Are you looking to make a foray into the real estate investment business? Real estate wholesaling is perhaps the easiest way of making money in the real estate industry and needs little capital to start with. If you enjoy keeping up to date with the latest real estate market trends, and regularly follow real estate blogs, then you might have more in common with a real estate investor than you imagine. Perhaps you’ve been considering a career in the industry but are yet to take the plunge. In that case, wholesale real estate is the right way to get your feet wet in the burgeoning industry.
What is real estate wholesaling?
This is a short-term business strategy that makes big money for investors. However, this has absolutely nothing in common with retail wholesaling, where the wholesaler sells a large number of goods at a discounted price, still making a profit on the sale. Real estate wholesaling in Arizona isn’t about the sale of multiple properties at lower prices. Instead, in this, the wholesaler does a contract with a distressed homeowner and shops that home around to potential buyers. The goal is to find an interested party before the expiry of the contract.
Wondering how the wholesaler makes money in this? Well, it is true that no money exchanges hands between the wholesaler and the seller, not until a buyer is found! The wholesaler makes a profit by finding a buyer willing to purchase the home at a slightly premium price – higher than the amount agreed upon by the buyer. The difference in price is the profit made by the wholesaler.
Pros and cons of real estate wholesaling in Arizona
Now that you have a basic understanding of real estate wholesaling and how to make a profit with it, let’s dive into the benefits and risks associated with it.
- Making easy money: If you have a working idea of the real estate industry and you’re looking to make easy money, this can be a very lucrative opportunity. It is a good way of gauging the market for budding real estate investors, as it requires little to no personal finance.
- Great for beginners: Wholesaling is great for those who’ve just started out in the industry. While working as a wholesaler you’d slowly learn more about the industry – the tricks to negotiate, organize, and acquire legal documents. It will also help you figure out what to look for in deals, and which deals to avoid.
- Little cash required: If you’ve been hesitating to move into the real estate business because of a dearth of capital, real estate wholesaling is an excellent route to take. In this, you do not actually purchase the property and instead merely assign the purchase contract to a party interested in buying the property.
- No guaranteed income: Let’s face it, real estate wholesaling isn’t a typical nine-to-five job. Though you would be answering to no one, you wouldn’t be getting a paycheck every month, or health insurance or retirement benefits. So, consider making this a full-time gig only if you know how to manage your finances.
- Difficulty in finding buyers: The key to being a good real estate wholesaler is to have a robust list of buyers, who are looking for properties on sale. However, depending on how much you put down in escrow, you may be forced to pay the homeowner if you cannot find a buyer. Thus, having a list of potential buyers lined up is a good way of reducing the risk of losing money.
Real estate wholesaling in Arizona is a great opportunity for aspiring investors to learn the ropes of the real estate industry. In fact, some like wholesaling so much, that they make it their full-time profession. That said, if you are looking for quality leads for wholesaling, we’d advise you to check out Foreclosures Daily. It is an awesome platform for all things real estate, and may well be your first step in building real wealth.