Wholesale Real Estate Guide for Beginners

If you've been looking into investing in real estate, among the top ways to do so is with wholesale real estate investing. The purpose of performing wholesale real estate investing is to find a deal before passing this deal to an investor. By utilizing this type of strategy, you should be able to avoid the risk that the end investor will have when purchasing the property in question. While success isn't guaranteed with wholesale real estate investing, it's a great option for beginners in real estate investment.

What Is Wholesale Real Estate?

Wholesale real estate is a form of real estate investing that gives you the opportunity to find a deal on a property before passing this deal to an individual who will invest their own money into purchasing the property. When you opt for this form of real estate investing, your own capital won't be tied up. It's also important to note that the risk of the investment falls to the end investor.

The purpose of wholesaling houses is to locate properties that are discounted, place these properties under contract, and sell to a buyer who's interested. However, it's important that you're able to sell the property for a profit. Because of how quickly a home can be placed under contract, it's possible to wholesale a property in just a few hours. It's also highly recommended that you use some kind of real estate wholesaling software to assist you with making wise investments. According to DealMachine, this kind of software helps you "build a custom list of distressed properties that only you have".

​What a Beginner Should Know

The first thing you should know about wholesale real estate is that you'll need to find properties that are listed below market value. Once you find a property with a good price, you can control it via a purchase and sale agreement, which is a simple contract that finalizes the sale price of the property.

When this home is under contract, you will then have a short period of time to find another interested investor who is willing to purchase the contract from you at a higher price. This form of real estate investing is relatively straightforward because you aren't actually selling the property. Instead, you're selling the right to purchase the property to another investor. Keep in mind that a license isn't necessary for wholesale real estate.

Goals and Strategies for Wholesale Real Estate

If you want to start performing wholesale real estate investing, the basic steps for starting this process include:

• Conduct research of your local market before getting started
• Create a buyers list for the surrounding area
• Obtain the right financing with a hard money or private seller
• Search for possible wholesaling properties
• Consider your exit strategy, which could include a double closing or a simple selling of the contract

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A double closing means that you will take control of the property. The downside of a double closing is that you will be required to pay all closing costs.

Wholesale real estate investing is a simple and easy method of investing money into real estate. This investment technique should help you get acclimated to the real estate market, which will make you more knowledgeable about other types of real estate investments that could diversify your portfolio.