Is Wholesaling the Best Beginner Real Estate Investing Strategy?
What Is Wholesaling Houses?
Wholesaling real estate is the process of finding a distressed contract, getting it under contract, and assigning that contract to a rehabber for an assignment fee.
Some of the benefits of wholesaling include:
- You don’t need any money to start
- You get ALL of the REWARD with NONE of the RISK
- You can generate cash quickly
- An excellent way to gain experience & start connecting with other real estate related professionals (Title Companies, Attorneys, Realtors, etc…) while building your buyer’s list
I like to say that wholesalers get the “risk-free” profit from the real estate deal and pass on the “risk-full” profits onto someone else who is going to take the title, deal with renovations, deal with any project or contractor ‘surprises’, deal with the market and all the other fun (yet stressful) risks associated with rehabbing houses.
Wholesaling Adds Some “Ummpf” To Your Networking
Imagine you’re an experienced and established professional in your field (probably not too big a stretch).
Now, imagine some newbie comes up to you and says “Hey, I’m just getting started. I don’t know anything and I’ve never done anything. Will you help me?”
Not an attractive proposition. Unfortunately, I see this several times at real estate networking events.
Now, imagine going up to an experienced real estate investors and saying “Hey, I don’t have a lot of experience, but I’m out there busting my butt doing marketing and I’ve got a great lead that I’m looking to wholesale. Would you like to help me and buy it from me?”
The Truth Is This:
The Real Truth About Wholesaling Houses
Wholesaling real estate is a beginner’s strategy, but it’s a beginner’s strategy from the standpoint of how much capital you need to have. It’s NOT a beginner’s strategy in terms of how much KNOWLEDGE you need to have.
For example, you have to be really good at real estate analysis and due diligence. You’ll need to understand what the After Repair Value of the property is going to be after it’s repaired.
If you start off overestimating how much the property will be worth, then your entire deal falls apart.
You’ll have to understand what it’s worth in its current condition, what repairs will need to be made, and what those costs are.
Once you’ve researched these numbers, you have to be able to reverse engineer the entire cost process so you can determine what you can ultimately get the property under contract for and how much of an assignment fee you can charge.
If you make errors in any of those processes, that error will end up coming out of your assignment fee.
The Most Important Skill Needed For Wholesaling
If you want to become a wholesaler (and stay a successful wholesaler) who makes consistent money, then this ONE skill will help you…
Marketing!
You have to be really good at the marketing part – and you have to be out there doing MORE marketing.
The Truth Is This:
Practice Practice Practice
Perhaps the greatest of all experiences you can gain from wholesaling properties is the ability to practice presenting to homeowners.
Believe me, this practice is valuable.
If you take away just 1 tip from this article, let it be this one: perform your presentation in front of as many homeowners as possible.
Even if you come across a lead that you think is an unattractive deal – schedule an appointment and make a presentation.
Practice!
Why? Because when you get in front of a homeowner on a deal where you might be able to make $5k, $10 or even $20k wholesaling a deal… do you want to be ‘practicing‘ then?
Don’t practice on the potential wholesale deals that will make you a boatload of money! Practice on the ones that don’t look good.
If you can put yourself in a position where you have experience overcoming (real estate) objections because you were practicing on less than perfect deals, then you’ll easier close the better deals that will become available to you!
Ready To Get Started Investing in Real Estate Using The Wholesale Strategy?
This month, the topic of our local Real Estate Investor Association is How To Get Started Wholesaling Houses.
At this presentation, Club President Shenoah Grove will teach you:
- Dozens of ways to market for wholesale properties
- How to evaluate a deal from soup to nuts
- The process of getting a deal under contract and assigning it
- What it takes to present (actual scripts), negotiate, overcome objections, and close deals
- How to build your buyers’ list so you can assign your properties (and get paid) quickly
Best of all, you’ll be at a local REIA event with 250+ other active real estate investors!
