How do real estate wholesalers make money? – Very carefully!
All kidding aside, when you’re looking at wholesaling houses for beginners, it can take quite a lot of work. Real estate wholesaling is an interesting way to make money. In some ways, it's low risk and high reward. In other ways, it can be grueling, frustrating, daunting, and cumbersome.Here are some of the ways that the best real estate wholesalers use sophisticated strategies to actually gain a lot from property deals and make wholesaling work well for them:
They Find Good Sale Deals
The fundamental principle of real estate wholesaling is to find properties that are available at a discount.
This is really the cornerstone of good real estate wholesaling, because it determines everything else throughout the process – how much money you'll get out of the deal, how you'll work with other stakeholders, what you'll need to do to the property, etc.
One of the simple ways to describe how wholesalers find good property deals involves talking about distressed properties.
So many real estate properties look like ‘dogs’ to the average buyer, and even to the owner, as well. You might roll up and see broken boarded windows, an empty pool, a ratty yard, unkempt landscaping, problems with siding or brick, or other issues that lead to really low curb appeal.
Distressed properties can actually look like liabilities, until a real estate wholesaler comes along and makes a successful deal with an investor.
However, distressed properties are not the only opportunity to make a wholesaling deal. Think about all of the situations where someone who bought a property to rent, and feels like he or she is in too deep and wants out of the landlord job – badly!
Being a landlord isn't for everybody, and one negative experience can really turn you off. So these people are also stuck with perfectly good properties that they just don't want anymore. They’re ready to run – even if it means selling off the property for less than 70% of its value!
In addition to locating distressed properties and trouble situations, good real estate wholesalers put a great deal of research into looking for these deals.
Wholesaling Real Estate for Beginners: Finding Buyers
Another part of expediting good real estate wholesaling deals is having a list of buyers.
Sometimes your people skills will come in handy – sometimes your organization skills will win the day. As a real estate wholesaler, you're looking to maintain a list of interested buyers and get those people to sign on the dotted line when a deal is available.
So much of real estate wholesaling is about timing, and having a good solid list of buyers is key. Having the right buyers and the right relationships will help you optimize your real estate wholesaling strategy in a big way
They Get the Deals Made
In addition to finding good properties and having good buyers, real estate wholesalers also benefit from having the right processes in place.
This can be trickier than it seems. Take the example of the title company:
A title company has a conventional role to play in any real estate deal – but not all of them are set up to deal with real estate wholesalers.
Wholesaling a property often requires specific title work, so that the wholesaler can unload the property without actually purchasing it themselves. It's important to find title companies that are wholesaler-friendly – companies that understand the scenario and will work with wholesalers instead of throwing up roadblocks.
In addition to title companies, other people also have their hands in the process.
From home inspectors to appraisers to lenders and other parties, everything has to work well together to make the deal go through in the required time frame.
You're always racing against the clock, because as a wholesaler you need to make the deal happen between the seller and the buyer, or it's off. There's no time to waste.
They Protect Their Time and Money
This leads us to the last and most fundamental way that real estate wholesalers make money.
You might say they do it by “preserving margin.”
If you're successful in real estate wholesaling, you are a multi-tasker. You're wearing many hats and doing many different things within a day, or week, or month.
You understand time management and how these deals work practically. So you understand how to build margins into your schedule and your budget.
In so many of these real estate wholesaling situations, wholesalers have to be ruthless and relentless with their time and money. Waste not, want not, as the old saying goes – but it goes further than that.
Real estate wholesalers have to really be vigilant about making sure they're doing everything the right way, to prevent those dominoes from cascading into an unholy mess.
That's where Privy comes in – this unique real estate platform uses investor activity to inform real estate professionals. For a wholesaler, Privy can be a lifesaver.
In addition to locating those distressed properties and distressed landlords, if you can find deals based on neighborhood value and accurately identify the best potential wholesaler properties, you are worlds ahead of the competition.
Take a look at how Privy’s system of comps and activity data help wholesalers to both survive and thrive and orient those interested in wholesaling real estate for beginners. You can find deals at light speed – and show them to buyers through a transparent automation process.
This levels up what you are able to do as a wholesaler – it helps you to meet those quick deadlines for making deals go through, and, as pointed out above – it helps you to preserve margin! And that can make all the difference.
If you're ready to take the next step in your research to find the right REI tool to increase your efficiency and the quality of your deals, this free guide is for you: