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There are several ways for you to invest in real estate. You can own a home and rent that out, which will give you rental income. You can buy shares of a home. You can also put money in a REIT. While those are some of the most common approaches to real estate investing, you can also think about giving wholesale real estate a try.
What is Wholesaling Real Estate?

If you don’t have a lot of cash but are willing to put the time and effort, this could be the right option for you. Before anything else, you’ll need to thoroughly understand wholesale real estate, or specifically,how to do wholesale real estate. For starters, real estate wholesalers excel at finding owners who want to sell. That is, they’re usually in a rush to sell off the property and so put them up in the market for so much less than what their price should be.

Why are the Properties Undervalued?

The properties are undervalued for a lot of reasons. A property could be facing foreclosure, so the owners want to sell it as soon as possible. If that’s not the problem, the property might require a lot of repairs that the current owners can’t financially cover. Another reason is that it’s a neglected property. It could be a piece of land that passed to the current owner after the death of a relative. Since the owner who inherited the real estate doesn’t intend to live there or want to renovate the place for rental income or future use, the property only has one place to go: the market.

What Do You Do as a Wholesaler?

If you want to work as a real estate wholesaler, you need to have the following qualities:

  • Excellent property finding skills. You need to hone your skills and get better at finding undervalued properties. That’s where the profit lies.
  • Prepare estimates. When you talk to a client, you’ll need to provide estimates of the after-repair value of the home. That should also include the cost of the repairs. Break them down, so the homeowner knows you aren’t trying to add bogus fees to the estimate.
  • Tie up the contract. You’ll need to do that and make sure you get a money deposit out of the transaction, as well.
  • Take care of the purchase contract. You should look for another investor, so you can close the deal on that property.
  • Receive the wholesale fee. You receive this after you find a property that’s being sold below market value.

Steps on How to Wholesale

If you want to wholesale a piece of property, here are six steps to follow:

  • Find a property that’s undervalued and a seller that wants to sell that property.
  • Determine the ARV. You also need to know what the maximum allowable offer (MAO) is.
  • Negotiate and put the property under contract.
  • Give the contract to the right investor.
  • Work out terms with the investor or buyer.

And lastly, close on the deal.

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