Real estate investment is very much different from stocks and bonds investments. In the latter, one can easily dive into an investment with as small as $100, and you can enter and exit whenever you wish to. Dealing with properties is not as easy as dealing with stocks and bonds because dealing with properties can be tricky to navigate and usually comes with a very expensive price. It also takes time to buy and sell homes, unlike stocks and bonds. The activities that normally takes time are getting financing, coming up with a down payment, filling out the paperwork, and then closing the deal. Time is also consumed when it comes to dealing with tenants and rent collection. If you have an interest in investing in real estate, but you just do not know how to save up the money needed for the purchase process, there are other ways you can invest. One of such ways is real estate wholesaling. It is a method or strategy you can adopt and utilize to your own advantage without ever having to make a purchase offer or put down a down payment.
WHAT IS REAL ESTATE WHOLESALING?
Real estate wholesaling is a short-term business strategy used by investors to amass big profits. It has nothing to do with retail wholesaling. in real estate wholesaling, instead of purchasing a home and selling it, a wholesaler contract it with a seller that will then find parties that are interested in buying the property. All these connections between these parties can be done on the RealEstateCake platform.
Real estate wholesaling has to do with the finding of a great real estate deal, and then selling it to another party that is interested in the deal. It allows you use a good deal to make money with little or nothing in a deal. It involves no financing, no repairs, and no landlord duties, and these deals are done within weeks and months.
The main focus of the RealEstateCake when it comes to real estate wholesaling, is by connecting parties in the sales of homes or properties to an interested party before the contract with the owner of the home expires. This implies that there is no hand to hand money exchange between the wholesaler and seller, until a suitable buyer is found. The seller here gets his profit by finding a buyer who is willing to buy the property at a price higher than that agreed upon by the wholesaler. The difference in the price paid by the buyer and that agreed upon by the seller is the profit retained by the wholesaler.
People who want to get into the real estate business, but do not have the needed finances can choose to delve into real estate wholesale business. They are not required to take any course, or pass an exam, or possess a real estate license in order to become a wholesaler. One thing that has been seen to be important is having great people skills, and be very patient.
IS IT LEGAL TO WHOLESALE REAL ESTATE?
Real estate wholesaling is totally legal, as far as you abide by the laws already in place. However, real estate wholesaling has some misconceptions. For instance, a lot of professionals that plays in the real estate industry that assume wholesaling are illegal. In reality though, selling of a contract is totally legal. Even making it more legal, is the fact that you are not acting as an unlicensed agent.
Real estate wholesaling is simple and completely legal: you are the buyer who is key to the transaction and your job is to sell your contract to another buyer, and these can be performed on the RealEstateCake platform. You are, therefore, not listing the property for a commission, as an agent would. To make sure you are wholesaling within the boundaries of the law, you must also:
- Be the principal buyer in the transaction
- Execute a valid agreement
- Include the required agreement language
- Include a deposit that is properly exchanged
- Purchase with the intent to rehab (it may be a better exit strategy)
- Only market and sell interest you own
- Disclose agent licensing
- Be fully transparent with all parties involved
Some states may have different laws regarding the wholesaling legal process, so it is vital that you understand the laws in the area you intend to wholesale. These points are, in no way, universal to each state and can change depending on where the deal takes place. Before you intend to wholesale a deal, check with a real estate attorney in your area that understands creative real estate transactions.
HOW TO SUCCEED AT REAL ESTATE WHOLESALING
It is very true that real estate wholesaling is not for just anyone, venturing into it requires a lot of time, commitment, and patience. Also needed, is great communication and marketing skills, and RealEstateCake can be of great help in complementing these aspects. RealEstateCake allows you to have access to a network of investors. Thus, with RealEstateCake, you will always have a handful of investors at your disposal who will be likely interested in buying the property that you want to wholesale.
The first key to real estate wholesaling is finding the right kind of property. RealEstateCake can however help you in this crucial search, as it is a platform that connects buyers, wholesalers, distressed homeowners, real estate investors, and others. Distressed home owners are eager and desperate to sell their homes quickly, and as such make great prospects. These properties are especially attractive to potential investors when they are in a good location, with other desirable features and the right price tag. It is recommended that before you make an offer, you make a review of what kind of repairs or additions the home will need.
As a wholesaler, it is helpful if you know what kind of offer to make. If your offer is too low, you may scare off potential sellers. On the other hand, if you go too high, you will not be able to find a buyer who is willing to take on the risk of buying and fixing up a distressed property.
One beautiful part of real estate wholesaling is the addition of contingency to the purchase contract. This allows the wholesaler to back out of the deal should he not be able to find a buyer before the closing date. This reduces the wholesaler’s risk completely.
ADVANTAGES OF REAL ESTATE WHOLESALING
There are numerous advantages of real estate wholesaling, some of them are listed below:
- In real estate wholesaling, a successful deal can happen without your spending little or no money at all in the deal. The only money that you get to put into real estate wholesaling is your earnest money, and this is as well completely negotiable with the seller, and it can be as low as a few hundred dollars. Should the deal go the wrong direction, you can easily afford to let go of that money. All deals can be easily negotiated and carried out on the RealEstateCake platform.
- In real estate wholesaling, you do not have any fears in securing financing for the deal. In traditional real estate transactions that are not carried out on the RealEstateCake platform, there is usually stress associated with these deals, and the processes involved in working with lenders to get loans needed to close the property are usually lengthy. But in real estate wholesaling with RealEstateCake, you don’t need to close the property, instead, you try to sell the contract to another buyer, hence the loan is not needed. There is also no need for equity, so the search for money for a down payment is not necessary. The only payment you need to make is the escrow fee.
- In real estate wholesaling, you do not need to worry about being a landlord and doing repairs and maintenance on the property. This is due to the fact that in this process, you do not get to be the owner of the property, rather you get to own the deal in the form of a contract. Owning just the deal does not require you to do any upkeep and repairs on the property. Real estate wholesaling deals are as clean as a deal can get.
If you’d like to invest, we recommend using our website/app: RealEstateCake.com. We specialize in real estate off-market and exclusive deals. #RealEstateInvestor #RealEstateAgents