IS WHOLESALING WORTH IT OR NOT?

Wholesaling has become a trend in the real estate world. Many gurus are selling courses to teach people how to build wealth with no experience, no credit score, and money. Now you may say it is too good to be true, while others see the potential this strategy offers. So let's discuss what wholesaling is, and is the hype, worth trying, or should you find other creative ways to grow your real estate portfolio?

WHAT IS WHOLESALING:

Wholesaling is a real estate strategy to create active income. Active income is when you are constantly doing work to receive income, while passive income is little to no effort to earn income. The wholesaler is essentially a middleman in the deal. He gets a house under contract for less than market value and then assigns that contract to a buyer who can sell the property for much more after. The wholesaler later receives money for being able to get the contract under market value.

As easy as this may sound, wholesaling comes with pros and cons, so let's unpack some before you continue your journey.

LEARNING ABOUT REAL ESTATE:

Wholesaling allows you to learn the ins and out of the industry. As you start generating leads, you will find yourself needing other professionals like realtors, escrow officers, and investors. You will also learn how to generate leads due to wholesaling being an active income strategy. Run comps and estimate the after repair value of a house to offer the best deal to your cash buyers (investors).

NEED NO TO MINIMAL CAPITAL TO START:

Typically, when you are buying a home and financing it. They ask for proof of funds for eligibility. Wholesalers, on another hand, are not purchasing the property but assigning it to a person that has the money for the home. Therefore, a wholesaler does not need money to make this deal.

However, if you are a beginner, you will need some money to market your services to generate leads.

UNPREDICTABLE INCOME:

Wholesaling takes time to find quality leads, and there may be months when you have no income coming in. When you do start making some income through wholesaling, all the wins are not profit. Be smart and save a portion of that profit for a rainy day or just in case it takes a few months to close another deal.

SUMMARY:

As you see, for those who have little to no money, wholesaling could be the best real estate strategy. It is a low-risk, low reward for beginners, allowing you to build your portfolio and connections in the industry. Be prepared to but in a significant amount of time as it requires patience and a level of sales skills to negotiate deals with sellers.