What is Wholesaling

I mentioned wholesaling a few days back. I recently learned about this concept and I’ve ‘gotta say…I could see a lot of benefits in wholesaling.

So what is wholesaling property?

A wholesaler is basically a middle man. He’s the one who links the seller to the investor/buyer.

He creates a contract with the seller. During an agreed upon time (maybe 30 days) the seller can not sell the property to anyone else. The wholesaler finds a buyer/investor. The investor buys the property from the seller and the wholesaler collects a finder’s fee (a nice little commission). It’s a win-win-win situation. The seller sells the property, the investor gets a good deal, and the wholesaler makes a nice commission. Isn’t capitalism great?!

This is a good way for a newbie (like me) to get their feet wet. I would be able to learn my market and learn how to find good deals. Since the wholesaler is flipping contracts instead of flipping houses, he does not need financing.

This is also a good way to network organically. Who knows, if you’re connecting with investors and hooking them up with good deals, they may be interested in becoming equity partners down the road (we can talk about equity partners in another post).

Many real estate investors will tell you that wholesaling can be a great way to get started (plus you can make some extra cash, which would be great for saving up that down payment).

I need to do my homework and see how an FHA loan works with foreclosures and auctions but, assuming that can work, who knows…maybe I’d know enough to be able to get a good deal at an auction for my first home after I have a few wholesales under my belt.

I’ve been toying with this idea. What do you guys think?

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