Wholesaling Real Estate is what we're all about at The Wholesalers Toolbox, so it would be appropriate in our first blog post to explain what "wholesaling houses" means. Often referred to as "flipping houses" or "flipping contracts," wholesaling is simply putting a house under contract and immediately assigning that purchase contract to another buyer (typically another real estate investor). Wholesalers do not repair, fix up, or renovate the house in any way, shape, or form.
Wholesalers search for houses they can buy cheaper than other properties in the area because the house is in need of moderate to major repairs (often referred to as a distressed property). Sometimes the owner of the property needs to sell quickly due to divorce, death, relocation, financial problems or some other reason (this is called a motivated seller).
One crucial trait of a wholesaler is being a great negotiator! Since a wholesaler does not do any repairs to the property, the only way they profit is from the "spread" on the deal. In other words, they have to buy the property well below market value so they can resell to another investor at a price that's still attractive to that investor.
Just as important as negotiating, a good real estate wholesaler will be a relentless marketer. Successful methods of marketing usually include driving neighborhoods looking for distressed properties (driving for dollars), direct mail, bandit signs, websites, online ads and any other creative method of finding the motivated owner of a distressed property.
The awesome thing about wholesaling houses is anyone can do it. You don't need any of your own money, or even good credit because you are never going to own the property. All you need to do is educate yourself on the wholesaling process, have access to the right tools, and develop the skills necessary to be successful.
In future posts we'll discuss the steps of real estate wholesaling in greater detail, so keep watching! Until then, if you'd like us to blog about a specific wholesaling topic, just contact us and let us know.