Wholesaling Real Estate, Is It For You?

As times change and prices rise it is natural for people to look into other avenues to invest. The popularity of wholesaling has gained strength as these real estate market shifts occur which always begs the questions centered on  wholesaling. With so many of these questions taking center stage in my conversations I thought I would share some of the popular ones here today.

Should I start wholesaling?

Wholesaling Real Estate, Is It For You?Wow, this question has a different reply to everyone but can best be answered by first posing another one. The fact this question gets asked suggests you may not know all that much about wholesaling so I of course ask, "what is your knowledge of wholesaling."

This investment strategy is a very active investment. Wholesaling is an investment of both time and money that entails much day to day activity and personal involvement.

If you are already an active investor this may be right up your alley. If, on the other hand, you are a passive investor who likes to invest money and sit back and watch your portfolio grow, then the odds of you being successful in wholesaling may not be very high.

This will take a great deal of time and is a relationship building business. Wholesaling is a knowledge based investment where the investment of time and knowledge actually may weigh heavier than the cash you have to invest. Often you do not even need cash to invest as you can use other people's cash.

So what exactly is wholesaling real estate?

In simple terms it is buying or controlling distressed property. Think of the opposite of what you will find on the MLS (multiple listing services) as you see when working with a realtor. These MLS properties are typically retail properties that are selling to the retail buyer. They are usually nice properties that are sale ready and move in ready.

Legal challenges

However there are many properties that are not sale ready or move in ready. Some may appear to be move in ready and are in good shape but they may have some legal challenges attached to them. Perhaps it is a property in probate because the owner passed away without leaving a will. Perhaps the property has tax liens on them and cannot sell until the tax lien is removed but the seller cannot afford to pay the tax lien.

Distressed property

Some properties are simply in much needed repair, the seller cannot afford the repairs and the buyer is not able to acquire a loan to buy the property as lenders will not finance a property that is not considered safe and move in ready. Homes with leaky roofs, mold issues, electrical concerns, plumbing concerns, Tax liens, are all properties that make them hard to sell on the retail market. This is where we enter the area of the non-listed properties in limbo.

Non listed distressed properties crying out for help

Sellers who own these properties have a challenge on their hands. Often they do not have the money to correct these issues and are looking for solutions to get out from under their problem. The retail outlet of the MLS is not a solution for them so what are other options?

This is where a wholesaler comes in. They solve these problems. Wholesale properties are acquired cheap because they have blemishes either of legal capacity on the deed or tax liens or with the integrity of the building itself. As a wholesaler you have to have creative solutions to help these sellers and you want to be able to create a win win situation for both seller and buyer.

Related Resource: Finding Great Real Estate Investment Properties

The wholesaler as the problem solver that has the ability to purchase these distressed properties with cash as financing is typically not an option. When you are able to help sellers with their problem you are able to acquire a property cheap and build a good name for yourself. Always thinking of win win strategies will allow you to build a strong presence within the wholesale community.

Not a get rich quick scheme

If you are great at problem solving skills perhaps you may be great in wholesaling. It is very lucrative for the person good at communicating and building relationships who strive to help people and create mutual wins. What it is NOT is a get rich quick scheme where you steal properties out from under inexperienced people who have challenges with their properties.

Create win wins and help people and you are sure to build a great business.