Wholesale Real Estate: What You Need to Know To Make Money in 2022

In the single-family residential market, you have undoubtedly heard of wholesaling. Naturally, this might conjure up thoughts of houses sitting on tall shelves in warehouses. What exactly is wholesale real estate anyways?

Real estate investing can come in many different strategies. The industry itself is massive and has many other asset classes, hold times, and business models that you can implement.

When just starting, you may look into single-family rentals, the BRRRR Method, multifamily rentals, and commercial real estate.

What is Wholesale Real Estate?

Wholesaling is a nickname used to describe a type of real estate investing or transaction where the investor buys and sells an interest in the property without holding it. The wholesaler has a direct relationship with sellers through various marketing forms. They can then negotiate the terms of a sale to take to another market and sell for a profit.

Assignment Vs. Double Close

Wholesalers typically use a double close or an assignment of the contract to sell the property. The investor buys the double property close and immediately sells it to the end buyer. Frequently the title company waits until everything is signed and funded to execute both closings. The wholesaler assigns their interest in the purchase contract to the end buyer with an assignment model.

Benefits to Wholesaling

There are many benefits to wholesaling as a real estate investor. 1. Wholesaling is a short-term strategy that an investor can realize benefits from quickly. 2. It does not require a large pool of capital to get started in wholesaling. 3. Wholesaling can be used to get direct experience in many aspects of real estate investing. 4. Since wholesaling focuses on acquiring real estate and quick disposition, investors can cycle through more deals quicker.



Investing in Real Estate or Buying a New Home?

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Negatives of Wholesaling

1. By selling the properties without holding them, wholesalers short-circuit one of the best ways to build wealth in real estate. 2. To be successful, a wholesaler must accurately determine the ARV and estimate rehab costs to determine a property’s value. That can be very challenging for a new investor.

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