Wholesale real estate is one of the best ways to break into the real estate investment world. In short, wholesale is the process of finding a deal and passing it to the final investor. Doing so allows you to stay clear of any risks.
When you wholesale real estate, you can easily enter this business, but success is not guaranteed. Just like every other thing in real estate, there is a thin line between success and failure. You need to have a knowledge baseline for this process and everything that wholesaling in Arizona needs.
Here are some basic concepts you need to know before starting to wholesale real estate.
What is Wholesaling Real Estate?
Wholesaling properties is an exit strategy. In it, the investors find discounts, get contracts, and sell them to interested buyers to make profit in the process. Wholesaling houses are a strategy that has become the fastest way to profit or loss in today’s fast market. Some investors take only a few hours to wholesale a property.
To start wholesaling real estate involves carefully examining this process. Investors will discover discounted properties, usually at lower than market value, and then they can be controlled by using the Purchase and Sales Agreement.
When investors sell contracts, they don’t actually sell their property; they actually sell their rights to others. In the case of a doctrine called fair conversion, once the real estate agreement is signed by everyone who participates in wholesale transactions, the final buyer becomes a fair owner. Subject to the terms of the agreement, the seller retains all legal ownership of the property.
How to Start Wholesaling Real Estate
As with everything else in real estate, you must know the entire process and each step of a process very thoroughly to gain profits. Here is what you need to do to start wholesaling real estate.
Do Your Homework
Always make preparations first. A great place to start is familiarizing yourself with the wholesale housing process. Then, making appropriate research on your local market is a good idea. Get an idea about home prices, where the different communities are, and what types of properties are there in your area. It is now doing your job to build a strong foundation for your future wholesale efforts.
Create a Buyers List
Before investors start searching their first wholesale transactions, it is a good idea to get the buyer list in place. As a wholesaler, your sole purpose is to act as a middleman between the seller and buyers. That’s why you should know where to find buyers before securing a property. Establishing a strong buyer list will help make sure you know where you take the deal you find.
There are several ways to build a list of buyers, including participating in real estate activities, networks, email marketing, and social media.
Arrange the Capital
Before finding your first wholesale deal, the other things involve finding financing. If you can’t buy a contract, identifying a great property will not help your business. So, first find a financer such as a private or hard money seller. By doing this, when your first transaction arrives, you will be able to secure the financing quickly and smoothly.
Find Wholesale Real Estate Deals
Now that you are ready to find wholesale deals, you can use several strategies. A great starting point is to seek distressed properties in your market area. These are perfect, because the seller is often eager to get rid of the property, and more frequently, you can get the deal at lesser than market value. To find distressed properties, you can search online. You can also find the distressed properties in public records in your area.
Determine Your Exit Strategy
As a real estate wholesaler, there are two ways to profit from the transaction: sales contract and performing double closing. Wholesalers who choose to sell contracts simply make contact of the seller with the buyer and benefit from the process. This is the most common strategy of wholesaling in Arizona.
Wholesalers can also perform double closing, which involves taking possession of the property.