The Pros and Cons of Wholesaling Real Estate are very important to those who are considering entering the industry. If you’re thinking about it, I’d encourage you to take a look at this information first. Yes. It’s true.
Pros and Cons of Wholesaling Real Estate Properties
Indeed, it IS the pros and cons of wholesaling real estate investing that have a lot to do with the kind of cash investment that you can make. Most people, especially investors of average or lower income levels, don’t want to put themselves at risk of incurring very high sums of debt just to buy their own place. They’d much prefer low risk investments that will give them cash flow even after they’ve paid their initial investment down.
However, there is one major drawback to buying real estate wholesale. You have to buy in bulk. Now, I’m not talking about physically having to buy the properties yourself. You do need to know how to get started though. In this article, I’ll give you some tips on how to get started in wholesaling real estate:
Get a Comparative Market Analysis.
You need to understand the current market value of real estate property to know what to expect once you start buying up lots of properties. A comparative market analysis (also known as a CMA) gives you a very good idea of what the market value is at any given time. You can get one for free from a real estate agent or a property manager.
Buy a Real Estate Wholesale Permit.
Before you get your real estate license though, you have to get a real estate wholesaler’s permit. These licenses are available in most states. If you can’t get a permit on your own, then you’ll have to find a motivated seller. Sellers who are motivated are always looking for motivated sellers.
The Ugly Side Of Wholesaling Real Estate And How To Avoid It
Set up a Rental Property Management Company.
You need a way to keep track of your inventory, and this is where a real estate wholesaling real estate company comes in. These companies will help you by taking care of everything so that you can focus on making money instead of focusing on making sure your inventory is accurate and up to date. A wholesaler will also make sure that your property management contract has a clause allowing you to earn an additional 15% of the wholesale amount that is being sold.
Set up a Deposits & Earnings Account.
When your business is established and you are already earning enough money, you can transfer some of it into a bank account. A good wholesaler will offer this service, so you don’t have to do much. It is important however, that you choose a wholesaler that will work with you to ensure that they get paid on time. A great wholesale lender will be honest and reliable, so you don’t have to worry about the other party getting paid.
Start a Business Wholesaling Real Estate and Earn Money.
The greatest thing about making money with a wholesaling business is that you can get started almost immediately. As long as you have a real estate property to sell and a buyer to consider, then you can start making money right away. There are no investment property requirements and no licenses required. Start profiting today!
Wholesaling vs Fixing and Flipping Pros and Cons Of Each
One of the pros of wholesaling real estate investing is that the initial investment is lower.
Most wholesalers buy directly from the owner. This means that you pay only the seller’s commission. In most cases, you can find a seller who is willing to sell for less than fifty percent of the original cost. Since you only pay for the sale price of the property, there is no need to hold any title. These pros make it easier for beginners, since it is less costly and less complicated.
The cons of real estate wholesaling are few.
Perhaps the biggest drawback is that you don’t have the same financial leverage that you do when flipping properties. If for one reason or another the market doesn’t perform as well as expected, then you may have to invest more money into the property, even if you are still holding a position in the deal. You also don’t have the same amount of time frame to wait before making a profit.
So, what is the final conclusion?
Wholesale real estate investing is a very attractive proposition for a buyer who is looking to purchase property without the hassles and worries of owner maintenance and repair. There are also some potential disadvantages that buyers should be aware of. As with all investment decisions, it is important for a buyer to research the pros and cons of wholesaling real estate property before purchasing.