How to Make a Profit through Wholesaling
Real Estate Investing with No Money Down
Discover the secrets to finding distressed properties, negotiating a killer deal, and flipping your contract to an investor for a fee. Learn why wholesaling is a top strategy for investors looking to break into the market with little to no money down, and how you can start building your wealth today!
Stay tuned for our five-part series where we discuss the top investment strategies!
More of a reader? Catch the video transcript below!
Hey guys! Welcome to the first part of my five-part series on investing in real estate with little to no money.
Want to read the others? Binge those videos and blog posts here:
Part Two: The Power of Lease Options in Real Estate Investing
Part Three: How to Partner Up and Profit Big
Part Four: How to Fund Your Deals with Hard Money Loans
Part Five: How to Fund Your Deals With Crowdfunding
Real estate investing is a great way to build wealth — but it can seem kind of daunting when you consider saving for a down payment, closing costs, and everything that comes with buying property. That’s why I want to give you several ways you can start your real estate investing journey with little to no money down in this series.
What we’re talking about today is a no-money-down real estate investing strategy you need to know about: wholesaling.
What is real estate wholesaling?
Wholesaling is when you get a property under contract and you sell the contract to another buyer for a fee.
Let’s start with an example. Let’s say I’m a buyer and I’m willing to pay $505,000 for a property. Let’s say you negotiate a deal with the seller at $500,000. Well, because I’m willing to pay $505,000, what I can do is pay you $5,000 for the right to step into the contract at $500,000. So, you get $5,000, the seller gets $500,000, I get the property, and everyone’s happy.
So, if you can get a property under contract, it costs you no money out of pocket.
Key Considerations with Wholesaling
Make Sure the Deal is Attractive to Another Buyer
You want to make sure you’re structuring the deal in a way that makes it attractive to another buyer. So, if I only think the property is worth $450,000 and you have it under contract for $500,000, then no one is going to buy the contract from you. You need to get a good deal upfront.
You Need the Ability to Move Quickly
You need to have a list of ready-to-go buyers or investors lined up. You need to know how their mind works and how they’re going to analyze the property so that when you’re writing an offer and getting it under contract, you’ll know you have people lined up that are going to be interested in stepping into the contract.
Get Your Assignment Contract in Order
The last piece of the puzzle is that you want to make sure that you have your assignment contract in order and reviewed by your attorney. As with all of the investing strategies we’ll talk about, it’s crucial to make sure your contracts are ironclad and that you’re protecting yourself legally.
Make sure that when you write the offer and sign the contract with the seller, it’s an assignable contract. So, sometimes you might find yourself in a position where you’ll get a property under contract but you’re not allowed by the contract terms to assign it to another person.
Most standard Association of Realtors forms do allow you to assign the contract — but just make 100% sure yours does.
It’s so important to have all your ducks in a row when it comes to wholesaling.
You’re going to want to make sure all your paperwork is in place, your buyer network is lined up, your deal structure is in place, and you know what you’re doing when it comes to analyzing the deal so that you can sell the piece of paper for an actual profit.
I think the mistake a lot of novice investors make is they think that the hardest part of a real estate transaction is coming up with the money; however, in our world, the money is plentiful — finding the money is not the issue.
The hardest part for any investor is finding the right deal. So, that’s why it’s important to find the right deal when it comes to wholesaling in real estate.
That’s going to be it for me today, guys! See you in part two all about the power of lease options in real estate investing!
Brent Edwards (aka Brent the Broker) is a residential real estate agent and Realtor in San Diego, CA who helps clients buy and sell homes in San Diego, California and all surrounding areas. Brent is a highly-recommended Realtor in San Diego by family, friends and past clients. Call Brent today at 619-550-8070 if you have any questions about real estate in San Diego or you'd like to buy or sell a home.
