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Why Wholesale?

Why Wholesale?

Wholesaling tends to be used as what some experts call a “buy low, sell low” strategy, but it can really be used in any market on any property. The point of wholesaling is to make earned income for your time, knowledge, and negotiations.

Often times, it can be an attractive strategy for new investors as a way to get their feet wet in the business, generate quick cash that they can then turn in to a bigger deal, and has minimal risk compared to other strategies when structured the right way. With wholesaling, you’re never owning a property, so you minimize the risks of what comes along with ownership. Often times, wholesaling requires little to no capital of your own. In some scenarios, money may be required, but that money doesn’t necessarily have to come from you. There are several ways to creatively fund any deal you acquire. The question is do you know how?

Think of it like this—investors like to buy properties at discounts … that’s how they make money. As new investors evolve into more seasoned investors, their time to go out and find, negotiate and execute transactions can become limited. So, they’ll look for good wholesalers to find them opportunities that they can make win-wins. Let’s say an investor has the capital to purchase and renovate a property while the wholesaler has the skillset to find and negotiate the opportunity for the investor to execute the deal and make a profit. The two would work together to make the deal happen. The wholesaler would go out and find the deal, run the numbers, make the offer, get it under contract and then assign the rights to buy the deal to the investor. For his or her time to do the leg work, the wholesaler would charge a fee and that’s how they get paid. At that point, the investor who has the capital now has control of the contract and would be able to move forward to close on the property.

When we wholesale, it’s usually either to exit a deal ourselves or to receive a fee for our time of finding and structuring a deal. This can be done early in the game as a business to generate cash or could be done later, on properties that may make sense for someone else but may not make sense for us or our current portfolio.

State to state, the way we wholesale and what is required varies which is why we at Legacy encourage students to have more knowledge of the subject before executing. All in all, it’s a great way for people to get started in the business and eventually can become a great way to exit a deal without leaving money on the table.

Areas of Review

Big picture takeaway points

Big picture takeaway points

  1. Wholesaling is a risk-free way to get started in investing.
  2. It requires minimal to no capital.
  3. A fantastic way to start generating money on the side to start your portfolio.

Reflection

Self-reflection questions to think more about the content

  1. What ways can I find properties to wholesale?
  2. Do I know the laws in my state?

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Legacy Wealth Club