What is Wholesaling Houses?

The definition of wholesaling houses is often up for debate.

For the longest time the definition of wholesaling has taken on the meaning of solely “Assigning Contracts.”

This is in part to the real estate instruction of real estate educators from the early 80’s till even now in 2020.

So How Does Wholesaling Houses Work?

The concept of this is simple:

Wholesaling houses by this definition means you are securing a contract on a property. You then sell your interest in the contract for a fee. This can range from anywhere to 500- 150,000.

A lot of investors have built their businesses around this model over the last 15 years. More and more investors continue to operate with this particular model while some investors think this model of wholesaling houses could be saturated.

In order for this model to work it requires that you or someone on your team is speaking to potential motivated sellers on a daily basis.

A lot of investors have turned to data sources like ReiFlipData.com in order to accurately source this type of data.

If you want to make this model work it is critical that you find a quality list of potential sellers who would like to sell at a discount. After securing a quality list of seller names and properties you need an efficient compliant texting program to find the potential phone numbers of these owners. Your goal is to reach out to the potential seller to ask if they would consider an offer for their property.

This type of model is very fast paced and requires you talk to A LOT of potential sellers.

You will use most of your capital for acquiring large amounts of data of potential properties you would like to acquire.

If you have the cash or resources you can look at another option of wholesaling houses.

Buying and Reselling the Property

Another potential model is the simply buying and reselling in a short amount of time.

In this scenario you buy the property straight out for cash at a discount. You would then turn around and list them on the open market for maximum exposure. This is similar to a typical assignment since you are listing the property “AS-IS” with the intent of finding a cash buyer looking for their next deal.

However in this situation you are incurring the closing and transactional costs to acquire the property. You are also now 100% at risk for the ownership and liability of the property.

If you bought the property right this should really not be a concern as your profit is already built into the deal.

This is why it is critical in learning how to evaluate local real estate comparables. You must buy the property at a deep enough discount to ensure you don’t lose money on the deal. Your money is made when you BUY the property at the right price. You realize your profit when you sell.

While the actual method of turning the deal into profit is different here, both of these options involve converting discounted real estate assets into profit.

What is Wholetailing?

There is also a mid-ground which is referred to as “Wholetailing.” This is when you do some work to a property with the intent on selling it on the open market. Your goal is to sell the property at the top end of a wholesale price and most often to a homeowner that wants to move in and make it their own.

This entails buying the property for cash, hard money or even private money. There maybe some slight fix up involved but very minimal as the goal is the speed of the transaction.

Rehabbing or Flipping Houses

Rehabbing and flipping houses is another model of working with discounted real estate. However, because the property is being fixed up it is not being sold at a discounted price this will not be considered “wholesaling” for the purpose of this post.

Every Good Deal Starts with a Wholesale Deal

Whatever method you choose every good deal starts with a wholesale deal. Every deal that has any kind of potential begins with a discounted piece of real estate.

So you don’t have to be a master at developing or rehabbing or even wholetailing but you DO have to become a master at consistently finding discounted real estate deals.

If you need help with putting together a system that consistently finds Discounted Real Estate Deal on Demand.

Click this link to apply for my coaching and mentoring program.