Wholesaling for the Newbie with No Money or Credit
Ok..Ok..Let's be totally honest. The "no money" claim is a little off. Like every business, there are start-up costs. Marketing is the only way to keep your business alive. Business cards, postcards, flyers, direct mailing, car magnets, or even gas to drive for dollars are some ways you will want to market your business to get leads constantly coming in. Let's also not forget about REI Meetings/Workshops fees, website fees, and costs to create your LLCs.
However, when we say wholesaling is great for someone with no money or credit, we mean that you aren't actually purchasing a house with thousands of dollars that you must have readily available. You are simply getting a contract signed and selling that contract to another investor who will probably rehab or rent out the property. You will receive an assignment fee, usually anywhere from $1,000 to even $15,000 or more if the spread is really good.
Sounds pretty decent for not owning the property, right?
If you have the right contingency clauses in your contract and you have fully disclosed to the owner that you may not purchase the property if the inspection doesn't go as planned, then you are making money off of a deal with literally no risk.
However, without the proper education and guidance, your chances of getting offers accepted are low. It may be simple, but wholesaling is certainly not easy. It requires building a buyers list of investors, marketing to motivated sellers properly, negotiating with sellers successfully, using legal contracts that you can fully explain to the seller, analyzing rehab costs and after-repair-values accurately, and finding an investor friendly title company who will close your deal with no headache.
Turns out, there is a lot to learn about wholesaling. Read Steve Cook's article below on wholesaling basics for more information. Steve started investing in 1998 in the Baltimore area.
Wholesaling Real Estate Basics: 9 Steps to Quick Cash by Steve Cook