Wholesaling real estate deals are often an investor’s first taste of making money in property investment. It’s a popular real estate investment method because it requires little to no money from the wholesaler, deals move at a fast pace, and it’s possible to be involved in multiple wholesale real estate deals simultaneously.
What is wholesaling?
Wholesaling is the practice of finding a property owner willing to sell their home for below market value (typically 10 to 30 percent), putting that property under contract, and then finding an investor or end buyer to whom you assign the agreement.
When done correctly, the wholesaler never actually owns the property and is out of no cash. Here’s an example of wholesale real estate:
The wholesaler finds a property that needs a rehab makeover and places the house under contract for $80,000. The wholesaler determines $20,000 in repairs need to be made to the home. Once the repairs are made, the property will sell for $150,000. The wholesaler then reaches out to potential investors and finds a buyer. The wholesaler assigns the contract to the investor for $95,000. The wholesaler walks away with a $15,000 profit without ever owning the property.
Even more so than other real estate investment methods, wholesaling requires you to find a motivated seller. While it may seem unlikely that a property owner is willing to sell their home for well below market value, there are certain circumstances that build motivation to sell quickly.
Finding distressed properties
In order to be successful at wholesaling, you must seek out and market to motivated sellers. The properties you’ll go after won’t be found on the MLS. A motivated seller is one who wants to move quickly and is in a financial situation that calls for the home to be sold. Motivated sellers are often those who:
- Can’t afford property taxes
- Dealing with tenants who don’t pay rent
- Entering a divorce
- Have major health issues
- Inherited an unwanted property
- Live out-of-state
- Property in major disrepair
There are specific ways and locations where you will find these potential sellers. Some of the best ways to find motivated sellers for wholesaling include:
- Craigslist: Don’t underestimate the power of Craigslist when it comes to wholesaling real estate. The website is a great place to find property owners who want to get a home off their hands. To use the site effectively, create ads that call for a specific group of people: homeowners unable to pay property taxes, behind on payments, or who own homes in disrepair.
- Delinquent tax list: Work directly with your county to obtain a list of property owners who are delinquent on their taxes. You’ll be more likely to reach the correct owner because these lists are updated in real time.
- Paid data resources: Companies like RealQuest, ReboGateway, and AgentPro247 collect and sell data. The companies compile organized lists that you can use to send direct mailers or marketing emails to find motivated sellers.
A wholesale deal works best with a motivated seller. By using these strategies, you’ll spend your time and money marketing directly to your target audience, develop a higher ROI, and more readily find motivated sellers to launch your wholesale deals.
Wholesaling is the practice of finding a property owner willing to sell their home for below market value (typically 10 to 30 percent), putting that property under contract, and then finding an investor or end buyer to whom you assign the agreement.
When done correctly, the wholesaler never actually owns the property and is out of no cash. Here’s an example of wholesale real estate:
The wholesaler finds a property that needs a rehab makeover and places the house under contract for $80,000. The wholesaler determines $20,000 in repairs need to be made to the home. Once the repairs are made, the property will sell for $150,000. The wholesaler then reaches out to potential investors and finds a buyer. The wholesaler assigns the contract to the investor for $95,000. The wholesaler walks away with a $15,000 profit without ever owning the property.
Even more so than other real estate investment methods, wholesaling requires you to find a motivated seller. While it may seem unlikely that a property owner is willing to sell their home for well below market value, there are certain circumstances that build motivation to sell quickly.In order to be successful at wholesaling, you must seek out and market to motivated sellers. The properties you’ll go after won’t be found on the MLS. A motivated seller is one who wants to move quickly and is in a financial situation that calls for the home to be sold. Motivated sellers are often those who:
- Can’t afford property taxes
- Dealing with tenants who don’t pay rent
- Entering a divorce
- Have major health issues
- Inherited an unwanted property
- Live out-of-state
- Property in major disrepair
There are specific ways and locations where you will find these potential sellers. Some of the best ways to find motivated sellers for wholesaling include:
- Craigslist: Don’t underestimate the power of Craigslist when it comes to wholesaling real estate. The website is a great place to find property owners who want to get a home off their hands. To use the site effectively, create ads that call for a specific group of people: homeowners unable to pay property taxes, behind on payments, or who own homes in disrepair.
- Delinquent tax list: Work directly with your county to obtain a list of property owners who are delinquent on their taxes. You’ll be more likely to reach the correct owner because these lists are updated in real time.
- Paid data resources: Companies like RealQuest, ReboGateway, and AgentPro247 collect and sell data. The companies compile organized lists that you can use to send direct mailers or marketing emails to find motivated sellers.
A wholesale deal works best with a motivated seller. By using these strategies, you’ll spend your time and money marketing directly to your target audience, develop a higher ROI, and more readily find motivated sellers to launch your wholesale deals.
