The “Real Estate Goddess” Vena Jones-Cox* presents the second and final part of her series, which provides a 30-second overview on getting started with the real estate investment tactic wholesaling.
Wholesaling is a very simple strategy—so simple, in fact, that it can be described as a series of a half-dozen steps. In 20 years and hundreds of deals, I’ve never found a way to cut out a step, and never seen a reason to complicate the process. Let’s take a moment to get grounded in how the process works, so that you can understand why you should be doing it.
You, the wholesaler, find a property that, for whatever reason, the owner is prepared to sell at well below-market price.
You perform an evaluation of the property by researching the fair market value, inspecting to determine what repairs might need to be made and estimating the cost of the repairs. Based on the resulting numbers, you determine mathematically what your buyers will be willing to pay for the property, and figure out an offer that, if accepted, will allow you to make a profit from the sale of the contract.
You make your offer to the seller. If he finds it acceptable, this agreement is formalized via a written purchase and sale contract that gives you the right to purchase the property at the price and during the time frame negotiated with the seller.
You begin the due diligence process (ordering a title search, checking on any code violations, utility bills due, and so on) so that your buyer will have all of the information he needs to make the decision to purchase the property. This step usually happens, at least in part, simultaneously with step 5.
Using marketing, your buyer’s list, and other resources, you identify a likely buyer or buyers for the property, arrange for the prospective buyers to view the property, and, after agreeing with the buyer as to price and terms, continue on to step 6.
You sell your right to purchase the property to the buyer, who buys it directly from the seller. Alternatively, and only in rare cases, you BUY the property (usually using cash or private funds), then sell it immediately to the buyer.
The PROCESS really is that simple, but I can’t emphasize enough the importance of really learning the DETAILS of the business—the forms and paperwork, legalities and regulations, and the practicalities of HOW to find the deals, figure out the prices, attract buyers, and so on.
Vena Jones-Cox has been a full-time real estate entrepreneur since 1989, and has been a principal in over 800 deals. She’s the founder of Central Ohio Real Estate Entrepreneurs (COREE), past president of Cincinnati REIA, Ohio REIA, and the National Real Estate Investors Association. You can learn more about Vena at her website, www.TheRealEstateGoddess.com
*Vena Jones-Cox is not affiliated with Equity Trust Company or its affiliates. The information provided is for educational purposes only and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with legal, tax, and accounting professionals.