Wholesaling a real estate property is one of the ways by which old and new real estate investors can accumulate upfront payments as well as build capital for rehab projects in the future. Most investors jump right into property wholesaling without learning the basics of how the process works. This makes the business very risky and speculative for them. However, there are some essential steps to follow in order to ensure that the wholesaling of a real estate is successful.
The good news about wholesaling a real estate property is that you do not take ownership of that property rather you assign the contract to another buyer who will close on the property on your behalf, thereby giving you the opportunity to do other important things that matters most in your life. This happens only when the property is under contract.
So, to complete a successful deal; you must learn the processes involved to successfully wholesale a real estate property.
The Basics Of Wholesaling
Basically, a wholesaler puts a property under contract and assigns it to another investor (assignee) for a higher price when the contract is ratified. Legally, the assignee working in place of the original buyer (assignor) takes all the privileges as well as responsibilities of the prevailing purchasing agreement.
To accomplish the wholesaling of a real estate, both the assignor and the assignee sign an assignment agreement giving the assignor the opportunity to make profit without incurring much risk. So, you can build capital without investing all the time and money required by complete rehab through the wholesaling of a real estate.
Presented below are the steps required to easily wholesale a property without any hassle whatsoever.
1. Find a property from a motivated seller
Finding a property with sufficient equity is not all that simple. Hence, I suggest you make use of contracts coming from the Board of realtors because they are easy to use and most homeowners are often acquainted with their services.
You may ask: who is a motivated seller? A motivated seller is a homeowner who is willing to sell his or her property at the prevailing market conditions such as low price offer and agreeing to your very flexible terms.
Therefore, finding a property from a motivated seller starts with your ability to find a list of homeowners who are highly interested to sell. This entails looking for a particular demographic of individuals who are very much willing to sell their property more than the average homeowner.
2. Build your buyers’ list
This step starts with making a list of potential rehabbers who are willing to purchase your wholesale properties. The first ground to cover in this regard is to run advertisements on papers and get investors’ information when they start calling. Information such as name, email address, phone number, faxes, etc; can be put in a database thus helping you to build your buyers list.
For your information, you can run adverts consistently for 2 – 3 months even if you sell the property within 5 hours of advertising it. So, the faster you find a buyer and build your list, the faster you earn money.
3. Negotiate transaction with your rehabber, assign contract and collect deposit
Maybe a homeowner is distressed and wants to move quickly as a result of either facing foreclosure or being backward in payments. So you purchase the property at a very low price. The rehabber will step in and fix the property according to your terms and agreement of the contract. If you leave enough profit for the rehabber, say between $25,000 and $40,000, they will be happy to pay an assignment fee of $10,000 to $15,000 for your contract.
4. Close the deal and get paid
Prepare for closing using a title company. Title companies are best bet because they perform all the work for you. All you need do is to find the deal, wholesale it to your rehabber, then move towards closing. The title company takes it up from there and the rest is history.
However, if you encounter any issues along the way; make haste to call the various title companies or closing attorneys in your area until you meet the right title company that understands your problem perfectly well.
Lastly, wholesaling a real estate property is quite fun and the profits are quick. You do not have to fear in venturing into it.