The business of locating properties (usually needing repairs) at bargain prices and quickly passing them to investors/landlords at prices well below retail.
Wholesaling Real Estate Basics
This is the business of locating properties (usually needing repairs) at bargain prices and quickly passing them to investors/landlords at prices well below market. Unless you have access to a large credit line, partners, or real cash, you cannot buy a lot of the great deals. The best alternative is to tie up the property with a contract, and then go looking for a new buyer to give you more money than what you have to give the seller.
Wholesaler VS a Retailer
A Wholesaler is someone who sells goods or services in bulk or large quantities to a Retailer at very cheap prices. A Retailer sells goods or services to new consumers in small quantities at a much higher price. The more a Retailer buys from a Wholesaler, the cheaper the costs. Retailers buy goods and services at a price they can still make a profit from when they resell to the new consumer. Wholesalers exist because Retailers do not have the time or means for finding goods or services at a discount price.
In the real estate business, a Wholesaler depends on a Retailer and a Retailer depends on a Wholesaler. The Wholesaler has the advantage over a Retailer because they are the ones that find such great deals, eventually they could become a Retailer. This would mean they would profit even more.
Should I Wholesale or Retail Real Estate?
One question we get a lot is “Why doesn’t a Wholesaler do the deal himself and make the money the Retailer is going to make?” The answer is very simple, NOT ENOUGH MONEY! Most deals require the buyer to come up with cash to purchase the property and rehab it. Wholesaling is a great technique to start off with if you do not have any cash or credit. Once you have some cash, you can then move into the Fix & Flip (Retailing) business.