Wholesale real estate is a short-term business strategy that investors can use to make quick and steady income in the real estate market. It involves finding distressed properties that the owner doesnt want to spend time or money on, and convincing the owner to open a wholesale contract with the wholesaler. A wholesale contract is not a promise to buy the property but is a contract giving the wholesaler a set period of time to find a buyer for the property. The wholesaler then enters into a wholesale real estate contract and reassigns the contract to an end buyer for a higher price, known as a wholesale fee. Wholesalers act as intermediaries between sellers and buyers, who are usually investors. Unlike flipping real estate, a real estate wholesaler doesnt make any renovations and carries no costs. Wholesale real estate offers beginners the opportunity to start investing in real estate with little or zero capital investment. However, the legality of wholesaling real estate varies by state, so it’s important to understand and comply with the laws put in place by your state of residence.
Pros of wholesale real estate include the chance to learn real estate investment with lesser risks, efforts, and time required to complete a wholesale deal, and the ability to sign a wholesale real estate contract with a home seller without spending a penny. However, there are also cons to wholesale real estate, such as the potential for unscrupulous wholesalers to cause real harm to communities, and the possibility of pricing first-time homebuyers out of the market.
