Real Estate investing can be a very lucrative investment if you know what you’re doing.
A wholesaling strategy for real estate investing is quite possibly one of the most credible investing strategies in given the current economic scenarios. Not only is this strategy foolproof, but also an extremely safe plan to implement. The investor does not run the risk of investing their own capital or even own credit.
It is considered a stepping-stone in the real estate investing learning curve. You may be curious to know what exactly ‘Wholesaling Strategy’ is for investments in Real Estate. All markets have wholesalers and retailers. The Wholesale person has access to drop shippers, which they in turn sell it to other retailer in case of goods for a fixed amount. Wholesalers are the intermediaries between merchandiser and retailer. Similarly, in real estate, Wholesalers are intermediaries between a buyer and seller of a real estate property.
To clarify, let us understand the role of a wholesaler in real estate investing. Consider for example; you make an offer to buy a property. You set up a meeting with the seller to quote an offer for his property. Assume you have completed your assessment of the property and done sufficient research for the subject property. You have also completed reviews of comparables and calculated the repair expenses. Based on the above analysis, you determine that best option is to consider an exit strategy by wholesaling the property to another investor. Let’s say the property is valued around $300,000. You are aware of the fact that the seller would be eager to sell the property for a reasonable price. So you quote an amount on the lower side, $250,000. The smart seller as expected counter- offers your bid for $275,000. Remember this quote is still below your assessed value of $300,000. So you enter into a contract and record the offer to buy for $275,000. You inform the seller that the property will be financed by the bank within 30 days. This leaves you with just under 30 days to find an investor for the property.
Next, you list the property on various local classifieds and newspapers. You can also access your local craiglist.com for interested buyers. After deciding on the final buyer, you will again enter into a fresh contract or consider an assignment of contract for the property to the final buyer. You quote an amount to the buyer. After consideration, both the parties finally settle for mutually agreed price of $280,000. The investor signs on the business deal within two weeks and seller, who owns the property, gets the quoted price of $250,000. The new investor acquires the property and you make a decent margin of $20,000 as a wholesaler.
Wholesaling is quickly becoming a popular vehicle with many new people entering this business. It is a good way to take advantage of the fastest strategy of making money in real estate investing. The strategy, is simply holding on to the property on paper for a certain amount from seller and reselling the paper to another prospective end buyer.
To find out more about real estate investing click here. Unique version for reprint here: Wholesaleing and Real Estate Investing.
