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If You Love Digging Up Bargains – You Could be Wholesaling Real Estate

If You Love Digging Up Bargains You Could be Wholesaling Real EstateAre you an avid garage or yard sale shopper? Does it make your day to find an item that’s priced below its true value and then argue down the price a little more? Have you resold some of your booty at a profit, either online or in person? If so, you could be ready to up your game and your transaction size dramatically. You fit the profile of a successful real estate wholesaler. By the way, you may not need to buy homes before you sell them.

What is Real Estate Wholesaling?

The best way to explain the process is to relate it back to our normal concept of retail wholesaling. When you shop in the local grocery store, all of that stuff on the shelves was stocked there by a wholesale supplier. The wholesaler deals with the manufacturers to buy in very large lots, stores the items in warehouses, and then transports smaller lots to the stores. The wholesaler works on low markup, making their profit from the large quantities supplied to stores on a regular basis. It is expensive to maintain warehouses, trucks, and employees.

When it comes to residential real estate wholesaling, you’re going to avoid almost all of the costs of the traditional wholesaler. You’re not going to need a warehouse, nor a truck, as the house isn’t going to be moved. You don’t need employees either. Basically, you can operate from your kitchen table with a computer and the internet. If you don’t have a kitchen table, go to the library.

Success Requires Buyers

You’re going to start at the tail end first. You need to meet and cultivate relationships with real estate investors who will become your customers for homes. They are of two types: Rental home investors or fix and flip investors. The difference between the two is the condition of the home you’re selling. The rental investor wants a home ready for a tenant, while the fix and flip investor will be doing repair and rehab to fix up a home and profit from the work.

You need to get your buyers to give you their requirements, including:

  • neighborhoods of interest
  • desired profit margin on a flip or desired rental cash flow

Once you have this information, you’ll know what they’re willing to pay for a home, and you can move to the next step. Once you have buyers waiting for you to deliver properties, you’re ready to have that bargain-hunting fun.

The Real Estate Wholesale Process

Now you go out and find deals that your buyers are unable or unwilling to locate themselves. Often they’re very active investors who prefer to have deals come to them. Using the classifieds, Craigslist, neighborhood signs, or just driving around, you want to find homes with motivated sellers. They may be in financial trouble, or they may need to move in a hurry to get a better job. Whatever the reason, they’re motivated to sell in a hurry.

Of course, you want to locate homes with enough equity to buy them and resell them to your buyers with a profit in the middle for you. As you’re not going to do any work on the homes, your holding period is a matter of a few weeks, so it’s a quick flip for profit. You know the price your buyers will pay, so you work down the purchase price until your desired profit is in the middle.

How to Fund the Deal

Depending on the state in which you’re doing deals, you may be able to do assignment contracts to fund your deals. An assignment is a contract with the seller that allows you to assign your rights and obligations in the purchase contract to another buyer. Once you have the contract signed with the seller, you can execute another contract with your buyer that assigns them your rights and obligations. You’re out of the deal at this point, simply waiting for your profit paid to you when your buyer closes the deal.

If you can’t do assignments legally in your state, you can still do these deals with little or no money, but you’ll have to use transaction lenders. These lenders specialize in working with real estate investors, funding short term flips and deals like yours. You execute a purchase contract with the seller with you as the buyer. The transaction lender funds the deal at closing. When your buyer closes on buying the home, the transaction lender gets their fees and money back from the purchase. Your profit is what is left.

This is a simplified description of wholesaling real estate, but it should be enough to get you excited about it. It’s the ultimate bargain hunting pastime.

Hot Key West Business Opportunities

1 Henry Morgan Road W 1 $38,000,000

1 Henry Morgan Road W 1 OTHER, Florida

99 Beds 119 Baths

1 Infinity Bay Road W 145 $28,000,000

1 Infinity Bay Road W 145 OTHER, Florida

99 Beds 170 Baths

1 Media Luna Resort Road W 126 $26,000,000

1 Media Luna Resort Road W 126 OTHER, Florida

99 Beds 109 Baths

$10,000,000

Other, Florida

30 Beds 33 Baths

27340 Overseas Highway $6,900,000

27340 Overseas Highway Ramrod, Florida

3,969 SqFt

1 Lands End  West End Roatan W $6,750,000

1 Lands End West End Roatan W OTHER, Florida

25 Beds 27 Baths

328 Whitehead Street $4,995,000

328 Whitehead Street KEY WEST, Florida

5 Beds 5 Baths 2,759 SqFt 0.330 Acres

7537 Overseas Highway $3,495,000

7537 Overseas Highway MARATHON, Florida

6,750 SqFt

91865 Overseas Highway $2,300,000

91865 Overseas Highway Tavernier, Florida

15 Beds 10 Baths 10,150 SqFt

100150 Overseas Highway $2,100,000

100150 Overseas Highway KEY LARGO, Florida

58835 Overseas Highway $1,499,000

58835 Overseas Highway MARATHON, Florida

3,414 SqFt

1000 Eaton Street $1,200,000

1000 Eaton Street KEY WEST, Florida

1 Baths 989 SqFt

Pirates Road $799,000

Pirates Road Cudjoe, Florida

Pirates Road $799,000

Pirates Road Cudjoe, Florida

2.200 Acres

Pirates Road $799,000

Pirates Road Cudjoe, Florida

96,547 SqFt

Are You Looking for Commercial Property in the Florida Keys?

Use our site to search commercial real estate in Key West and all of the Florida Keys. Unlike the “big name” sites out there, our site is directly connected to our local MLS and is updated with new properties every HOUR. By creating a Property Manager account you can stay on top of the newest businesses that go up on the market and get Price Change alerts so you can stay ahead of other buyers and beat them to the best deals!

In the meantime, check out these 1-click searches:

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Newest Key West Commercial Properties on the Market

Large commercial building in good shape with Dade County pine ceiling, zoned mixed use commercial, located in up and coming part of Marathon. Property has almost 19000 square ft of fenced in area with plenty of room for parking and located directly on US 1. There is a second building in back that has a bathroom, and living/bedroom area, that can be office space or storage. Lots of potential for the building and land. $1,650,000 Active

1825 Overseas Highway MARATHON, Florida

1 Beds 2 Baths 2,796 SqFt

Excellent Opportunity to lease small retail/professional space in Old Town Key West directly on Truman Avenue with approximately ~600sf. Join the charming & friendly business environment that Historic Downtown has to offer, catering to a diversity of local dining, shopping & specialty services. Visible storefront with display windows and heavy traffic flow. Sales tax and shared water expense are in addition to monthly base rent quoted for a minimum two-year lease agreement. Vacant and easy to show. $1,850 Active

1100 Truman Avenue A KEY WEST, Florida

1 Baths 2,600 SqFt

White Sands Inn is located in Marathon, FL on the Atlantic Ocean with views that will take your breath away.  Unfortunately, hurricane Irma took it's toll on the first floor of this little motel.  The owners have made most major repairs but ran out of money to complete the motel.  Currently being sold as-is with the new owner to complete the first floor.  The second floor was not damaged and occupied.  All reasonable offers will be considered.  Don't let this deal get away.  Seller has all plans and estimates to pass on to the new owner.  Most of the major work is completed.  Call for details.  Please do not visit the property without an appointment.  Property comes with 1 market rate (single family building right) and 4 transient motel rights. $1,450,000 Active

57622 Overseas Hwy Highway MARATHON, Florida

8 Beds 8 Baths 3,082 SqFt

Offered for sale is Vaca Cove a 7 unit vacation rental property located in Marathon, FL.  The property is comprised of 7 stilted waterfront homes, dockage accommodating up to 40' boats per home, resort sized pool, fishing dock/kayak launch and built in 2016.  Each home is 1,740 Sq. Ft., 4 bedroom, 3 bath, open floor plan living area, large laundry, water front porches with open water views, private spas and covered parking.  This is an active vacation rental property with established management and increasing numbers.  Please do not go to property unscheduled.  Call for more information. $6,900,000 Active

12555 Overseas Highway MARATHON, Florida

28 Beds 21 Baths 12,180 SqFt

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Posted in: Buying Commercial Real Estate, Commercial Real Estate, Investing, Sellers, Wholesaling, Wholesaling Tagged: Wholesale, Wholesale Real Estate, wholesaling real estate, wholesaling real estate tips

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