Why Investors Should Add Wholesaling To The Mix
All investors should be seriously considering adding real estate wholesaling to their mix this year. Here’s why…
No matter whether you are just starting to invest, or have a highly profitable business or portfolio using other strategies right now, this year could be an important one for adding in real estate wholesaling. Keep reading to find out the advantages, and how it could complement what you have been doing.
The Advantages of Real Estate Wholesaling
Wholesaling has many benefits, including:
- Fast and simple to start
- Low barriers to entry
- Fastest payouts in real estate investing
- Lump sum cash profits
- Low risk
- Easy to scale
While wholesaling may not be the first choice for every investor, it can have a place in every investor’s income, wealth, and business plans. Many make it their main strategy, and one which can be grown into a very profitable and sizable long-term business.
Wholesaling for New Real Estate Investors
Individuals are drawn to real estate investing for many reasons. For some it is the safety of real estate assets. For others, it is increased monthly cash flow, or higher returns. Some are drawn for the freedom to be their own boss, and to be able to work from anywhere. Depending on their goals they may initially be drawn to another investment strategy, but could find that wholesaling is the ideal way to get started. In addition to all of the benefits above, wholesaling is a good way to get your feet wet, and learn the industry, with low risk, and low resource requirements. After a few deals you’ll be able to make much better calls on rehab and rental property deals. It can provide the funds to jump into those strategies as well.
Wholesaling for Rehabbers
Rehabbing and fixing up and flipping houses has become one of the most popular real estate investment strategies in the last few years. TV has helped that a lot. It can be a highly profitable way to make money in real estate. It can be fun and rewarding too. In some cases, flippers may make more than wholesalers on a deal, but that isn’t always true. However, wholesaling is simpler, faster, and more reliable. It doesn’t require the cash capital that rehabbing can.
We need rehabbers. Yet, it isn’t uncommon for rehabbers to get caught in the middle of a project, or several. This may be due to running out of cash for improvements. Or it could be failing to secure a tenant or end buyer on schedule. Depending on the position rehabbers are in at the time, and the market, it can be unviable to exit those properties. By adding wholesaling to the mix, rehabbers can gain the cash they need to complete their projects and stay in the green. By learning the math of wholesaling they can also find better value deals, and in turn enjoy better profits and more flexibility and exit options when rehabbing.
Wholesaling for Landlords
Rental property investors have a lot to gain from wholesaling too. As for house flippers, it can lead to getting right to the source of the best priced real estate deals. That can build in better spreads and equity positions. Wholesaling can also provide the lump sums of capital for expanding portfolios and acquiring new rentals, without having to milk the equity or deplete the returns from existing assets. Plus, it provides a backup when disaster strikes or tenants stop paying, and there is a need for extra income or large capital expenses.
Wholesaling for Note Investors & Private Lenders
There are two ways that this group can benefit from wholesaling. One is to fund wholesalers, and to make sizable yields, with rapid payoffs. This may return far better rates than longer term loans to rehabbers or landlords. Or lenders can actively engage in wholesaling to generate far larger incomes than the payments on a mortgage provide. Some may take a hybrid approach and buy wholesale deals, and then create notes by seller financing these deals to rehabbers and landlords.
Wholesaling for Stock Market & Tech Investors
Real estate is a great way to diversify and protect from the volatility of the stock market. It is also an ideally suited strategy to profit from the ups and downs of stocks and tech, as heavy investors and founders make it big, or burst and either sell off assets fast or quickly upgrade to more lavish mansions.
