Methods to Save Money on Wholesale Real Estate Investing

James Jones
Created by James Jones
On Oct 9, 2019
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Methods to Save Money on Wholesale Real Estate Investing

Wholesale real estate investing is a quick way to earn a good sum of money and get a foot in the door to the real estate business. Wholesalers typically do not have the financial means to do so. Men and women realtors can take an abandoned and unwanted home and place it back on the market at a varying price. Wholesale real estate is not an easy job. To make the most out of your investment, here are some quick methods to properly save your money on wholesale real estate investing. 

How It Works

A wholesaler looks for a home that is on the market to be sold by selling the contract to the owner. The wholesaler tries to look for properties that are risking foreclosure, in other words, a distressed property. They create a contract for a specific amount and sell it to the owner and they find an investor who is interested in the estate and sell it for a higher price, keeping the difference between the seller's pricing and the buyer’s price as profit. Their tactics oppose that of regular realtors. Normal realtors try and help buyers find the most affordable price for a property. 

A wholesale real estate investor tries to find a buyer for the seller before the seller’s contract is up and they sell it for a higher price. 

There are similarities and differences between wholesaling and flipping. Both deal with tasks that include taking the property and selling it for a higher price; however, a wholesaler does not deal with renovations or actually buys the home. A wholesaler has a shorter window to sell a home but is overall less risky compared to flipping homes.

The way that most wholesalers find their success is their market knowledge and a good investor network on hand. 
Getting Started

First off, anybody can be a wholesale real estate investor. As a male-dominated industry, women are beginning to penetrate the market. To be a successful female wholesale real estate investor, look into wholesale real estate mentors. What better way to tackle the tips, tricks, and methods that work than to have a mentor walk through it with you. 

  1. Develop great communication and sales skills. Explain to the owners what you have to offer and why it is the best option they should take. Having a decent line up of investors that will want to buy your wholesale property.
  2. Finding the right properties to sell. This could potentially be a very difficult step. Most wholesalers find distressed properties because of the timeline that they need to be sold. It is more likely that the owner will take whatever kind of offer you have in order to get the home off their hands. 

Depending on the property's features, it might need to be renovated. Distressed properties are appealing to investors because of the potential it can bring to be sold at a higher price.

  1. Pricing is another consideration that must vary from property to property. If the pricing is too high, there might be a scarcity of people interested in buying it as well as if the price is too low. Finding a happy medium for the price of a home will depend on its size, amenities, the quality of the home, and area. Finding investors who would want to handle the cost of renovations and fixing it up will need to be sought out. 
  2. You will need to market yourself to potential sellers and gather as many as you can. The same goes for investors/buyers. To gather buyers, a decent amount of marketing is required to let them know about properties as well as asking other wholesalers if they know anybody interested can help. 

How To Make and Save Money

  1. The assignment method is a strategy where you sell the rights of the contract to the investor after determining the price that the home can be sold at. Renovation and repairs are taken into consideration. They charge the investor a fee, for example of $4,000, and that is what they pocket. 
  2. The double-closing method is all about timing. It is a method where the wholesaler buys the property off of the seller and almost immediately sells it for a higher price to an investor that is interested and makes a profit. 
  3. Understanding and determining the ARV. The ARV is short for the “after repair value”. This determines the cost of a damaged property after the proper repairs are made. To find the ARV of a property, you must pull comps of nearby homes nearby that have been sold in the last month. They should have a similar design and set up so that it is accurate to know what they were priced at. 
  4. Understand what kind of returns your buyers are interested in when making their purchase. 
  5. Once you find your end buyer, the buyer will need to understand and agree with the terms, fees, and pricing that the contract states. Once the contract is signed then you can close the deal and collect your check. 

The job of a wholesale real estate investor is simple but it can be tricky. It takes patience, diligence, and knowledge about the job that is readily available to. The process of getting started will require legal knowledge of what your able to do and what you are not. There are some grey areas legally that can occur based on the signing and rights that the wholesaler has. This is why consulting in a wholesale real estate mentor might be the best option to avoid legal issues in the beginning. It will take time to fully understand the real estate market and network accordingly to grow the number of investors to buy your properties. A mentor could be influential in your success; their knowledge and participation could be instrumental. Researching wholesaling is a key step to find success. Do not throw yourself into it without having enough knowledge. Practice and time will allow you to perfect your craft and ensure success.