Merits and Demerits of Real Estate Wholesaling
Real Estate Wholesaling is about discovering those properties which are below market value or having the capacity to negotiate with the dealer at a lower cost. However, the essential aspect of real estate wholesaling is to find motivated sellers or people who are hoping to wrap up their properties quickly for some reasons.
Well, it’s time to find the buyer now. If you have ever invested in real estate before, you would most likely have a list of reliable buyers. If you don’t have it, you can always find a buyer who is utilizing similar techniques which you applied to discover your property.
#ProTip: Try not to get confound; wholesaling is more about selling the CONTRACT than it is about selling the PROPERTY.
Wholesaling is the prototypical way to break the grounds as a real estate investor. But, do you know your Real Estate Wholesaling objectives? There are certain goals each investor should put up on their to-do list before entering into the world of wholesaling. But before that, you need to determine the merits and demerits of the business first. Likewise, with any new business opportunity, there are both advantages and disadvantages to the procedure; try to assess the upsides and downsides before beginning:
The Merits of Real Estate Wholesaling
- No Cash Required And No Credit Involved: If you have a low credit score or limited access to capital and that is what holding you away from investing in real estate, then wholesaling is the best journey you need to get on right away. You can participate in a wholesaling agreement, even with bad credit because:
● You are not the actual person purchasing the home.
● Your ultimate buyer is the one who will have to go through the credit check.
Another important advantage of wholesaling is that you put as little as $10 down on the property. When putting it under contract, it deviates the personal risk if the deals fall off. - The Quick Money Making Method: Wholesaling can prove to be a very lucrative business if you have done your due diligence and taught yourself enough on the process. Not only this, but wholesaling is exceptionally good for new investors since it expects almost no individual funds or experience.
However, if you find a decent deal, don’t be hesitant to offer a genuinely low cost. There can be a striking chance that they are desperate to sell. If your offer is acknowledged and it is totally conceivable to settle the negotiations, you can get your money in 30 to 45 days or less.
The Demerits of Real Estate Wholesaling
- The Inability To Find A Buyer: In a world of wholesaling, no buyer means no deal. Therefore, the key to being a successful wholesaler is to have a solid and strong buyers list. In addition to this, your personal risk is unpredictable in the way your contract is written.
So, depending on how much you settle down in your escrow account – which again could have been as economical as $10 – you may have to repay your seller if you are unable to find a buyer.
While owing your seller a measly $10 doesn’t seem like a ton, it has a greater effect on your reputation. If the word makes out that you are adversely influencing homeowners, future buyers will be less prone to do business with you. - No Guaranteed Income: You should keep in mind that wholesaling is not your typical 9 to 5 job. By all means, there is a merit of being your own boss. But unfortunately, there is no guarantee of receiving that trusty paycheck every two weeks. Moreover, you get no health insurance or retirement benefits.
Therefore, if you are thinking about making real estate wholesaling your full-time gig, it is essential for you to be the type of person who knows how to manage their finances. - Being on Top of an Organized Buyers List: Do you know hoe half the battle of maintaining a successful wholesaling business achieved? It is by staying on top of your potential buyer’s list. With the help of right marketing management and the completion of few deals, you should possess a relatively stable list of contacts.
However, the real estate wholesaling is not just about possessing those contacts. It is about grasping the different preferences of each buyer. The last thing you want is obviously not a negative reputation. So, be sure to stay on top of the list of contacts by taking note of personal tastes. This will guarantee that you keep faithful customers.
The Final Call
After considering the merits and demerits as mentioned above, wholesaling seems like a business that you can profit from. If you are driven, disciplined and organized, there is no force in the world that can stop you from making money and no limit to how much money you can make in your wholesaling career.