The Basics of Wholesale Real Estate and How It Works

What is Wholesale Real Estate?

Wholesaling real estate is the process wherein a real estate wholesaler puts a distressed property under a contract with the intention to assign or sell that contract to a potential buyer or investor.

In this process, the property wholesaler does not have any plans of fixing and restoring the house or property. It merely involves marketing it to potential buyers for a price that is higher than what is indicated in the contract. 

The process of wholesaling real estate property is advisable if your want to get into the real estate bandwagon without having to invest a large sum of cash.

The only downside is the confusion or inconsistencies with regards to its legality, especially when dealing with contracts that are too complicated and ambiguous. 

Why Choose Distressed Properties in Wholesaling Real Estate?

Properties that are distressed are usually the best choices for wholesaling since they can be bought under market value.

These properties are usually houses that need major repair, those that had been abandoned and unoccupied for a long time, and others that need to be sold quickly by the owner.

Such houses may enable you to sell them for a higher price than what you put them under contract for.

Part of the deal in wholesaling real estate is the low requirements for capital. This makes it a typical choice for those who are starting up in the real estate field. Given this idea, those who are new to wholesaling real estate should look for free and inexpensive ways to find distressed properties.

Even experienced investors penetrate this type of real estate investing because there is indeed money in distressed properties. 

Distressed properties are usually found with the help of real estate wholesale investment groups, direct contacts, online property selling sites, Multiple Listing Service or MLS, newspaper ads, For Sale by Owner or FSBO properties, and with the help of real estate agents in a particular area.

How Much Money Can You Earn Doing Wholesale Real Estate?

Wholesaling real estate is a game of money. How much you can make depends on how well you’ll play and strategize with the contract. A typical wholesale fee cannot be identified objectively.

However, most wholesalers make a minimum of $5,000 per deal but this could go as high as $30,000 and even more depending on the type of property, location, income potential, and how it’s marketed to potential buyers.