Real Estate Wholesaling
- Thread starter danke
- Start date
I've never met anyone actually making money doing it, are your friends really doing it or is it more like WaFo style where they're "doing" it.
It's easier said than done, but like everything if you spend enough time on it you could probably make money.
Check out the forums at Real Estate Investing Information | Creative Real Estate Online .
Check out the forums at Real Estate Investing Information | Creative Real Estate Online .
Correct, in theory its very simple. Back in the hay day it was like printing money. You really have to hustle now and get solid buyers in your pocket ready to buy.
I know a small company that helps "renters" into their own houses this way. They basically take a for sale property and convince the owner to allow them to manage the rentals and it goes under contract with a fixed 'sale price' for a certain amount of time.
They then screen renters with 'good enough' credit, and work with them for a year to get them ready to buy the home.
So they get paid no matter what and if they DO have to buy the house in two years they still have the rental income.
Don't think they are getting rich off this though - and they have deep pockets to start with. Not something I'd shoestring in this market for sure.
They then screen renters with 'good enough' credit, and work with them for a year to get them ready to buy the home.
So they get paid no matter what and if they DO have to buy the house in two years they still have the rental income.
Don't think they are getting rich off this though - and they have deep pockets to start with. Not something I'd shoestring in this market for sure.
Thats a lease to own, not wholesaling.
In a wholesale deal, I find a house for $100k, put it under contract, then get someone that actually wants to buy it for say $110k. So when you close you do a double closing, or simultaneous close, and you walk away with $10k.
That's not wholesaling.
Wholesaling is when you're assigning a contract to someone else for a fee.
Putting a house under contract for 65K w/ an after retail value (ARV) of 90K and you selling someone else that buyer's contract for a flat fee.
What you're talking about is just flipping a house and many municipalities have title-seasoning guidelines that don't even allow that. Not to mention in your example would lose money w/ closing costs and the tax implications.
Danke is right Blokblok in wholesaling you sell the right to buy the property.
Example
I find out that danke is selling a house for 100k
I then find you who will buy the same house for 120k
I sell you the right to take over the purchase "rights" to the house and I net the 20k.
Now this doesn't work in every state exactly and this isn't a walk in the park as described. Just like making money online isn't just throwing up a website and adsense code.
Personally you really need to have a good understanding of the RE market in your area as well as investors/flip buyers that have the capital to do so.
Personally we do short sale flips in California which lets us resell a property without having to buy and hold. But disclosures,banks and laws make this far from a walk in the park.
Example
I find out that danke is selling a house for 100k
I then find you who will buy the same house for 120k
I sell you the right to take over the purchase "rights" to the house and I net the 20k.
Now this doesn't work in every state exactly and this isn't a walk in the park as described. Just like making money online isn't just throwing up a website and adsense code.
Personally you really need to have a good understanding of the RE market in your area as well as investors/flip buyers that have the capital to do so.
Personally we do short sale flips in California which lets us resell a property without having to buy and hold. But disclosures,banks and laws make this far from a walk in the park.
This is what most of you sound like....
http://www.biggerpockets.com/renewsblog/2011/07/28/real-estate-wholesaler-pretender/
Selling "rights" to a property eh? Unless your contract is determinable (closing on this property no matter what) and you have equitable interest (legit contract) you are acting like a Realtor and is a Class 3 Felony to take commission on real estate in which you do not own or have a license to sell (In AZ at least).
BlokBlok in his initial post I questioned but his second post with the scenario he laid out is exactly what I did over and over again from 06'-08. Never taking title once. Problem became deals with equity went from 2-5 out of a 100 to 1 out of 500. Moved to short sales and for the past year have been completely out of REI mainly because of divorce and child support and needing a stable income.
The figures of $10k to $20k profit per wholesale deal are no longer. Most wholesalers I stay in contact make $2k-$5k and work strictly off of volume.
http://www.biggerpockets.com/renewsblog/2011/07/28/real-estate-wholesaler-pretender/
Selling "rights" to a property eh? Unless your contract is determinable (closing on this property no matter what) and you have equitable interest (legit contract) you are acting like a Realtor and is a Class 3 Felony to take commission on real estate in which you do not own or have a license to sell (In AZ at least).
BlokBlok in his initial post I questioned but his second post with the scenario he laid out is exactly what I did over and over again from 06'-08. Never taking title once. Problem became deals with equity went from 2-5 out of a 100 to 1 out of 500. Moved to short sales and for the past year have been completely out of REI mainly because of divorce and child support and needing a stable income.
The figures of $10k to $20k profit per wholesale deal are no longer. Most wholesalers I stay in contact make $2k-$5k and work strictly off of volume.
It varies from state to state and yes the numbers are not as much 10k as they once were. Personally I have dealt with short sales and short sale flips. Never did wholesaling, assignments for auctions or such. I might be getting into trustee delay, and lender litigation though.
Wholesaling can make money , but if you really want to make money in real estate right now, it's in rentals.
Rentals are unpopular , they'll always be unpopular becuase 75% of the people who get into them have no clue about what to do, and do not want to build a rental business model.
I could go into almost any area in the US and build a successful rental business yielding 100%+ ROI per year. It is literally the easiest way to become a millionaire over the course of several years, bar none (Even IM). I'm not saying it's easy to do, just that it requires the lowest skillset to reach one million dollars.
Right now in my area of Central Ohio, I can pick up rentals in reasonable areas for $40,000 , finance them @ 20% ($8000) and make no less than $7000 back a year.
Rentals are unpopular , they'll always be unpopular becuase 75% of the people who get into them have no clue about what to do, and do not want to build a rental business model.
I could go into almost any area in the US and build a successful rental business yielding 100%+ ROI per year. It is literally the easiest way to become a millionaire over the course of several years, bar none (Even IM). I'm not saying it's easy to do, just that it requires the lowest skillset to reach one million dollars.
Right now in my area of Central Ohio, I can pick up rentals in reasonable areas for $40,000 , finance them @ 20% ($8000) and make no less than $7000 back a year.
what should you do to get it right? also, any reading recommendations regarding rentals specifically? i have a bunch of john t. reed books and he seems to advise against rentals (whereas he used to do them) because he's come to the conclusion that most money is made in real estate at purchase, and the profits from that are best focused at acquiring more property/selling it fast/repeat. are you investing in rentals right now?
Do you just hire someone to do all of the admin work? I've heard of a lot of horror stories having to deal with rents.
so why don't you do it? It's not as easy as you outlined
http://www.wickedfire.com/affiliate-marketing/129788-what-stable-im.html
seems like in today's market this is far less of a sure thing, you have to be fast and killer at selling houses to do it, it sounds like.
I own an apartment complex, so yes I do take my own advise, I'm trying to buy more rentals at the best pace possible.
The best book I've read is [ame="http://www.amazon.com/gp/product/1430308060/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&tag=20yearbillion-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=1430308060"]one minute to rental property riches[/ame] , the guy who wrote it lives pretty close to me as well.
You can make more money quicker by flipping properties, but the problem with that is that you can loose serious money if you make a mistake. Rentals are MUCH more forgiving because even if you over pay a little you're still making 50% ROI or so. I've seen people even in my small town make $50k to $200k 'mistakes' on flips during a hot market. Not so much with rentals, even if you pay double what you should, you still break even, eventually pay off your mortgage and then have a property free of mortgage.
The other thing is that in 15-20 years or so, your mortgage will be paid off and you'll have a asset worth tens of thousands or hundreds of thousands of dollars you can sell , refi or what not. Real estate is also the best way to get your tax liability down, my apartment takes care of over 50k of tax burden each year , even though it's profitable.
With a good rental you should be buying at 20% to 35% of market value so you realize a decent bit of equity up front. After 15-20yrs of owning it your initial value should increase 300% to 400% even through crummy markets. Some people i know of will take a $20k property, rehab & rent, get some money coming in and sell to a institution for $50k or so.
The best book I've read is [ame="http://www.amazon.com/gp/product/1430308060/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&tag=20yearbillion-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=1430308060"]one minute to rental property riches[/ame] , the guy who wrote it lives pretty close to me as well.
You can make more money quicker by flipping properties, but the problem with that is that you can loose serious money if you make a mistake. Rentals are MUCH more forgiving because even if you over pay a little you're still making 50% ROI or so. I've seen people even in my small town make $50k to $200k 'mistakes' on flips during a hot market. Not so much with rentals, even if you pay double what you should, you still break even, eventually pay off your mortgage and then have a property free of mortgage.
The other thing is that in 15-20 years or so, your mortgage will be paid off and you'll have a asset worth tens of thousands or hundreds of thousands of dollars you can sell , refi or what not. Real estate is also the best way to get your tax liability down, my apartment takes care of over 50k of tax burden each year , even though it's profitable.
With a good rental you should be buying at 20% to 35% of market value so you realize a decent bit of equity up front. After 15-20yrs of owning it your initial value should increase 300% to 400% even through crummy markets. Some people i know of will take a $20k property, rehab & rent, get some money coming in and sell to a institution for $50k or so.
I agree. In my market the mortgages are around $400 a month while rents are strong at 1K for the same properties.
I'm just not in a position to qualify for conventional financing. I've actually been taking construction technology at the local college and just started subbing out contracting jobs. I plan on buying my own stuff using private money for flips soon and buying my first rental cash.