When you first get started in the world of real estate, many people will tell you to become a wholesaler. This might actually seem like a good idea at first glance. Wholesaling is similar to filling houses. The difference is that you don't have to do any rehab work to get the house back in shape. All that you need to do is strike a deal with a seller and find another investor interested in buying the property.
While wholesale deals don't generate as much profit as house flipping, they also don't require as much effort on your part. As you're never actually taking possession of the house, you're just buying a contract, then moving on to sell it immediately. But just as we say in our Tarek & Christina Seminars, real estate wholesaling isn't as simple as it looks like. Some people may find it an ideal way to get started, but it's not a perfect solution for everyone. You need to take a closer look at everything that's involved so that you can make a more informed decision.
Learning Is Highly Important
Some people believe that wholesaling gives them the opportunity to skip the entire learning curve that is associated with real estate investing. They may think they can get started right away instead of taking time at the beginning to learn about how the real estate world works, house rehab and marketing strategies. Thinking that you can learn as you go along and skipping the initial learning face will often prove to be a costly mistake.
On the other hand, if you've attended Tarek & Christina Seminars and have taken the time needed to learn what you should know about flipping, yet are still hesitant to go that route, wholesaling can be a good option. If you know how things work, how to obtain funding and how to spot motivated sellers, you can get started with wholesaling.
However, you should know that it's still possible to get in over your head. For example, if you haven't looked into how to find investors willing to take over a property when you were researching house flipping.
Many people see wholesaling as easy, as it's a more "hands-off" process. But once you've made a deal, you'll need to take action quickly to flip the house if you're hoping to make a profit. In order to achieve this, you'll need to have a list of flippers who you can contact to buy the property. But when you're the one flipping the homes, you don't have to build a list of investors, as all that you need to do is to find some leads, rehab the properties you've found and sold them on to interested buyers.
Figuring Out the Values of Your Properties Can Be Challenging
If you're skilled in marketing and networking, building a solid list of buyers may not be that hard. But there's another part in the wholesale equation that can be just as difficult: figuring out how much your wholesales are worth.
Whether you'll be the one rehabbing and flipping the property or you just want to quickly wholesale it, you'll need to obtain an estimate of the rehab costs and the property's after-repair value (ARV). Some real estate experts believe that those interested in flipping houses should get started by wholesaling, as it allows them to gain experience in estimating these numbers without the potential of actually going over a rehab budget like during a flip.
No matter what kind of real estate investor you become, you'll end up acquiring some useful skills while on the job. You should think of the differences between flipping and wholesaling, do your research and then get into the type of investing that you think is most suitable for you. Wholesaling doesn't make the same kind of money that flipping houses does, but it can nonetheless be a good choice for some investors.
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