Many people want to get into the real estate investing business. Wholesaling real estate is a great way to earn extra money and get started. Wholesaling real estate, by definition, is to buy a house below market value, fix it up, and sell it. For wholesaling, bad credit and little property management experience are not the barrier of entry. People with bad credit would not even touch the property; they get controlled of the property by buying options. Some investors don’t like the fix-up process and have little property management knowledge; they would buy the property below market value, and sell it to another buyer straight away. How can you get started? Let’s learn it step by step.
Find the property
Before you start to find the property, decide what area you want to wholesale properties in. The best way to do this is to drive around and look for “for rent” signs in the area. There are many ways to find the properties: Bank owned properties, foreclosures, short sales, distressed sellers, auctions and so on. You can also talk to the local landlords who would like to sell their properties or the local real estate agents who have properties listing for sale.
Control the property use options
One of the safest ways to control properties is to purchase an option or right to sell the property. With the option agreement, you have the right, not the obligation, to purchase the property by a specified date. If you choose not to exercise the option or the option expires, you lose only the money used to purchase the option. The cost of the option depends on the value of the property and the current market condition. In most cases, you are expected to pay 1-5 percent of the market value of the property for the option. Because you are wholesaling real estate, make sure you also have an option to sell the property to another buyer.
Find the buyers
After you get controlled to the property, the next step is to focus on finding buyers. If you are a first-time wholesaler, run an ad in the newspaper. When investors begin calling, get their information. Take their name, number, fax and email. Run your ads for 60 to 90 days, even you have sold the property. Do this in every deal, over time, you have your own buyer database, next time you find another deal, and you will have a list of buyers.
Closing the deal
Once you find an end buyer, you can assign your right to the new buyer to buy the property in the assignment contract and collect your assignment fee. Usually you don’t need to deal with the paperwork yourself, find a reliable title company to help you with the wholesaling. Send the assignment contract to your title company or real estate attorney; they can do the rest for you.