There’s Big Returns in Wholesaling
Wholesaling is gaining popularity, and for good reason. It’s a very profitable source of income if you can do it right.
What is Wholesaling?
Wholesaling is when a buyer agrees to purchase a property that is listed for lower than market value, then assigns the purchase contract to another buyer (typically an investor or flipper) at a higher price. The wholesaler earns revenue through a wholesaling fee attached to the contract (typically a percentage of the property), and often never has to front any money for the property. In a nutshell, wholesalers are the “middleman” who help real estate investors find and close on potential deals.
Does Wholesaling Actually Work?
While it may sound simple enough, wholesaling isn’t for everyone. It is for those willing to put in a lot of work if they want to see a healthy return. As a wholesaler, you have to be able to identify properties listed under market value, be a good negotiator, and have some good connections with potential investors/cash buyers willing to purchase those properties. Contrary to what many people might think, you don’t need a lot of capital to get started with wholesaling.
Wholesaling Vs House Flipping
Why would a house be listed under market value? Typically it’s because the house needs some rehabbing and the homeowner can’t afford it– or doesn’t want to put in the money and time for it. A wholesaler can contract the right to buy the property at a certain price, then make the necessary repairs, and find another buyer with a higher price tag.
If you’re thinking this sounds a lot like flipping houses, you’re right. But it’s not quite the same. House flipping generally costs more, is higher risk, takes longer, and generates more in returns. Wholesaling requires less money up front (if any at all), is very low risk, fairly quick, and has smaller returns.
Advantages & Disadvantages
Wholesaling isn’t a “get rich quick” scheme. So long as you do your due diligence and understand this business, you can really make a lot of strong return in a short period of time. If you’re worried about your financial status or your credit score, don’t! Because you are the “middle man” and not the end buyer, you will not be filing for a loan yourself.
Other advantages include learning the ins and outs of the real estate market/ industry, gaining a strong network of potential buyers and investors, and developing the basics of marketing, negotiating, organizing, and understanding proper legal documentation.
If you’re someone who is driven, self-disciplined, organized, has a trained mindset, and loves the real estate industry, you could do really well in the wholesaling business.
While there are many benefits to wholesaling, it should be noted that there are also some disadvantages like unpredictable or unsteady source of income, difficulty finding buyers, or struggling to maintain a solid list of buyers.
There is no limit to how much you can make in the wholesaling business, especially when you’re teamed up with a reputable title company like Northern Title.
We are a wholesale-friendly title company and can get you the services you need in a professional and timely manner. From issuing titles, to securing title insurances, to running the escrows, we do it all! Let us help you and your buyers with our services today!