There aren’t that many other ways better to learn the ins and outs of residential redevelopment than Real Estate Wholesaling. Compared to traditional Real Estate Investing — or Real Estate Rehabbing, in which a Real Estate Investor discovers a distressed property, refurbishes it, and then sells it for a higher premium — Real Estate Wholesaling allows a would-be Real Estate Investor to find an undervalued property, then pass the final transaction onto another Real Estate Investor.
With its reduction of financial commitment, and relatively short time expenditure, Real Estate Wholesaling can be an incredible way to learn the “tools” of the Real Estate Investing trade — without facing some of the market uncertainties and deal complexities that saddle other, more traditional, forms of real estate investing.
This doesn’t mean the pursuit of Real Estate Wholesaling for investment purposes is for everybody. Or that “wholesaling” is easy at that. A handful of the same traits required in a successful rehabbing investor are also necessary for a successful Real Estate Wholesaling investor.
Here are five critical questions all Real Estate Wholesaling investors should ask before jumping into the exciting — though fast-paced and unpredictable— world of Real Estate Wholesaling.
4 Real Estate Wholesaling Questions to Ask
#1: Do You Understand How Real Estate Wholesaling Works?
The term Real Estate Wholesaling is an apt one, as it doesn’t share some commonality with the general context of wholesaling — in which a manufacturer sells an item “at wholesale” to a retailer, who, in turn, “marks up” the item for sale.
Notably Real Estate Wholesaling works the same way. As a Real Estate Wholesaling investor, you will have some expectations:
- Find a distressed or undervalued property
- Work with the seller to agree on an “assignment of real estate purchase and sale agreement”
- Find a Real Estate Investor who you will “assign” the contract to
- Collect a “finder’s fee” for locating the property and getting it under contract
Other more specific details vary, depending on the real estate market and property being considered. However, at its heart, Real Estate Wholesaling is centered around a few specific concepts:
- Doing the legwork to find a property
- Securing a purchase deal for the property
- And then passing the deal off to another investor
#2: Are You Willing to Work Fast?
One of the benefits of a Real Estate Wholesaling deal is its limited financial risk; you are not the one eventually buying the house, the Real Estate Investor is. One of the downsides, however, is the necessity for a practitioner to operate with speed and punctuality. You must move quickly to find — and secure — Real Estate Wholesaling opportunities before other real estate investors (or wholesalers) get them from under your nose.
This usually means legitimate Real Estate Wholesaling investors areL
- Up-to-date on market trends
- Able to judge a good Real Estate Wholesaling deal from a bad one (quickly)
- Willing to pull the trigger when the data — and instinct — tells you it’s the right thing to do
This doesn’t mean every Real Estate Wholesaling deal you pursue will come in existence or that everything you touch will turn to Real Estate Wholesaling riches. But it does mean speed and knowledge are prized assets in this corner of the Real Estate Investing world, and often the factors that will make-or-break a Real Estate Wholesaling career.
#3: Do You Work Well With Others?
Real Estate Investing requires incredible people skills. And that is doubly true with Real Estate Wholesaling, because, in essence, you must secure deals with two different parties: the seller and the real estate investor.
As any long-term Real Estate Wholesaling investor will tell you, this necessitates the ability to juggle many balls in the air at the same time (often with a smile on your face).
Savvy Real Estate Wholesaling investors know the key component to working with others — and securing Real Estate Wholesaling deals — is not about imposing your agenda on others or beating them down until they comply with your terms.
It is strictly about the ability to listen and hone in on what a person wants from a deal.
Great negotiators are detectives. They ask probing questions. The other negotiator will tell you everything you need to know –- all you have to do is listen.
The upside is that so few people are good at negotiating — many are focused only on what they will get from a deal. Thriving in this area will separate you from a crowded Real Estate Investing herd.
#4: Are You Willing to Search for Leads?
Although the financial investment required as a Real Estate Wholesaling investor is much lower than in a traditional Real Estate Investing situation — some Real Estate Wholesalers have secured deals by spending as little as $5-$10.
As a Real Estate Wholesaling investor, you must acquire two sets of leads: sellers and investors. You never know where those ever-valuable wholesale properties — and wholesale buyers — will come from.
Your wholesale property leads might come from a variety of sources — classified ads, bandit signs, appraisers, even court records — while creating a real estate wholesale buyers list will very likely require the development of a separate marketing platform: In venues like CraigsList, social media, pay-per-click advertising, and your local chapter of Real Estate Investor Associations (REIA).
The essential key is to be open to a variety of different kinds of marketing, and be willing to experiment with your lead-gathering strategies. At the same time it’s critical you be hyper-vigilant about “checking your numbers” to ensure your lead-generation dollars bear wholesaling fruit.
There’s only so much you can learn from the sidelines. Sometimes you’ve got to jump into the deep end of the pool to find out if you can swim. ”
The same is true with Real Estate Wholesaling. Many of the important lessons needed to become a successful Real Estate Wholesaling investor can only be acquired in the wholesaling trenches. By arming yourself with enough real estate industry knowledge, wholesale marketing savvy — and a healthy dose of speed and efficiency in your day-to-day operations — you can improve your chances of answering the question “Is Real Estate Wholesaling Right For You?”
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