Wholesaling for quick cash is a popular strategy amongst real estate investors. In a nutshell, wholesaling real estate is a form of house flipping. The primary difference is real estate wholesalers do not invest cash into the property. Instead, they resell it to a professional rehabber or private real estate investor.
Wholesaling for quick cash is relatively easy and risk-free. However, it is important to become educated about wholesaling and have a solid understanding of the various financing options. There are numerous ways to craft real estate wholesale deals so all parties benefit.
One of the primary attractions to wholesaling is the fact that nearly anyone can participate. Real estate wholesaling isn’t limited to established professionals or the wealthy. In fact, wholesaling is one of the few real estate transactions which can completed without ever spending a dime of your own money.
Wholesaling real estate requires a bit of work and considerable networking. In return, investors can yield substantial profit for their time and effort. Before dabbling in wholesaling, investors should:
- Become educated about wholesaling real estate
- Develop a marketing strategy
- Create a network of prospects
In a sense, wholesaling real estate is similar to matchmaking. First, investors locate property owners motivated to sell. With today’s housing crisis, this isn’t difficult to accomplish. Scope out homes listed as “For Sale by Owner” and properties in foreclosure.
Homeowners oftentimes engage in FSBO to avoid paying Realtor fees and commissions. Doing so can allow them to offer the property at a lower purchase price. Others place their homes on the market to avoid foreclosure. Some FSBO listings are vacation homes which sellers need to quickly liquidate. As you can see, there are plenty of properties to choose from.
Once sellers are located, investors need to negotiate the price and place the property under contract. Sometimes, property owners offer seller carry back financing in order to attract more buyers. With the current credit crunch, seller carry back is quickly becoming a necessary financial tool.
Owner financing can be arranged with wholesale real estate deals, even when the seller is facing foreclosure. Let’s say you find a pre-foreclosure home with an after-repair value of $180,000. The balance due on the mortgage note is $120,000. The homeowner owes $2,500 in delinquent payments and requires $10,000 in moving expenses.
Now, let’s say a wholesale investor offers to purchase the property for $132,500. This amount covers the delinquent mortgage payments, pays off the balance and provides relocation funds to the seller. Although he sells his home at a loss, he avoids foreclosure and credit headaches. He walks away with a lump sum of cash and the opportunity to make a fresh start.
Wholesaling real estate eliminates the headaches oftentimes associated with house flipping. Wholesalers do not have to invest time and money to make repairs or locate a qualified buyer. Instead, they locate sellers who have property that buyers are looking for.
Numerous real estate wholesaling resources are available online. Simply type in “wholesaling for quick cash” and you will find a wealth of information at your fingertips. By becoming educated about the wholesale process, you can develop a successful real estate business that offers solutions to financially-strapped homeowners and property buyers.