First off to be honest I have never done a whole sale deal. At least not yet. I am going to do my best though to explain what the concept of wholesaling is.
Wholesaling is buying and selling house quickly without making any repairs.
Step 1: Wholesaler find the property and gets it under contract.
Step 2: Wholesaler finds an investor who can buy the property for cash or private money. Time is important so traditional financing doesn’t usually work.
Step 3: Set up closing with a title company. The wholesaler does not need to use their own money because they use what is known as a double close or an assignment of contract. When you double close, the title company will use the money from the end investor to pay the original seller so the wholesaler does not have to come up with the cash. When an assignment is used, the wholesaler simply assigns the contract they had with the seller to the end investor, and the end investor becomes the buyer.
Step 4: Close. The Title company will make sure the property is free and clear and create all the paperwork. The wholesaler will need to make sure the property is still in the same condition.
Wholesaling is not easy, but you can make some good money with not having a lot of money to start. The key is finding the deals.
Example:
Find a deal for 50k and you know an investor will buy this for 60k (property could be worth 65-70k as is). You get it under contract for 50k and turn around and assign it to the investor for 60k. You then make 10k on the deal (give or take).
Be Careful:
As a wholesaler, you must take the title to the house or sell your interest in it. You cannot introduce a buyer and seller and then take a commission or any other type of fee. This would be considered brokering a real estate deal, and you must have a license to do this. It is against the law to practice real estate without a license. This is why wholesalers will assign a contract or use a double close to complete a deal.
Please consult an attorney for specific legal advice.
How much can you make:
This all depends on the deal and the wholesaler. Some might make a few thousand dollars per deal and some might make a few hundred thousand dollars per deal.
Again I have never done this before, so I can’t tell you what works and what doesn’t. Investfourmore is a great resource and where I have pulled some of my information from (link below).
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