Real Estate Wholesaling

Little to No Cash, Experience, or Connections? You Can Still Invest in Real Estate—Here’s How

Expertise: Landlording & Rental Properties, Real Estate Investing Basics, Personal Finance, Real Estate News & Commentary, Business Management, Real Estate Deal Analysis & Advice, Real Estate Marketing, Mortgages & Creative Financing
103 Articles Written

The most challenging aspect of real estate investing is getting your foot in the door.

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Theoretically, anyone can become an investor. However, there are certain strategies that require a lot of cash, experience, and connections. This prevents a large percentage of the population from accessing real estate investing.

Then, there are other methods that are relatively accessible to anyone—including those who don’t have the cash to make a major investment or can’t afford to take on excessive risk and become overleveraged. Real estate wholesaling with an options contract is one such method.


Related: The Ultimate Beginner’s Guide to Real Estate Wholesaling

The Benefits of Wholesaling With Options Contracts

In theory, wholesaling is pretty simple. An investor goes out and finds what he believes to be an incredible real estate deal and signs an agreement with the seller that gives him the option to buy the property at a later date. This option includes certain language that allows the investor to then go out and find another investor and assign the contract to him at a higher purchase price.

The original investor then transfers the contract and cashes the difference. The seller, the original investor, and the actual buyer all benefit. Here’s why. 

From the investor side of things, wholesaling with options contracts is highly advantageous. It yields compelling benefits like:

  • Low barriers to entry: Unlike most other forms of real estate investing, you don’t need a lot of cash or credit. You’re simply acting as a conduit between the seller and the future buyer.
  • Time: With an options contract, you don’t have to feel rushed to make a deal happen. There’s a predetermined period of time within which you can find a potential investor. This takes the pressure off and allows you to work your contacts.
  • Flexibility: Wholesale investing presents a lot of flexibility. Not only do you have the option of purchasing the property yourself as a buy-and-hold investment, but more importantly, you also have an array of investors you can assign the option to. Successful wholesale investors work with a variety of buyers, including individual investors, institutional investors, contractors and builders, and recreational buyers. With such a diverse pool of possible investors, it’s easier to close deals.
  • Low risk, high reward: With little or no cash involved, there’s minimal risk on your end. However, you simultaneously have the opportunity for a high reward. Sure, there’s a lot of time and energy involved in finding an investor to take over your contract, but the financial commitment is quite low.
  • No holding costs: Typically, a real estate investor has to actually purchase a piece of property before he’s able to resell at a profit. This means there are repairs, fees, commissions, and upgrades that have to happen—all of which eat away at profits. With a wholesale contract, you don’t actually take ownership of the property. This means there are no holding costs. In this sense, your profits are true.
  • Quick cash: Wholesaling real estate gives you the opportunity to earn a quick return. Done right, a deal can pay within days (and sometimes even hours).

Wholesaling isn’t a perfect investment strategy, but it’s certainly a viable one for investors who face certain constraints. It can also be an effective approach in both hot and cold markets, which makes it a surprisingly sustainable tactic.

Related: How to Invest in Real Estate with No Money Down (4 Rules You NEED to Follow!)


How to Start Out Wholesaling

If you’re a total real estate investing newbie, the first step can feel like a blind leap off Mt. Everest. It’s scary, nauseating, and overwhelming. But it’s also empowering!

Once you take the first step, you’ll realize that it’s really just lifting one foot and putting it in front of the other. Sometimes you’ll take two steps forward and one step back. Other times you’ll look up and notice that you’ve made significant progress.

Here’s the thing: you can only do so much research and planning before you have to give it a go.

Proceed with caution, but make sure you’re proceeding! Find a deal that fits your criteria and offer a purchase agreement with an option contract. It may get turned down—and that’s okay.

But there’s also a chance that all of your research and due diligence pays off and you secure a decent deal. There’s only one way to find out!

Do you have other questions about getting started as a wholesaler?

Leave a comment below.

Larry is an independent, full-time writer and consultant. His writing covers a broad range of topics including business, investment and technology. His contributions include
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    Jerry W. Investor from Thermopolis, Wyoming
    Replied about 4 years ago
    Nice article Nathan. It is a pretty deep article for how short it is. I read it a few times and got more out of it each time I read it. Thank you for taking the time to write it. I have found your articles to be very well thought out.
    Tiersa Jergesen from Portland, OR
    Replied almost 4 years ago
    Thanks you for a great article. I was so moved by the first quote: “Visionary companies are so clear about what they stand for and what they’re trying to achieve that they simply don’t have room for those unwilling or unable to fit their exacting standards.” — James C. Collins, Built to Last: Successful Habits of Visionary Companies WOW! In a year where my focus is all about getting clear and building my business the right way, this was great to see. Two recent books I have enjoyed are Essentialism by Greg Mckeown and The One Thing by Gary Keller. I have added Built to Last to my list, where it joins Good to Great, next up! Thank you!
    Tiersa Jergesen from Portland, OR
    Replied almost 4 years ago
    and yes, it wasn’t the first quote, lol, but all the same, it hit me just right! 🙂
    Nikkita Nguyen
    Replied over 1 year ago
    Great explanation for a newbie like myself. I’ve been listening to the BP podcasts and had heard wholesaling mentioned in passing but didn’t quite get it. This article turned the light bulb on. Thank you, Larry.
    Ernest Wood II
    Replied over 1 year ago
    I want to learn how to do preforclosers .
    Richard Peter from Harker Heights TX
    Replied over 1 year ago
    I’m also a newbie and looking into wholesale to get my business started. Where and how to I secure assignment contracts that will work here in Texas. Any help is surely appreciated.
    Linda Walker
    Replied over 1 year ago
    I see how this benefits the investor, but how does this method benefit the seller?
    Kayla Mueller from Mobile, AL
    Replied over 1 year ago
    Linda, It gets them out of a sticky situation and gets them money for their house. That’s why we only work with “motivated sellers,” not somebody who’s just looking to sell their house whenever. With pre-foreclosures, for example, we buy someone’s house and save them from foreclosure. With vacant properties or absentee owners, typically the property is just sitting there and becoming more and more of a burden to the owner, so they are usually glad to have us take it off their hands. Basically, we find off-market properties where the seller is desperate to sell for whatever reason and doesn’t have the time/money to deal with a realtor. It’s usually a win-win for all involved. (BTW, another benefit for the seller is it costs them absolutely nothing to work with us. We make our money off the property and investors take care of closing costs, so all they have to do is get paid).
    Tyrone L Brewer
    Replied over 1 year ago
    It made it easier to understand and straight to the point.
    Marika Mcdonald
    Replied over 1 year ago
    Thank you so much Larry And everyone else who posted! I am so very Grateful for you all helping us newbies I’ve been learning so much And it truly is not that hard! I actually have my first contract here in Austin ,Texas My first 1 and it has been a roller coaster ,learning all the time trying to get investor.Offers have been low & sisters want more but I’m finally getting it down to get rid of it hopefully soon! I’ve learned from my mistakes .