It’s no secret that most entrepreneurs are go-getters and self-starters. As an entrepreneur, you’re probably always looking for new opportunities to up your game and increase your financial portfolio. If you can relate, then you might be considering whether or not real estate wholesaling is a good entrepreneurial venture for you. Read further about common questions surrounding real estate wholesaling so you can make an informed decision about expanding your entrepreneurial horizons with this potential money-making strategy.
What is Wholesaling in the Real Estate Industry?
In simple terms, wholesaling real estate is all about connecting real property sellers with buyers. It’s an appealing strategy in real estate because you do not purchase the home. You’re only buying the purchase contract and selling it to a viable buyer. Unlike other real estate transactions, there is no physical property to contend with – that means no repairs or renovations such as what is typical in flipping houses for a profit.
Can I Make Money Wholesaling Real Property?
The short answer is yes. As with any entrepreneurial endeavor, there is work, time and investments involved. Nonetheless, if you are committed to learning the ropes of wholesale real estate, and are motivated to hustle, there is definitely money to be made.
The best way to make money wholesaling is to buy low-cost property contracts from motivated sellers and sell to equally motivated buyers at an elevated price. The best properties for wholesalers are those that are in foreclosure or from homeowners who want to make a quick sale. With these scenarios in mind, it’s not unusual to earn a markup of 5% to 15% profit when sealing an ideal transaction.
What Skills Are Required to Wholesale Real Estate?
Real estate is predominantly a people business. Therefore, if you have excellent people skills, you will find your work as a wholesaler much easier. Furthermore, you should have a knack for research because a lot of data mining is required to be a successful wholesaler.
From understanding the market trends, researching motivated sellers, and building a buyers list – research is key to optimal results. And while you don’t need a law degree, having knowledge of how to draw up a legally binding real estate wholesale contract is helpful for optimal outcomes in this entrepreneurial venture. At the very least, you’ll need to possess a keen attention to detail so that your real estate contracts protect yourself as well as your sellers and buyers.
What Startup Costs Are Involved?
A major attractant of wholesaling real estate is that it requires very little startup costs. Once you begin making a profit on your initial contract sales – you’re well on your way to having a rolling real estate venture in wholesaling.
Some startup expenses might include building a website and/or investing in a marketing budget that informs buyers and sellers of your services. Unlike other entrepreneurial ventures in real estate, you don’t have to invest in a costly education or licensing to become a real estate agent in order to start wholesaling. Essentially, if you have an office and internet connection, you can start out relatively inexpensively.
What Other Investments Should I Consider When Wholesaling Real Estate?
You need to invest in getting a prospective buyers list. Technically, cultivating a solid buyers list doesn’t have to cost much at all. The biggest investment you’ll make is taking the time to build a list of strong leads in terms of potential sellers and buyers within the real estate market.
You might want to spend a modicum of money to join an MLS (Multiple Listing Service), which provides you with properties and data to find foreclosures that are prime for pouncing.
Overall, the amount you spend (outside of the initial cost to buy your first purchase contract) is surprisingly small. However, the more you spend to attract prospective buyers through creative networking and entice potential sellers with clever marketing – the better results you will experience.
Is Wholesaling Real Estate Right for You?
If you have a desire to broaden your entrepreneurial portfolio with little startup costs, wholesaling might be a good option for you. The requirements to get your venture off the ground are relatively small compared to other entrepreneurial projects. Moreover, with the real estate market beginning to stabilize, you may find yourself surrounded by ample opportunities to make your mark in the industry.