The Art of the Wholesale in Real Estate Investing

A wholesale is a very useful strategy in real estate investing. It may be the single fastest way to earn a profit in this business. Although it is a simple concept, it requires diligence if you want to make a lucrative living flipping houses, or for the sake of wholesale terminology, “flipping contracts.”

A wholesale can be described as the selling of a contract for a fee. As an investor, there is nothing more important than fast cash. Here is how I perform an average wholesale deal. When I find a property in disrepair for a bargain price I am presented with a couple options.

It is evident that the house is a good deal and once the repairs are completed the house will increase in value. The two options I am presented with are to either purchase the house myself and renovate it or to wholesale it. In most cases, I prefer to wholesale it and here are a few reasons why. Many rehab projects can take months to complete between the acquisition, renovation, and selling stages.

Not to mention you will have to come up with thousands of dollars to complete the project. The average investor who is just getting started in real estate is not capable of executing this task.

On the other hand, a wholesale can be completed very quickly. It takes me approximately one month to perform a wholesale. Once I have found a good property that meets the criteria of a wholesale, I start contacting other investors I am networked with. I explain that I have found them a great rehab project and I am willing to assign them my contract to purchase the house for a fee.

I typically call the same few investors every time so they understand my stipulations and are aware of the fees I charge. I usually charge an assignment fee within the range of five to ten thousand dollars. In order to successfully wholesale a property, a few things have to happen.

First you have to find a property for a bargain price. Secondly you have to find someone (typically another investor) to purchase the property. You have to fill out a document known as an “assignment of contract” in order to be able to be paid from this transaction. There are many generic versions of this document available on the internet. I also provide a copy of the exact document I use in my manual that is available on my website.

Lastly, the investor has to successfully purchase the property in order for you to receive a paycheck for structuring this deal. Your payment comes directly from the investor you wholesaled the house to. The investor is now paying ten thousand dollars more for the house if you charged a ten thousand dollar fee. When this deal is complete you have successfully been paid a large sum of money without putting forward any risk. You acted as a third party negotiator to the deal.

As you can see, there are many reasons why I love wholesaling properties. It is risk-free and it can be very lucrative. If I find several good deals at once, I am incapable of renovating every property at the same time. By using the technique of wholesaling I can continue to profit from every deal I encounter.

Article Source: http://www.realestatepropertyarticles.com.

About the Author:
Brian Ducharme is a full time real estate investor. He started investing in real estate at the young age of eighteen years old and has currently been investing in real estate for five years. He is an experienced investor within all aspects of real estate including rehabs, short sales, "subject-to", and wholesales. For more information you can view his website at http://www.learntofliprealestate.com/ and you can receive a free miniature investing e-course just for visiting!