What Is Real Estate Wholesaling? I’ve been getting asked a lot lately about “what is real estate wholesaling? How does wholesaling real estate work? Why would you want to wholesale real estate? I am Justin Colby and we are going to go over a massive subject that literally has come up five different times this week alone. And that is what is real estate wholesaling? Now I’ve talked to realtors and flippers this week five different conversations that they simply wanted to actually know what is it that makes real estate wholesaling so special? How do you actually do it and what is really the definition of wholesaling real estate? So let me break that down to you as it is a very hot topic across all real estate investors as well as agents. Now first, if you are a realtor, and you do not know what wholesaling is you really need to pay attention to this video, a realtor should understand wholesaling real estate, and realtors should also be actively wholesaling real estate!
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Additionally, If you are fixing and flipping properties, you need to also be wholesaling. I can tell you today, I actually had two separate conversations, one with the realtor out in DC, one with a local fix and flipper. And both of those conversations basically came from one angle as a realtor one as a flipper, saying, What is wholesaling and should I put that into my current business model? Now for those of you that are not yet investing or wholesaling real estate, and watching this video in hopes to get in the game, I can tell you wholesaling is the very best way to start getting into real estate investing. Now, it is different than long term wealth building, because it creates quick cash, in terms of a lot of cash that you can pay yourself, right, but it absolutely does not build wealth.
What it will help you do is fire your boss create a great lifestyle. So you can not only just pay your bills, but you can afford vacations. And most importantly, you can afford to buy the rentals that you want to be able to buy, it creates fast transaction, it’s a cash stick type of transaction, if you will, where you are simply contracting the deal with the homeowner and selling the paperwork, the assignment contract off to another investor who is likely going to either flip it or hold it for themselves. So let’s truly define it and I’ll explain it the best way I can for you what wholesaling is now, wholesaling is the type of real estate transaction that you are not actually buying the property, you’re simply contracting it and then assigning your contract off to another investor. As I just mentioned, the process is very clear, very simple, where you use a simple, you know, two page purchase agreement, you do not have to use a residential purchase agreement. If you are licensed, you might choose to do so if you are not, you absolutely do not have to use one. So you use a purchase agreement, you contract the property, you have other you have another buyer, let’s say another fix and flipper, or maybe you have a landlord type buyer who’s looking to build more of a portfolio, you may not be at that point yet you may not have enough money to start building your portfolio, you may not be wanting to take a risk in getting into the real estate flipping game.
So at this point is best to simply assign your contract. This is what is called an assignment contract which is used to wholesale real estate. It is a one simple page contract that essentially is giving you a fee to assign the contract over to the end buyer. Now, this is completely legal, the negotiations are between you and the seller. And ultimately you are collecting a check putting the seller together with the ultimate end buyer and you go rinse and repeat. You have no skin in the game in the sense of buying the property you do not need to go get credit or have credit for that matter. You do not need to go get a loan. You simply get a earnest money deposit at your choosing however much you would like. You then put it into escrow with a 14 day contingency or inspection period. And from that point, you do some your inspections and you simply find a buyer who will go out and buy this property for themselves, whether it be a flip or a rental. That is wholesaling real estate, folks.
