I know this is the Cash Flow King Podcast and I generally stick to helping you get cash flow from properties, but I truly believe that the concepts in wholesaling are influential to how you do almost any real estate investing. The fundamentals are the same! If you have no interest at all in doing wholesaling, it’s still good to know this information because you might be able to cut out wholesalers when finding deals and keep some money for yourself.
If you are looking to get into real estate investing as a wholesaler, this is the mini-series for you! Do remember that I am speaking of my experiences in Ohio. Each state has different laws for wholesaling or real estate investing. Make sure that you know what the legalities are. Selling a contract is legal in all 50 states. You can wholesale a contract in real estate investing. Talk to an attorney and make sure you follow all the rules.
Are You Marketing?
If you aren’t marketing, you are not finding leads, and you are letting your business die. Just using signs or looking for signs in people’s yards is not going to be enough as a wholesaler. Anyone can see the signs and reach a buyer first. It’s also difficult in real estate investing to trust wholly in the referral system. Those deals might be far and few between.
What is Wholesaling?
Wholesaling is like the stock market–you buy low and sell high. Except, this is with properties in real estate investing. As a wholesaler, you are pretty much doing the legwork of finding deals for other real estate investors. You find properties to buy and hold or to flip and sell them to other investors. The idea is to find the deal that is cheap enough for you to add a fee to it and still sell it as a good deal to a real estate investor.
Another form of wholesaling is the double close. It means you can go out and buy a property and then, two days later, put the property back on the market for a real estate investor to buy from you.
What does a Wholesaler Do?
A wholesaler can sell a contract. The contract says that you will give you money for the property at a specified amount. You can then take that contract to a buyer and they can decide whether they want to buy it. You will generally add a price markup for the buyer as your fee.
When is Your Job Done?
A wholesaler is supposed to help the seller fix their problems so you can close the deal at the price you agree to. From a transactional standpoint, your job is done when you sell the contract to the buyer. Some people will get paid from the closing or some will get paid once the contract is sold. If you are waiting until the deal is closed to get paid because you are worried that the buyer won’t like how much your fee is, that’s stupid. They signed at the amount they gave you because it was a good deal. It doesn’t matter how much you make in a deal. If the buyer gets angry because they see how much you made on the deal, they aren’t mad at you. They are mad they didn’t go out and find the deal themselves.
The bottom line of part 1 is this: wholesaling is finding a deal, getting it under contract, and then finding a buyer for that deal and getting paid for it. Your biggest wholesaling benefit will be fixing the pain points of the seller and still giving a good deal to a buyer.
If you love the returns of real estate investing, but don’t want to deal with any people, you have the option to be the bank. You can be part of a trust or a fund. Right now, I have a fund set up for accredited investors with over $5 million in assets. The fund has preferred interest and 70% profit sharing. Visit me at investwithdrmatt.com to find out if you have the opportunity to invest with us.
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