One of the quickest ways to earn quick cash in the world of real estate investment comes when you become familiar with the world of wholesaling real estate, which is a way of flipping properties. The profits in this area of investing can even sometimes come from properties you don’t even own!
A typical property flip involves only one investor who obtains a property at below market value that needs major repair or where a very motivated owner is selling for reasons such as a failure to make mortgage payments. This investor makes the necessary repairs and then sells the property at or near to market value and makes a profit. This selling price must be higher than what the investor originally paid for the property plus all repairs made.
A wholesale occurs when a wholesale investor goes into contract to purchase a distressed property below market value and then makes a profit by reselling it for a higher price to a property rehabber/retailer.
How can you profit from wholesaling? What you do is find a property that meets your characteristics, place it under contract, and then assign this contract to another buyer that closes on this property in your place. You have bad credit? No problem! When wholesaling, credit is not an issue. Plus, the wholesale transaction requires little or no money down!
How can you find a property to wholesale? Create a “We Buy Houses” ad to attract properties that have equity. If you run the right ads in the appropriate locations in the city, you’ll have plenty to choose from. A lot of these prospects coming to you will be in financial distress (foreclosure, etc.) or the properties may need repair.
Let’s make an example to further illustrate wholesaling. After running ads, you come across a property that has an after-repair value of $200,000. This property is currently in foreclosure and needs $30,000 worth of repairs. The sellers of the home owe $102,000 and will need $8,000 for their relocation expenses.
In this situation, discuss with your Realtor to negotiate a purchase contract for $110,000 and then agree that you will fulfill the mortgage deficiency. Make sure to write “and/or assigns” after your name when writing the contract!
How can you find a buyer? Set up local advertising while using phrases that attract attention, such as “Great Rehabbing Deal”, “Investor Special”, or “Thousands Below Market Value”. While planning for the sale price, make sure to leave enough profit in the deal for the incoming rehabber.
In this example, you can wholesale the deal (sell/assign) to a retailer/rehabber for $124,000, thus making you $14,000 in profit!
The rehabber purchasing the property will invest $30,000 for the repairs, and will still have a $45,000 or more profit potential on the investment. It all boils down to three simple steps: Find the deal. Find the buyer. Let the title company do the rest.
A great tip to make your future investments easier is to create a “future buyers list”. This is a list of potential buyers and rehabbers that you’ve worked with in the past or have contacted you about deals. Often, you may want to rehab a property yourself but you other properties that demand immediate attention. You can then make some quick cash by selling these excess deals to another person.
A cardinal rule of investing in real estate is that whenever someone calls to inquire about one of your properties, always make sure to get their names, phone and fax numbers, and email addresses. Find out what type of properties they’re looking for and how much they’re willing to spend.
Even after you sell the property, continue to run your ads. This way you can get as many potential buyers as possible to add to your future buyer’s list. What’s great about this is that whenever you get a new deal under contract, you now have an entire list of potential buyers to fax and email!
One of the greatest parts of wholesaling real estate is that it’s a way to get quick cash without worrying about your credit score or down payments. As long as you put in the work and have the right professionals on your team, wholesaling is a great way to earn cash in the world of real estate investing!
Related Posts:
- Making the Offer and Closing the Deal: Get the Edge as a Real Estate Investor
- How Looks, Contracts, and Inspections Affect Real Estate Investments
- Real Estate Investing Startpoints: Negotiation, Legality, and Referrals
- How to Beat Other Real Estate Investors by Using Full Price As Is Contract Offers
- How to Handle Hopeless Real Estate Negotiation Situations
- How to Use Public Records for Real Estate Investing Success
- The 2009 Real Estate Investing Market Predictions: Getting the Edge in the New Year
- The Realtor Search: How to Find and Keep a Real Estate Agent
- Focus on Profit: Accepting Counter-Offers and Trusting the Seller
InvestorTrip // Dec 11, 2006 at 5:01 am
Carnival of Investing – December 11, 2006 Edition
Welcome to the Carnival of Investing!
There are some great reads in this edition, and I’ve listed my favorites below under “Editor’s Picks”. The rest of the submissions can be found below in batches.
Enough talk, let’…
Michael,
Attached is an example of the detailed property information that our distressed property tracking system accumulates for investors. Below is a blurb describing how our automated system captures and then drives all the property and owner information to investors in real-time via email as soon as it becomes ascertained by the owner or becomes public. We will be making it available in North Carolina, Georgia, & Florida for large investors or groups in a few weeks.
We are letting RE professionals become aware of technology; it efficiently tracks all the distressed properties per county and identifies the 5% that yield the best possible investment opportunities at any given time. The property tracking tool, the business model has proven to perform incredibly well.
Please let me know if I can answer any questions for you.
Matt
COMPLETELY UNIQUE TECHNOLOGY SOLUTION for FINDING & TRACKING DISTRESSED PROPERTIES
We Provide Technology Licenses for Real Estate Portfolio Managers, Executives and Investor Groups that produce the ultimate solution for finding & tracking great buying opportunities below market value. Get all the information you need to make informed purchase decisions and selectively track real estate investments based on your own individualized purchasing criteria.
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Current Comparable Market Analysis, CMA’s on every property
Mortgage Principle Balance(s)
Recorded Liens
Arrears
Address, Photo, Size, Description, Map and Directions
Property Condition Reports
Purchase Date
Mailing Address
Critical Lender, Trustee, & Title Information
Tax assessment & Tax Map #
And much more!
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What is best to do first. Build a buyer list or find properties.
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I was intereseted in wholesaling properties in columbus Ohio. This artical was very insightful.
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Thank you for your info on wholesaling real estate you have cut through the chase in three minutes. Do have any forms/contracts for wholesaling or could you tell me where I can find some. Thank you, your info is illuminating.
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Thanks for this information, I’ve been an investor for about 2yrs now and this is the first time I’ve heard about wholesale real estate investing. This sounds like a good way to earn some quick cash!
Thanks again.
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Another thing I see about wholesaling is instead of going through this finding, fixing and finding a buyer again… Why not purchase pre-construction condos for an investment knowing the prices will be raised as the property gets built? They are known to be going 30% up in price. Now that’s an investment! I am personally looking at a Caribbean condo development on the island of St. Maarten. Why? No real estate tax. That’s just another added value.
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Kelly Reply:
April 27th, 2009 at 10:43 am
Did you ever do the project in St. Maarten? I am looking to do one there now and would love to talk to you….
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i have fixers email me
not listed ,
investors welcome
realtors with potential buyers email me
i have hotels, casinos, units.
and motels.
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in new york, will banks allow assignments?
thanks!
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I have 100% private funds for deals as long as you have a back end buyer that will close the same day. No credit check, no appraisal, no LTV requirements. You find the deal, put it under contract, find a buyer and let him close right after we fund your deal. A win, win!
Ryan Hollingsworth
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Tricie Reply:
April 15th, 2009 at 12:27 am
Hi i am starting new in my realestate business wholesaling ,and i saw your messesage for micheal milio’s page ,i was wondering if you can send your contact business information so i can do business with you very soon about your funds,no credit check,no appraisal,no LTV requirements
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Wholesaling Rules! The key is building your buyers list… once you get that solid list deals happen fast!
Ryan, I have been looking for a private lender for same day closings. I have been doing too many assignments and I think that would help out especially if I come across any solid REO deals.
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Very nice article! Wholesaling can be a great way to make a living and be a part of your investment toolbelt. It’s also a good first step for a new investor trying to build capital for a rehab or rental property.
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