Getting into real estate investing through wholesaling is the trick. It neither calls for cash outlay nor involves credit. The wholesaling process, for that matter, entails finding property for sale at a discount only to find a buyer willing to purchase immediately. The wholesaler, needless to say, quotes a higher price to the buyer. Under such circumstances, the wholesaler gains a quick profit as soon as the sale comes through.
It is imperative to add here that the wholesaler does not need to put out money or use credit. This is owing to the fact that he does not purchase that is for sale. He simply puts it under contract. This suggests that he has given an offer to buy at a certain price and the seller has accepted that price. The property is under contract for certain agreed upon period of time and it is precisely during this period of time that the wholesaler has to be able to come up with the money. The money can, in fact, belong to a third party as well. And during all this time, the property is kept on hold.
A wholesaler should initially ensure that he already has a buyer, someone who is actively seeking property in order to purchase. He can then look for property for sale at a discount and put that under contract as well. This way, the wholesaler will take very little time for the sake of closing the deal between the seller and the buyer and finally realising his profit.
Most of the wholesalers boast of a list of ready buyers. These buyers are real estate investors themselves who are willing to take on even properties that need rehabilitation. Not only this, the buyers are ready to take on the costs as well as the risks of rehabbing. This will enable them to resell at a higher profit.
In wholesale real estate investing, no risks follow as the wholesaler does not pay out any cash nor put up credit. In case the time specified passes and the wholesaler still does not have a buyer, the contract will be nullified. There is no need whatsoever to rehabilitate or maintain the property. Likewise, no management tasks are to be performed.
Let us now learn the disadvantages of wholesale real estate investing. First of all, bear in mind that each deal is a onetime income generating transaction. No long term residual income can be expected. And thus, the wholesaler is to repeat the process until and unless income is produced. Hence, wholesale real estate investing is employed by investors who are looking to earn enough in order to invest in enough rentals to produce long term wealth. Nonetheless (now that you know the disadvantages of wholesale real estate investing), remember that wholesale real estate investing has enough advantages which turn it to a powerful income generating tool. Meanwhile, acquire everything about the procedures and best practices of real estate investing strategy.