Wholesale is a “risk free” way you can get into the business without having to ever actually buy the property, taking title, getting financing or fixing anything. Actually, the only risk you have is your time equity / sweat equity by “Walking” neighborhoods searching for deals💰!
What’s “Wholesaling”?
Wholesaling is the process of signing a contract to purchase a property from a seller and then entering into an agreement with a third party to resell the same property at a higher price for a profit (Flip - No Fix/Just Fee). Just like buying anything in a retail store there was probably a wholesaler between the retailer and the producer. The same goes for real estate.
The wholesaler is also known as the “middleman”. All rights to the original purchase contract are assigned to the new buyer and the new buyer pays an "assignment fee" to the wholesaler in order to gain all rights to purchase the property at the original purchase price. The original purchase contract usually has an "inspection period" which allows the original buyer to back out of the contract and not close on it if they do not find a buyer to assign their contract to.
" Most wholesalers have no intention of actually purchasing the property and simply use wholesaling as a tool to locate properties for other flippers & investors. Many times it is an active part of the $elling $trategy on the capital gain side or Exit $trategy on the cash flow side of investment."
The practice of wholesaling is often advertised as "No Money Down and No Risk" since the actual deposit can be as little as $10 and often even the deposit can be returned if the wholesaler cancels the contract before the end of the inspection period.
Wholesaling is not just for the “starting” investor trying to get the “capital gain” going. If you implement a professional marketing/prospecting process for deals, aka building a “Wholesaling Business” you can often make even more money from wholesaling than retailing. It is also a perfect supporting exit strategy for your properties in your Flipping Business and a perfect extra stream of income for your Investment “buy & hold” Business
You see, beyond just explaining the fundamentals, our true goal is to inspire you to think like and create your own “Wholesaling Business” (with a capital “B”!). Something that will allow you to reach your financial goals and create a business that works for you, rather than you working for it.
The ultimate goal here is to use “The Big $elling $trategies to propel you into Investing”, the only true way to riches!
The Wholesaler’s Profile
Great skills you need to have are marketing and deal prospecting (finding deals). It is essential to have systems to follow up with potential sellers and your negotiation skills need to be on point so you can get a price that will make everyone happy. A lot of negotiating is just listening to what the seller’s challenges are and figuring out a solution that allows both of you to come out on top and still make a profit for your flipper/investor. If you don’t learn and understand how to properly analyze and evaluate the property you will not last long in this business or investing in real estate. Period, end of story.
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The most important skill for you as a successful “Wholesaler” is to develop analyzing property value skills. You must be able to “estimate” repairs, understand the costs involved in a transaction and know after repair value (ARV) of the property.
The goal behind analyzing for the ARV (After Repair Value) is to find the price the house will sell for once you have done your rehab, improvements and up to “selling or retail” condition. Now you can work backward and take out all the costs like financing, selling (real estate commissions), carrying/ holding costs (insurance and property taxes) repair costs, closing costs and lastly your desired profit in order to “exactly calculate & know” your maximum offer price. This is the price you must stay under to make your money!! The more meat on the bone for flippers/ investors to make a profit, the happier they are to carry your assignment fee. So you make a deal when you “calculate” your deal.
If you want to learn to properly value your investment and know-how all your costs will affect your profits - Calc Like A Pro E-book has got you covered.
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How The Process of Wholesaling Works in 4 Steps
The steps of wholesaling itself are actually easy, but it’s the mastery of the individual skills to build a profitable business that will make it a challenge. You need to be willing to mind the due diligence, spend time conducting research, and putting an effort to master the marketing, the communication skills and putting your systems into place.
You can break “The Process of Wholesaling” down into 4 steps. These are the four basic parts of the process from beginning to end:
Find A Property; the focus of Wholesaling is to find properties that are being sold under market value so you can assign the contract quickly to a buyer (flipper/ investor) and easily make your finders’ fee. This is known as “market to motivated sellers” through marketing. You can direct your marketing campaigns through social media or direct mail, but keep in mind that following up on leads routinely, “Walking for deals” – door knocking, is just as important.
WHAT IS A MOTIVATED SELLER?
