How to Do a Wholesale Deal
If today's troubled national economic situation has you more than a little fearful
of investing any of your limited cash reserves in real estate right now or you, too, are one of the millions that have gotten pink slips from your employer, but you still want to partake of the bountiful bonanza of available properties, there's a way for you to do it without stress or risk. You can do it by gingerly testing the real estate waters by cautiously dipping your big toe into the highly lucrative wholesale real estate market.Wholesaling a real estate deal isn't a difficult transaction, but there are a few things you need to keep in mind if you want to be successful with this strategy. First, wholesaling is where you essentially act as a middle man. If you want to buy a brand new car, rather than go to Detroit which for most of us isn't practical you instead go to a new car dealership and buy one off of their lot. The dealership has taken delivery of the car and they act as a middleman, selling the car to you for more than they paid for it. The difference between what they paid and what they charge you is their profit. It's no different with a wholesale real estate deal.
The first step in the wholesaling process is locating a property that makes sense for wholesaling. All that's required is that you locate a distressed property owner who is interested in getting out from underneath the crushing burden of a property they can no longer afford or that they no longer want.
Once you've located the property, you simply negotiate a sales price that leaves you room to turn a profit. If you determine that a property has an after repair value of $100,000 (based on $10,000 in repairs), you should offer no more than 40%-50% of that figure. The reason for this is to ensure that you can turn a good profit while enabling another investor to rehab the property and earn a substantial immediate return on the investment.
After placing the property under contract, you locate an investor who is interested in rehabbing the property and taking ownership. Instead of closing on the property yourself, you assign your sales contract with the seller to the investor, who will pay you a fee of $5,000-$10,000 for the property (which is your profit).
While it may seem like a dream come true, this strategy is successfully used every day by investors without cash or credit to profit from real estate and generate the cash they need for wholesale property investments of their own.
After you've done a few of these deals yourself, you might decide you'd like to try your hand at creating the potential for a much larger payday. Instead of locating a property to assign to another investor, you could be that other investor. You could let another investor go through the preliminary steps of locating a property for you. Once they've placed it under contract, they bring it to you and you negotiate to take their contract off their hands for an amount that you agree upon. Once executed, you close on the property with the seller, complete the rehab on the property, and you're done. Quick, sweet, and to the point. You have instant equity and you can hold the property as a stream of on-going monthly income.
Wholesaling real estate is a simple process for building real wealth quickly and easily. Whether you decide to step into the real estate investing pool by dipping a toe into the water and wholesaling a property to another investor or you dive into the deep end and take another investor's assigned sales contract off his or her hands and rehab it yourself, the promise of huge profits should keep you motivated to repeat this process over and over again.
This is just one way you can participate in the exciting world of real estate investing. There are many others as well. To learn more about this and other winning techniques that will allow you to secure your future in real estate, go to Power Investor today and tap into all of the tools available to help ensure your success.
How to Do a Wholesale Deal
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