert house flipper, so he can sell this house at even better rates, so he agrees at this price. David signs the contract with Jimmy, too.
Then David submits the paperwork and all the details to the local title company and waits for the processing. In the end, all three individuals get what they want. John gets $60,000, Jimmy pays $66,000 of the house and the David pockets the difference.
This is the simplest way of wholesaling; there are various other techniques and tricks that wholesalers use to boost up their business.
How Real Estate Wholesaling works
A real estate wholesaler is an open-to-opportunities person. He typically finds motivated buyers, flippers as well as sellers through online marketing sources, social platforms, newspaper ads, mail marketing, outdoor advertising, and other such means.
He basically tries to find the sellers who are ready to sell at below market value. Sometimes the seller has health issues, financial needs, or wants to avoid foreclosure of the property or he does not want to repair his house, so he urgently tends to sell it. So he signs a contract with the wholesaler and gives him the right to purchase this property to someone else at the mutually-agreed-upon time frame and rates.
A wholesaler must do a title search that this property is completely the asset of the owner and there are no other claims on it. House flippers and rehabbers are the common buyers of such properties.
A successful and witty wholesaler firstly focuses on building a list of cash buyers who are sound enough to buy the asset and sell it to higher rates. The wholesaler does not face any kind of loss in his business as he is not investing any money. Moreover, he gets paid instantly as this process completes within a few weeks.
Real Estate wholesaling for beginners
Did you just land on this business? If yes, you must take the following points into your accounts to boost your business like a pro. Let’s break each element down.
- You should learn to use strong call-to-action ideas. Try to inculcate the immediate benefits associated with services you can provide free of cost.
- You can wholesale with no money down, but what about using paid ways of marketing as a beginner? There are a number of money down strategies of marketing, wholesaling, and flipping. Looking back to our example, was David able to find motivated buyers and sellers without effective marketing? He did spend money on making phone calls and arranging meetings to convince his clients.
- Don’t hesitate to explore all the possible ways to market your wholesale business, including paid advertising, email marketing, social media sponsored ads, making a business website, networking, content marketing, influencer marketing, etc.
- Make yourself more active in receiving and making phone calls. Learn to use your phone effectively. As we know potential sellers are usually the people in distress and they need immediate help, so never miss out any chance.
- You cannot excel in this business without putting in a lot of hard work. You need to build up trusted connections. Treat the people honestly and politely. Make them believe that you are the right person. Keep your eyes on the goal, you are not going to do only one deal, you are going to build up your career on solid grounds.
- Work on your math. You cannot become a successful and competitive wholesaler if your math is weak. Search online for the wholesaling calculators and also make your own calculations. Figure out the strategy of the flipper, if you will sell at a very high rate, flipper won’t consider you at all. He will buy in the first place or completely reject your offer. Do not consider your own profit only. If you are selling a house that needs to be repaired, estimate the repair value as well.
- Try to get a license, of course, no one will ask you for a license but having a license puts a stamp on your authenticity and expertise. People will consider you more than any other broker or wholesaling agent.
- Prepare effective proposals to find the buyers. Work on your communication and marketing skills. Finding the leads and converting them into sales is an art. Don’t forget to consider the flipper’s cost, repair cost, transaction cost before figuring out your overall profit.
- Use the DD formula (Drive for Dollars). Drive-in your city or nearby areas and look for the broken and repairable buildings. Meet with people and find opportunities. Zillow and Craigslist is online platforms where you can find buyers.
- If you want to get results in short period of time , you may find our Real Estate Investor Training super helpful . Give it a whirl to to get world-class investor training courses at your door-step
Calculation technique: Here’s an easy equation to use so you create a minimum of $2000 as a wholesale fee off of every deal. The Contract + Estimated Rehab Costs + $2k Wholesale Fee should be < ARV (after repair value).
Real Estate Wholesaling In USA
In the United States, the wholesaling business is highly in demand. If you are living in the USA, you should look for deals and plans that make sense. Finding potential clients is easier as people are familiar with the real deals and they love to leave all the responsibility to the wholesale agent.
A Final Note On Real Estate Wholesaling
If you are determined to make your career as a wholesaler, it’s the best decision you ever make.
We recommend you to study all the pros and cons and learn how you can get the maximum profit. It will take only a few hours to figure out “what if’s” of this business. That means to build the maximum understanding before you start.
Moreover, consult experts and those who are excelling in this business. Don’t fear asking questions and clear your mind. Believe me, it is a great opportunity for those who are educated but not finding appropriate jobs.
Be your own boss, do your own research about the sellers and buyers. Once you will start dealing successfully, you will win fame and respect from both sides. You can also join various wholesaling forums and know more about this business.
So, If you want to do a smart work instead of hard work, Sign up with us right now to enjoy countless benefits by getting proven Investor courses without Breaking Your Bank