Go / No GO: How to begin real estate investing with less risk and less money?

Discussion in 'First Time Investors' started by Mary, Aug 27, 2015.

  1. Mary

    Mary Mary Hirsch (Admin)

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    There is. In real estate investing it is called "wholesaling".

    Wholesaling involves
    • finding a good investment property prospect for either a rehab-and-flip or a rental,
    • negotiating a price and securing a contract to buy the property,
    • and then finding an investor buyer to assign to the close the contract,
    • with a profit left over for yourself.
    The wholesaler holds the property for a very short time and does not do the rehab and/or rental themselves, thereby substantially minimizing both their risk and the cash required to do the deal.

    Ideally an investor-buyer is found before the contract closing date and takes over the contract through an assignment, so that the wholesaler never takes title or puts up much cash. In some cases a wholesaler will need to be prepared to close on the property before an investor-buyer is found. But in either case the goal is a fast turnaround with minimal cash outlay.

    Wholesaling typically does not reap the same level of profit as rehabbing and/or renting. But it can nonetheless return a nice cash takeaway for a short period of work and far less cash invested.

    Wholesaling is a great way for new real estate investors to get started! But I strongly advise new investors to learn about the wholesaling steps and to become connected with the real estate investment community first. You must be able to market the property to potential investor-buyers promptly to make wholesaling work.

    Yes, there is a market for wholesaling, and rehabbers and rental investors are frequently very interested in good properties from wholesalers.

    Yes - it is work! Wholesaling requires time, effort, commitment and follow-up to make it work. Finding good prospect properties and then negotiating with homeowners is not a walk in the park! And this is why other investors who specialize in rehabs and rentals are so often happy to pick up a wholesale property that includes a profit for the wholesaler.

    Basically, the wholesaler fills the role of middleman, finding and securing a property that another real estate investor will take on to do the work. It requires organization, planning, follow-up and work. Although the profits are typically less than rehabbing to sell, or renting, on the other hand far less cash, risk and time are involved, and more deals can be done in a much shorter time.

    Wholesaling is a great way to learn by doing, and to build cash reserves.


    Connect with other real estate investors through BRIC - the Brazos Real Estate Investment Club! (click here for more info)

    Stay in touch with Brazos Valley Source (this forum) for more articles to come about executing the steps for wholesaling - and for other real estate investment strategies.


    Post your questions and comments!

    If you are an experienced real estate investor, how often do you wholesale properties that you find, rather than work them yourself? How often do you buy from wholesalers?

    If you are new to real estate investing, do you plan to take steps to start out in wholesaling?


     

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