How Does Wholesaling Work Exactly....
I never really thought to venture into wholesaling b/c I was under the assumption that I would have to not only pay cash for the property, but would also be liable for holding costs associated w/ the property until I locate an investor.
Is this correct? It recently crossed my mind that maybe I didn't have to pay for the property up front and could possibly get it under some kind of option to buy until I found a buyer. But then what if I can't find a buyer? Will I be obligated to keep the property til I did?
Someone please fill me in.
Thanks :-?
Wholesaling in my mind uses very little cash... A wholesaler can put a property under contract for a certian amount of money and then sell that contract to an investor for a couple thousand dollars (or whatever your price may be)...
So if you have a contract on a house for $100,000 - and you know someone who wants to buy that same house for $110,000 - you just made yourself $10,000 for putting this house under contract!
You want to put houses under contract with the intent of following through... A lot of people put clauses in their contracts that say "Subject to Partner Approval" - therefore giving them an "out" if they can't find a cash buyer...
Good Luck!
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I am a newbie and I am unclear on how this transaction will work.. So once you put your contract down and have a buyer for a higher price. How do you get your 10K. Do you have to close on the house first then put it back on the market. Will you be able to close on the loan in 2-3 weeks. Help me to understand.
I get a property under contract. I am the buyer with (1) the right to assign the contract (2) access to the property (3) 45 days to close (4) way under market value (5) 30 day inspection period.
I find an cash investor and we enter into an assignment contract. The assignment contract gives him all my rights to my original contract except (1) 20 days to close (2) purchase price + 5k assignment fee (3) no inspection period
The buyer and my investor go to the closing table. I show up on the HUD1 as a 5k contract premium on the buyers side payable to my LLC. The seller does not know that the 5k is going to me for assigning the contract. All along, I have told the seller that I work with many different partners, and that it may not be me who actually signs the papers.
This works well only if the property is vacant and the owner gives you a key.
Brenda
First I haven't wholesales any properties yet, though I intend to start very soon.
It is my understanding of the wholesale or flipping process that you should be looking for a Title company to work with before you start doing deals. You'll be doing what they call a double close or collapsible close and you'll need to see which your Title company prefers and how they like to handle it.
You will also want to build a database of investors in your area and what they are looking to buy as well as what their closing terms are. Some investors guarantee cash close in 5 days or less..others do not. This will vary and it's good to know what they do beforehand.
You also want a good general contractor who can walk through the property and appraise the repair costs if any. This will help you know what to offer so you can have a good margin in there for yourself. From what I understand it's good to have 20-30% under market value...so you can take 10% and the investor your wholesale it to can still make money on it.
Hope that helps!
All the best!
Bill White
Wholesaling in it's simple term is "Buy Low, Sell Low" you will find that wholesaling will not have as much profit as retailing a property!
Wholesaling does require less time and money.
Many investors refer to wholesaling as "Flipping" simply because the deals are done so fast!
Every real estate investing entrepreneur should have a buy/sell/hold plan in the works at all times.
Wholesaling if done correctly brings in fast cash in hours or a few days.
Learn the IN's and OUT’s of wholesaling an investment property by search TCI articles forum comments and may of the expert teachers courses available on TCI.
Bgross,
Great info! I didn't understand one thing though. What exactly is HUD1? just didn't quite get that.
thanks
Mike
asu_marine, if you did not understand one thing then you need to buy some material on wholesaling. That will clear it all up. The concept of wholesaling is pretty straight forward, creates income, and has almost no risk and no out of pocket money.
HUD1 is also called the Settlement Statement. It is the two page closing statement that you sign at closing. There is a Buyer's side and a Seller's side. It shows where all the money is coming frmo and going.
Brenda
So I'm assuming a re agent isn't needed. And also what means of advertising do some of you guys use??
Thanks
A real estate agent is one method of finding properties which has some advantages such as saving you time, but is probably not the best method, overall.
Advertising for properties on your own can be done through the paper, signs, flyers, or any other method.
I would recommend purchasing some material on this, to learn about the basics, and also what forms to use, ect,, which is important.[ Edited by Rambler on Date 08/27/2004 ]
Sham:
You will need to put at least a deposit of $500.00 into escrow. Most successful wholesalers have their properties sold in a day or two and incur no holding cost.
Even if you put up an earnest money deposit, you can get it reimbursed by your wholesale buyer.. This is the easiest way to get started in this business. You can start wholesaling to an investor, watch how they rehab the property and learn from them. Then eventually you can start retailing...
I would suggest you start calling all those ads in your local paper: WeBuyHouses or IbuyHouses etc......... and start compiling a list of wholesale buyers.. Then all you have to do is tie up the property and flip it to another investor.
The best way I have found to do it is to simply open escrow as an "assignment"
collect your fee and "assign".
Best Regards,
Jeff Adam
_________________
"The only place success comes before work
is in the dictionary."[ Edited by JeffreyAdam on Date 09/10/2004 ]
do you need to do a title check on the property b4 you assign the contract??
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