Is Real Estate Wholesaling for You?
We talked recently about what makes you a better real estate investor and we can safely say that becoming a wholesaler (exclusively) does not, necessarily, make you better at what you do. But, understanding wholesaling and the role of the wholesaler can certainly help you to make wise real estate investments.
What is wholesaling?
Experienced real estate investors know the answer to this question, but let’s review:
Wholesaling is when an investor is able to obtain a contract on a property and then assign or sell it to another investor. Typically, wholesalers obtain the property at a price significantly lower than the value (usually from a distressed owner) and make a profit on it when reassigning.
How a Wholesale Can Benefit You
There are exceptions, but the best way a wholesale can benefit you is if you are the investor who purchases from a wholesaler. Why? Because you can often obtain the property at a lower price and hence have more cushion room to a) make updates that will increase its value as a rental, or b) invest more in your efforts to flip it.
What are the qualities of a good real estate wholesaler?
Of course, it’s important to work with a wholesaler whom you trust, because the business can attract many people who are just looking for a quick buck and who are not necessarily good business people. If you want worry-free investing, you need a wholesaler who:
- Knows the market. Strong wholesale investors know the neighborhoods, where the demand is and where to find the best investments. Tucson presents numerous wholesale opportunities. Work with a wholesaler who knows the city and the region.
- Has a network. A good wholesaler likely has a face you recognize—because they are members of the local REI groups, and they have an active buyers and sellers list—as demonstrated through email and social network contacts. They are also people who value relationships and therefore, have incentive to invest in properties that give their buyers more wiggle room to grow their investments. If you are interested in buying wholesale properties, ask your own network—other investors, property managers and real estate agents to help you find a reputable wholesaler.
- Understands motivated sellers. Wholesalers know what motivates people to sell and they don’t waste time with those who are curious about selling. They have an acute understanding of need vs. want.
- Moves Swiftly. Real estate wholesales require a bit of hustle. Wholesale investors must constantly and consistently be on the lookout for good deals and sturdy buyers.
On that note: just because wholesale investors move swiftly, you don’t need to. Take your time exploring your options for wholesale investments and vetting wholesalers.
