What Does It Mean To Wholesale Real Estate? Memphis Investor Explains
I'm sure you've heard the term fix & flippers and buy & holders but what about wholesalers? What does wholesaling real estate mean? Does it mean buying homes in bulk like we buy toilet paper at our local Sam's or Costco stores? What role does a wholesaler play in the real estate world? Can you make a living wholesaling real estate? All of these are questions you may have asked yourself before or may have been curious about. When I first got an interest in real estate I was introduced to the term wholesaling real estate and I was asking those same questions. Now two years later I have a clear understanding of the terms and wanted to take a moment to share with other's who may be interested as well.
Wholesaling real estate is the act of finding and buying homes at a discount rate and then selling the rights to the contract over to an all cash buyer or investor for a fee. As an investor, every home that I'm presented with may not be something that I would like to add to my portfolio. In that case, if the home is in a desireable location, the numbers make sense as far as debt to equity ratio, I'm able to buy at a discounted price and I know I have other investors who would like to buy the home I will get the home under contract with the homeowner. Once you have a signed purchase agreement between yourself and the homeowner it's now time to assign that contract over to a cash buyer who will submit to the title company for closing. Once the title has been ran and it comes back clean a date is set for closing for both seller and buyer. The homeowner then has an all cash payment in their hand within 5 to 7 days from start to finish and we as investors now have a new home to add to our portfolio.
Motivated sellers who may need to sell their home fast for cash and may not want to sell the traditional way are potential clients who will reach out to a wholesaler or investor. These houses usually are distressed properties, homes that are nearing foreclosure, inherited homes, property's of tired landlords or homes that need to be sold due to an unfortunate divorce. There are a multitude of reasons why a homeowner may need to sell their home fast. The goal of a wholesaler should be to position yourself and your company in your city as a realiable and honest source for people who may being going through a tough spell in their life and need your help. There are some people who may enter our industry for the wrong reasons and don't give a damn about people and the situations they are going through. I have no patience for those with that mindset and they usually weed themselves out anyway's. People who reach out needing to sell their home fast aren't doing so because everything is peaches and cream at the moment. It might be pork n beans and crackers time so make sure to have empathy for people.
There is so much I could write about concerning wholesaling real estate but I just wanted to provide the cliff note version so you wouldn't get bored. Just like selling and buying real estate the traditional way it's very important that you build lasting relationships with other investors, community members, real estate agent or whoever. You also want to make sure you do a great job being a solution for your clients because that will lead to referrals.
It's not easy wholesaling real estate. You have to work just as hard as any other sector in real estate field. You also have to make sure you educate yourself on what wholesaling is. There are numerous books and videos out there that you can purchase or are free that will help you understand wholesaling better. Someone recommended a book for me to check out and it changed my life forever! I'm glad I took the time to follow up and if you have an interest I hope you take the same time also.
Until next time.............I'm out