You want to get into real estate investing, but you don’t know how to start because you’re short on cash, nor do you have access to borrow funds.
If real estate is really what you want to do, then you have to find a way to do your first deal. One way is to start packing away money for a down payment – but, who knows how long that’ll take. Another option is to get started wholesaling properties.
We’re not going to get into explaining what wholesaling is here, you can Google that or read our previous posts. So, let’s cover why you should consider Wholesaling.
There’s no reason why you can’t start wholesaling right away, but there is a lot that goes into it. Before you start searching for a house to put under contract, you’ll want to study up or find yourself a mentor, as there is a bit of a learning curve. By the way, the best place to find a local mentor that knows the market you’ll be working in is by attending REIA meetings!
Let’s take a look at some of the advantages of starting your real estate career in wholesaling.
1) It doesn’t take a lot of money. There aren’t many businesses that can offer you a low-cost barrier to entry accompanied by low overhead. Since that was keeping you from buying your first property, wholesaling allows you to kick-off a new business venture with very little of your own cash. You’re not purchasing the property, only getting it under contract, so you don’t need a large lump of cash to put down.
2) A low credit rating won’t hold you back. Since you’re not actually taking possession of the property, you need very little cash on hand. Your buyer is the one who would need to apply for a loan or pay cash for the property.
3) There are always distressed sellers to target. No matter the area or economy, people are always looking to get rid of properties. You aren’t concerned with the condition of the property because you’re not paying to fix it up. Eager sellers provide the leverage you need to find money-making opportunities.
4) The potential for quick profits is high. Since you’re not waiting to find tenants nor for renovations to be completed, the faster you find a buyer, the sooner you cash your check. This is where having the proper contacts and a reliable buyer’s list comes in.
5) It’s a free real estate education. Wholesaling allows you to learn the real estate business from the ground up. By not being “cursed” with having a lot of money, you’re forced to learn the complex aspects of real estate investing using other people’s money. You’ll learn to vet properties, instead of buying them blindly hoping to turn a profit until your bank account runs dry. By starting at the bottom, you’ll also acquire a gift for spotting new opportunities.
Wholesaling requires motivation and an ability to network with people. Many wholesalers use it as a stepping stone to flipping or landlording, but many successful wholesalers choose to just stick to wholesaling.