Are you wanting to become a real estate wholesaler? It is one of the best ways to get started in real estate investing, and with the right guidance anyone can do it.
But what exactly is wholesaling? And where do you begin? Do you need a license? What are your options? There is a lot to think about before you can simply jump in. So, get a pen and paper handy because we’re about to answer those questions and more.
[While you’re here, sign up for my exclusive online training, ‘Learn The Hardcore Facts About Wholesaling Real Estate‘ and discover everything you need to know to successfully wholesale real estate!]
What Is Wholesaling?
Wholesaling real estate is defined as the process of finding a deal on a property and passing it along to another investor. You, the wholesaler, find a home, secure the contract, and then sell that contract to another investor for a finder’s fee—generally 5% to 10%. The best part is that you don’t have to finance any costs of renovating the property like you would if you were flipping it.
Do You Need a Real Estate License?
The short answer is no, you don’t need a license to pursue a career in real estate wholesaling, you only need to be the principal buyer in the transaction.
With that being said, it’s helpful to have good insight into the home selling and buying process, and the more you know, the better.
If you should choose to obtain a real estate license it will only work in your favor. You’ll have access to the MLS database, a stellar resource for finding property leads. You’ll also find that some investors are more inclined to work with you if you have a license, but it’s certainly not a requirement to establish yourself as a wholesaler.
How To Start Wholesaling Real Estate
If you’re an entrepreneur who’s looking to learn more about wholesaling properties, you’ll be thrilled to hear that it’s not difficult. There are five basic steps you need to take in order to get started.
- Do your homework and research your local market.
- Come up with a list of potential buyers or real estate investors.
- Secure a financing source.
- Start looking for possible wholesale properties.
- Figure out your exit strategy.
1: Do Your Homework and Research Your Local Market
When dealing with real estate, you can never be too prepared. Begin by familiarizing yourself with the process of wholesaling properties. For a thorough introduction, I recommend my exclusive online training course, Learn the Hardcore Facts About Wholesaling Properties.
Once you’ve done that, you should then start researching your local market to get a better understanding of what home prices currently are in your area. You’ll also want to pay attention to what kinds of properties are available and have knowledge about the different neighborhoods within your community. Truly, staying ahead of the game will only help you with future wholesaling ventures.
2: Come Up with a List of Potential Buyers or Real Estate Investors
Before you begin hunting for your first wholesale property, you need to have a prospect list of potential buyers or real estate investors.
When you’re a wholesaler, your sole objective is to be the middleman between property sellers and buyers. For that reason, it’s a smart idea to have an investors list ready before locking down a contract. Not to mention, you’ll know exactly where to take any deals you spot.
There are a ton of ways to cultivate a strong buyers list. Social media, personal contacts, email marketing, real estate groups and events, networking, even word-of-mouth. A lot of wholesalers even utilize bandit signs or posters that display their contact information. It’s ultimately way better to know who you’re selling a contract to before you go through with any transaction.
3: Secure a Financing Source
Securing financing is another important step for becoming a wholesaler. Finding a worthwhile property doesn’t matter if you can’t buy the contract, does it? Consider initially coordinating your business to work with a private or hard money lender. You’ll be able to obtain financing easily when you do land your first official wholesale deal.
4: Find Wholesale Deals
Looking for distressed or neglected properties is a great place to find wholesale deals. Generally speaking, sellers of these properties are motivated to sell and often for under market value. Great sources for finding them are Realtor.com, Zillow, Trulia, Foreclosure.com, Craigslist, public records (for people behind on payments), Facebook Marketplace and FSBO.com.
You can also identify wholesale properties by door-knocking. That’s right—you can literally walk up to someone’s door, knock, and ask them if they’re interested in selling. And guess what? It works!
5: Plan Your Exit Strategy
There are two ways to make money from wholesale deals as a real estate investor. The first, selling a contract and the second, executing a simultaneous closing—also known as a double closing.
Selling a Contract
Selling a contract is the most common way to wholesale real estate. Investors who elect to sell a contract just pair sellers up with buyers without ever having to own the property in question—and they financially benefit from the process.
A Double Closing
On the other hand, a double or simultaneous closing involves actually purchasing the property, which means the wholesaler bears responsibility for all the closing costs. This typically only happens when wholesalers know they have a buyer willing to pay more for the property. The option that you choose will vary depending on the deal.
More Resources To Help You Become A Real Estate Wholesaler
Wholesaling homes is a fantastic way to generate income and build a brand in the real estate business. But before you do anything, take some time to learn about the process. And, when utilizing the steps I’ve outlined, you’ll be on your way to a successful real estate investing career in no time at all.
For more information, articles, and resources on real estate investing, visit my blog.
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