I have been doing a lot of research about Wholesaleing real estate. I have books coming in, & I’m currently enrolled in a wholesale class, but i just want to know honest opinions.. can a 21 year old actually start making legit money in this field if he puts his all into it? I’m in college and don’t have much going for myself so i can’t afford to be wasting my money if this is not a legitimate way to make money. All replies welcomed
@Jerry Galloway Wholesaling is legal and legit nationwide. Tons of investors do it but as @Stanford Neal Mead , it's tough to find those deals - deals where you can buy cheap enough that you can sell to a rehabber who can rehab and still make their own great profit.
I find it interesting that "gurus" promote wholesaling as cheap, fast and easy. What I have found over years is it's the experienced investors who are more successful with this form of investing.
@Karen Rittenhouse your version of wholesaling (actually buying and then selling) is always legal... however it is not what 95% of the BP members actually call wholesaling. To them wholesaling is locking a house up under contract and then selling that contract to another investor.
In your example, the wholesaler would need money, or a loan, or some way to buy the house. In the 95% wholesaling they need no money, as they have no intentions of buying anything.
The truth is, finding deals is the hardest part of real estate investing (my opinion). Whether you buy and hold, fix and flip or plan to wholesale a contract, you need to find a house at a good value. In order to do this, you need to touch base with motivated sellers. There are tons of ways to do this, but it will cost money. How much money is anyone's guess, but the big players spends thousands, if not tens of thousands in marketing monthly. you can try and "hussle" to avoid spending big money, and can be successful at it. Do your research, pick your ways to find deals and go for it.
@Brian Pulaski Yes. And this is where there is so much confusion and controversy on BiggerPockets. To wholesale, you must close on the property and own it.
When you get a property under contract and sell the contract, that is assignment or assigning. Wholesaling and assigning are two very different types of transactions that incur very different legal jeopardy. Misusing the terms can cause, not only confusion, but litigation issues. Assignments are illegal in multiple states and how contracts are worded and closings are handled are not the same with these 2 types of transactions.
As you said, wholesaling is legal in every state and can be done with standard contracts. Not so for assigning.
By the way, @Brian Pulaski , to explain why I keep going over this here, I spend $15,000 per month in marketing and do an assignment or wholesale deal an average of at least one per week. I am EXTREMELY familiar.
@Karen Rittenhouse you might be one of the only members on this board I see who use the term wholesaling to refer to purchasing. My bet i you fall into a very small category of people who wholesale this way. I have an opportunity on a house to buy and my intent would be to do just as you state... close and immediately resell with little to no improvements. As much as assigning would save me money, I am not comfortable with it... yet.
@Brian Pulaski Nope, I'm always very precise that wholesaling is a SALES technique. People here use that wrong vocabulary again. You can buy wholesale but that would mean you are buying a property from a wholesaler.
I buy properties and SELL them either wholesale, wholetale, assignment, or retail.
@Jerry Galloway , it seems like you have some sage advice from both @Karen Rittenhouse and @Brian Pulaski . Wholesaling is a game requiring a lot of hustle. You are looking for sellers that don't know they are sellers just yet, or the same people who are on the same lists all the other wholesalers are buying. Yes, buying lists, which means spending money. Making direct mail. Posting bandit signs. Printing door hangers and knocking on doors. When Karen talks about spending $14k a month, that's a real thing. You can spend less by trading your lack of money for time, but the first and foremost thing you need to do is find buyers, so when you get these contracts, you can turn them around to well qualified buys that can purchase the properties from you. You can get a direct mail list for a few hundred dollars for a very focused area, but your conversion rate (actual deals that come from this mailing) may be low to none, and you need to decided what you want to market to: short sale, probate, out of state landlord/owner, vacant properties, etc. Heck, drive a neighborhood looking for vacant properties, then use spokeo or some other source to find the address and phone number of the owner and learn to talk to these people and ask them what the story of their property is. The point is, there is no get-rich-quick, but there is a way to get paid for your work, and work your way up to get-financially-free. I'm sending out a direct mail campaign today of 1000 or so letters, and tomorrow, I'll be knocking on some doors too.
I hope this helps a bit. Stay focused, and don't lose heart. Creating a to-do list for each day really helps get started.