If you like catching up with the latest market trends or following esteemed real estate blogs, you might have a real estate investor in you. For all you know, you might have been thinking about a career in real estate for quite some time now but never made the move. Maybe you have liked a property or two but stepped back because you were too afraid to go ahead. Every investment has two sides: benefits and risks. The article aims to explain to you the pros and cons of investing in wholesaling real estate. Before diving into the main topic, here’s a basic definition of wholesaling real estate.
What is wholesaling real estate?
When a contract is acquired from the seller of a property and assigned to a buyer, it is known as wholesaling real estate. It is one of the best short-term investment strategies and a great way to set foot in the real estate investing industry. There’s no compulsion of investing a huge sum of money to get started. Hence, wholesaling is a great stepping stone for those with limited funds to get into the world of real estate.
Dealing with wholesaling can also help individuals to quickly learn about the real estate trade and gain critical negotiation skills. After gaining a bit of experience in the field, you will be able to find your deals to purchase. Also, you will get smart ideas to fund the properties you are able to get under contract.
The pros of wholesaling real estate
The benefits of getting into wholesaling real estate are written below:
1. Learn about the real estate industry
Wholesaling is a great way to become quickly immersed in the real estate industry. Working with the right kind of people and utilizing the right resources can help you in the following ways:
You can find leads on your own
- we can build trust with motivated sellers
2. You can perform due diligence on a property without assistance.
3. Also can find the current market value by running comps or comparables.
4.Anyone can estimate the after repair value of a house
5. find buyers and build a buyers list of people who can close on a property quickly.
2. You need minimal capital to start
Wholesaling compels you to become creative with funds. The common financing methods used by most investors are cash, bank financing, or a hard money loan. If you don’t have limited capital to pay the down payment, it’s going to be a difficult task to obtain a loan from the bank.
In real estate wholesaling, you don’t have to deal with those limitations to make money. You just have to know the dos and don’ts and guide your clients to earn capital at closing.
3. You can earn well in a short period
Once you get a good hold of wholesaling real estate, you will get more properties under contract. Hence, you should be able to make good money in a short span. Usually, people buying homes from wholesalers are fixing up distressed properties. Their job includes rehabilitation and restoring those properties which takes some time. But, the job of wholesalers is not the same. They just have to wait for a week or a month to close a deal.
The cons of wholesaling real estate
Just like there are benefits of getting into wholesaling, there are some downsides to it.
1. Unstable income
Wholesaling real estate is not the same as a 9-to-5 job where you get monthly payments. There could be a period when you earn very well and on the other hand several months may pass by without you earning a penny. Being in the wholesaling real estate business, you must be consistent and diligent with your finances until you close your first deal.
2. Not having a buyer
When a wholesaler signs a property under contract, the contract includes a date within which the wholesaler has to find a buyer. If the selling price is too high, the wholesaler might find it difficult to get buyers for the property. Failing to find serious buyers may cause huge losses to the dealers.
