No. The process of creating a contract with a seller and then assigning that contract to a buyer does not require you to have a real estate agent license. However, it’s important to note that having a real estate license does have a distinct advantage to a wholesale real estate investor. If you hold a real estate license, you’ll have access to the multiple listing service (MLS) before the general public. This early access means that you’ll see the homes that fit the criteria for both wholesale real estate investing and the properties your buyers may be interested in purchasing.

If you’re looking to expand your investment portfolio, wholesale real estate may seem like a relatively quick and easy way to turn a profit with very little money or time invested. However, there are a few things you need to know before you can get started. Let’s dive into wholesale real estate and how to get started in this type of investment.

What Is It?

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Wholesale real estate involves the investor creating a contract between the seller of a property and the buyer of that property. The profit is made by purchasing the contract from the seller at a lower price than what’s assigned on the contract with purchaser and keeping the difference. To qualify for a wholesale real estate contract, the home must be sold under market value. These types of homes are typically in foreclosure due to either financial hardship or too many repairs for the owner to afford to fix them.

Do You Need Money to Get Started with Wholesale Real Estate?

The answer here is also no. However, it’s important to know that you could get stuck with a property or a payment if you’re unable to assign the contract to a buyer within the allotted time frame. Sometimes you can negotiate a contract to include a special clause stating that if a buyer is not found in time, the contract will be canceled, saving you from having to invest any of your money into the deal. You should have a complete and accurate picture of your finances and what you can afford to pay before starting wholesale real estate.

What is the Wholesale Real Estate Process?

Before you get started looking for a property to buy as a wholesale real estate investment, take the time to make connections with industry professionals such as title companies, lenders, lawyers, and other agents. These connections are essential for finding properties to purchase. It’s also important to start creating a list of potential buyers and their desired property features. Finally, you should get to know the market, how much houses are selling for on average, what the most desirable locations are, which features help sell a home faster, and the average cost of renovating or repairing a home.

Most of the time in wholesale real estate investing is spent on the front-end of the deal. After that, the steps include:

  • Finding a property to purchase. Focusing on the features your list of potential buyers is looking for will help you find a property listed under market value that meets your needs.
  • Negotiating a contract with the seller. The seller is aware of your role in this process, so you’ll need to bring your best negotiating game to the table to negotiate a price that will allow you to profit between contract creation and assignment. You may want to ask the seller to cover additional costs such as home appraisal, earnest money, and title company fees. If they agree, that’s less of your money invested in the contract.
  • Finding a buyer for the property. Hopefully, you’ve already compiled a list of potential buyers in your initial research phase and used that list to match buyers with the features of this particular property. The buyer is also aware of your role in this process, so your negotiating skills will be put to the test again to guarantee that you turn a reasonable profit once the contract is assigned to the buyer.
  • Assigning the contract over to the buyer. Once a price is agreed upon, it’s time to assign the contract over to the purchaser of the property. The buyer will need to agree on the assignment fee and deposit be paid to the wholesale real estate investor upon final sale.
  • Closing the contract and collecting your fee. You’ll want to attend the closing to ensure that the process goes well. Once the title company has wrapped up its duties, the assignment fee will be paid out to you.

Wholesale real estate can be a quick way to turn a profit after you’ve put the time and energy in on the front-end with research and connections. If you don’t invest the time in wholesale real estate up front, you run a higher risk of failure and may end up owning a property you had no intention to buy.

You may want to consider having a backup plan in case you’re unable to find a buyer or the buyer backs out of the deal. A backup plan could include renovating and repairing the property to sell at a higher price later, flipping the property, or renting the property out and collecting rent as your investment.

If you’re interested in learning more about wholesale real estate investing or feel that you’re ready to dabble in this unique investment opportunity, reach out to the knowledgeable team at Titan Funding. We have the expertise and experience to answer any questions or provide you with a full range of financing options. You can call us at 855-731-8313 or reach out to us online, 24 hours a day, seven days a week.