So you’ve been thinking of delving into the real estate sector and you’ve also been hearing about different investment platforms through which you can also partake in profitable investment platforms. Well, this is one article you would love on your quest to become a real estate investor.
The real estate sector is a broad one in which there exist so many ways available for you to invest in. Real Estate Wholesaling is one of the investment platforms in real estate. This article would teach you the necessary basics you need to become a real estate investor.
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What is Real Estate Wholesaling?
Real Estate wholesaling is not like the popular commercial wholesaling system we know about. In real estate wholesaling you serve as a middleman between the buyer and the seller and also get your own percentage from the profit made. It is a popular means for beginner real estate investors to break into the real estate market without spending too much.
Real Estate wholesaling is an investment strategy whereby the real estate wholesaler drafts a contract with the homeowner. The contract usually stipulates that the wholesaler would help him or she sell the house and get his own share of the profit. Via this contract, the homeowner has given him the authority to sell the house for him at an agreed price and get paid after the sale too. If the wholesaler is able to sell it above the agreed price, he gets to keep the balance after remitting what was agreed on to the homeowner.
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Is Real Estate Wholesaling Legal?
Real Estate wholesaling is legal so long as you abide by the rules guiding the real estate industry in your location. You have to avoid unethical business practices and any suspicious business offer that gets to your table.
It is always advisable to work with a real estate professional who understands all the intricacies of the real estate law, required documents and any regulations guiding whatever real estate investment platform you’re going into.
How Profitable is Real Estate Wholesaling?
The profitability of real estate wholesaling cannot be readily determined because a lot of factors are required to make it so. To start real estate wholesaling, you have to work with a network of willing buyers and sellers. If you are able to get buyers for the property you have been contracted for in good time and above the agreed profit price, then you can make a lot of money from it.
The strategies you devise and utilize will also determine how profitable it will be for you. You could try out online marketing, utilizing your social media platforms, direct marketing and so on. Properties involved in real estate wholesaling are usually distressed sales and the sellers are willing to get a lower amount than it’ll have probably sold for. You can also take note of this and make it reflect in your marketing strategies.
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Pros and Cons of Real Estate Wholesaling
As with other businesses, there are certain perks and pitfalls that come with the real estate wholesaling strategy.
Although it usually requires little or no money to start, real estate wholesaling can be very unpredictable. The property may not have to remain listed on the market for long before being bought, or could also not be the ideal property that buyers want to take their chances on.
Real estate wholesaling is a good and easy way to enter into real estate but the profit gotten after the property is sold might not be as much as expected. This is why it is important to not make heavy financial commitments in this type of real estate investment as it is more or less a fifty-fifty chance.
As a wholesaler, you are also dependent on other homeowners or buyers. Since you do not have enough capital to invest in a property for and by yourself, you need to work with other investors to be able to make money. And this sometimes doesn’t go as planned.
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Real estate wholesaling is a good entry point for beginner real estate investors. There are so many other platforms as shared earlier but what is important is that you begin taking the necessary steps by gathering prerequisite knowledge to help minimize or completely avoid mistakes.
MKH is a real estate development company that offers a variety of services within the real estate sector. We also have different properties that suit your needs and budgets. You can contact us here for more information.