Thursday, April 12, 2012

What Is Real Estate Wholesaling?

What is wholesaling? Well, to answer this question we have to know what it means in reference to selling properties. Now there is plenty of material out there to describe this strategy in estate investing and if it's described as the following scenario then there's a good chase you've found valuable information.

The Definition: The art of controlling a property by obtaining a sellers purchase contract from a eager seller for a fix price; once obtain assigning the contract for a higher price to an end buyer (usually investor "cash buyer" not home owner).

This is a great way to begin, for a new comer it's a fast no risk real estate strategy. There are many benefits. You'll never have to use your own money. The term "OPM" stands for other people's money, and essentially that's what you'll be doing; using OPM to fund your deals. You won't need good credit; this is because you'll be using the resources of your financial partner in all your deals. You don't have to be a real estate agent or broker to perform these deals.

You will however, need to structure the deal with the proper clauses in place for your exit strategy to work. You will need the assistance of a Title co. and/or attorney to handle the necessary paper work for closing. You will need to be ready to collect the Money.

The process is simply pairing a buyer with a seller and getting paid for matching the two. Pay attention to the statement just made. A few years back wholesaling properties was extremely easy by performing a few steps.

Step 1:

Find a seller

Step 2:

Gain control of property "get property under contract"

Step 3:

Advertise property

Step 4:

Assign contract to end buyer

Step 5:

Access to Title co, attorney, etc. go to closing

Step 6:

Get paid

Well it use to be effortless finding a driven seller's was easy, however in today's economy for this strategy to work you don't have to re-invent the wheel but some steps have to be altered. What's meant here is certain steps have to be re arranged to ensure leads are coming end and deals will be closed. Banks have made it close to impossible for investors to obtain funding, as well as hard money lenders. Finding motivated sellers first it not a "deal killer", but it will slow your productivity down. The best way to execute a wholesale deal in this current market is to build a buyers list. Have buyers on deck ready to purchase any deal you bring to the table.

So what should your first plan of action be? How do you find these motivated buyers? You market to them like you would if you're looking for a sellers. Through traffic generators: build a squeeze page website, blogs, direct mail (yellow letters, post cards, text blast). Once you've built a list, gather pertinent information from your buyers like the location of investing interest, price range, and min/max. amount of rehab desired if any etc. Once a rapport has been established begin looking for properties that fit the criteria of your financial partners.

1 comment:

  1. Great write-up and very useful information on wholesale deals for real estate investors to grow their business. This is a great way to begin, for a new comer it's a fast no risk real estate strategy. Brilliant!

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