Is wholesale a good way to start in real estate investment

18 Replies

IMO, no.

Wholesaling successfully is much more difficult than most newbies think. To wholesale successfully, you need a lot of knowledge. You have to know as much or more as the buyers you're going to try to wholesale to. The starting with little to no money part of wholesaling is the least important part.



I agree with @Mark Durham . Get yourself educated first.

1. Join a local real estate investor group that has classes on wholesaling and line up 30 or 40 buyers.

2. Start locating deals. There are many ways to do this.

3. Get a property under contract.

4. Present it to your buyers list.

5. Assign your rights to the contract to your buyer.

6. Collect your finders fee at closing.

@Teresa Alvarez , wholesaling isn't a way to start real estate investing at all because wholesaling isn't a type of investing.

Its more like a job like being a real estate agent. I'd recommend becoming an agent over wholesaling to start as you will learn a lot more. 

@Teresa Alvarez ,

There are good answers above, though I don't completely agree.

First, wholesaling is not easy.  It's simple, but it's hard work and takes time to get rolling.  You have to commit right from the start to go for the long haul, or don't bother.

No, it's not investing, but it is a way to learn a lot about real estate and to make some pretty good money while you're doing it - again, if you're willing to work hard and keep at it.

The real question, however, is "Is it good for YOU?"  Only you can answer this, and to do that, you need to learn more about it and your other options.  There's a book here on BP that addresses getting started in RE.  There are options, and you don't always have to have your own money to do it.  If you want to learn more about wholesaling, I recommend the book, "If you can't wholesale after this... I've got nothing for you."  I give it about a B+ as it really does cover the basics.

And whatever you do, start attending local REI meetups as often as you possibly can. You need to get active in the REI community and build your contacts.

Good luck!

@Teresa Alvarez

I agree with those that have commented to your question, however, I believe it is a good way to get started in real estate.

While you're finding a distressed property owner and will wholesale the contract to an end buyer, your assignment fees can be accumulated to eventually purchase your own rental property, or fix and flip, if that's what you're interested in doing.

It's definitely not easy work.

Marketing. Follow up calls. Appointments. Learning how to negotiate. Assessing repair costs and ARV. There's a lot to know.

It's definitely a rewarding opportunity, but develop a game plan as to what you want to accomplish through wholesaling as you get started.

Definitely read some books and get educated about real estate too.

Originally posted by @Teresa Alvarez :

I’m trying to get start in wholesale because I think it’s the easy way to start since I have no money , Is this a good idea?

 I think it is a lot of leg work for not a lot of payout. Also, in some states, it may be illegal so be careful. 

Actually, I'm pretty sure wholesaling is legal everywhere.  You just need to do it legally.

In Illinois, for example, you can do one per year without being a real estate agent.  So the solution to doing it legally there is to become a real estate agent.

Originally posted by @Teresa Alvarez :

I’m trying to get start in wholesale because I think it’s the easy way to start since I have no money , Is this a good idea?

 Is wholesaling the easiest way to get in the business?

No.

Is it the best way to get in?

Yes, absolutely.

As a wholesaler you need to be good at everything. Many investors look down on wholesaling but they are wrong.

Wholesaling (done the right way) means: 

  1. you know how to get off market deals
  2. teaches you how to negotiate with sellers

    teaches you how to negotiate with buyers
  3. teaches you all there is to know about marketing. (You are a marketer if you are a wholesaler)
  4. teaches you how to read and understand contracts
  5. Teaches you how to do ARV's
  6. teaches you how to do a scope of work
  7. Teaches you how to analyze the cost of repairs
  8. teaches you everything you need to know about flipping a house (you need to know the flipper in order to present a deal to them that works for them)
    teaches you everything you need to know about Buy and hold a house (you need to know the flipper in order to present a deal to them that works for them)
  9. Teaches you about credibility. You need to be more credible dealing with sellers telling them you are not buying their house
  10. Teaches you about honesty and transparency dealing with


    Now, is there any other niche in the REI world that will teach you all this?
  11. Nope!

If you are a wholesaler you are a master at REI.

However often it is not about how easy it is to pick a niche, but your circumstance.

If you do not have capital to buy a house in cash, or you don't feel comfortable using Other People's Money... more than likely you will end up being a wholesaler (again which is not a bad thing at all)

Originally posted by @Tom Ott :
Originally posted by @Teresa Alvarez:

I’m trying to get start in wholesale because I think it’s the easy way to start since I have no money , Is this a good idea?

 I think it is a lot of leg work for not a lot of payout. Also, in some states, it may be illegal so be careful. 

Flipping a house is a lot of legwork too!


The trick is... systems.

There are people that wholesale 200 deals a month... they have systems in place.

:) 

To answer your original question, and based on most new laws across just about every state, I say it is Not a great place to start in real estate and it certainly is not real estate “investing”. If you want to learn your market, real estate values and contracts, and the lingo, I recommend you get your license and work under a broker with good training. That is the best way to start your education while having an opportunity to earn income through commissions and referrals. This should be done parallel with attending meetups, reading books, listening to podcasts, and engaging the community right here on BP.

Everybody is told through gurus and other avenues that the “best way to get started in real estate with no money and no credit” is wholesaling. What they don’t tell you is that it does require money (marketing and advertising) plus it requires knowledge of your market, laws, and education on the mechanics of the deal. There are many ways to wholesale, many of them are done illegally so it is important to know how to do it legally and ethically. 

What is "best" for one person isn't necessarily for another.

I have to disagree, at least partially, that "they" don't tell you it requires money for marketing and advertising, that it requires knowledge of your market, laws, and the mechanics of the deal.  I suppose some might leave that out, but I know that the class I took went into great detail in those areas.  It helped to get this from someone who has been doing this locally.

@Teresa Alvarez if you want to wholesale...its all about finding discounted deals. If you can find the deals you will succeed. There are a lot of programs, courses and coaching with their pitches. They all work to some degree but you need more focus. You need to find a super targeted niche that you know well and match that with your unique skills to come up with a plan to find deals.

Dallas is one of the most saturated wholesaler markets in the country. If I was starting over today and looking for advice this is what I would want to hear.

No, if you don't have money and don't have access to money, you're doing a disservice to yourself and the homeowner. You should be prepared to close the purchase on any property you contract on in the event you can't locate an assignee. You, as assignor, are still responsible for performing on your contract even if you assign it IF your assignee fails to close. 

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