Mastering Real Estate Wholesaling: A Comprehensive Guide for New Investors

Understanding Real Estate Wholesaling

Real estate wholesaling is a popular strategy among new investors due to its potential to generate wealth without the need for significant upfront capital. It involves finding properties - residential, multi-family, or even commercial - and putting them under contract. Once a property is under contract, the wholesaler then sells the contract to an end buyer for a profit. This process, while seemingly straightforward, requires careful planning and execution to avoid potential pitfalls.

Key Steps to Successful Wholesaling

Here are the essential steps to follow when embarking on a real estate wholesaling venture:

1. Learn Wholesaling Laws: 

It's crucial to understand the laws governing real estate wholesaling in your area. In many places, you're marketing the contract, not the property itself, and you must be aware of the legal implications of your actions.

2. Partner With a Mentor: 

Partnering with a mentor can significantly reduce the number of mistakes you make in the process and guide you towards successful deals. Ensure you vet potential mentors by looking at their track record and knowledge of your local market.

3. Understand the Real Estate Market and Lingo: 

Familiarize yourself with the market and the terminology used in real estate. This includes understanding key terms like After-Repair Value (ARV), Assignment, Capitalization Rate (Cap Rate), Closing Costs, Comparables (or comps), Foreclosure, Legal Title, Real Estate Investor, and Rehab Cost.

4. Build a Cash Buyer List: 

Start networking and meeting potential investors. These are individuals or entities with the cash to buy properties but may not want to do the groundwork of finding deals.

5. Find Motivated Sellers and Distressed Properties: 

Look for properties owned by individuals who need to sell quickly for reasons such as divorce, estate settlement, or financial distress. These sellers are often more willing to negotiate, providing opportunities for profitable deals.

6. Put Properties Into Contract: 

Once you've identified a potential deal, the next step is to put the property under contract. This involves making an offer based on careful analysis of the property's ARV, estimated repair costs, and other factors.

7. Assign The Contract To A Cash Buyer: 

After putting a property under contract, you then assign that contract to a cash buyer from your buyer list. This process involves negotiating an assignment fee, which is the profit you make from the deal.

7.5. Secure Transactional Funding

Wholesalers here lately have been finding that they either need to, or do it to put the minds of the seller at ease, but they will utilize Transactional Lending to actually close on the sell of the house and take ownership of the property for a couple hours before re-selling it to the end buyer. This is a growing tactic and this article is not meant to teach about Transactional Funding but the basics are that you get a loan for the purchase of the property with a 24-48 hour repayment term and instead of a interest rate the lender typically just tacks on some kind of fee.

8. Close The Deal and Collect The Assignment Fee: 

The final step is to close the deal and collect your assignment fee. This is the point where all your hard work pays off.

How Areii Can Help

Areii offers a comprehensive platform that can assist you in every step of your wholesaling journey. From analyzing potential deals to estimating rehab costs, sharing your deal's data room, getting your wholesale deal funded, following the process, and tracking project expenses, Areii has you covered.

With Areii, you can analyze wholesale deals in seconds, saving countless hours. The platform allows you to go from analyzing a wholesale deal to managing the project in one platform, speeding up analysis so you can do more, faster.

Areii's Platform has a built in Off Market Deal Marketplace that allows you so share the property with other users and can also be shared across the web. You can track visitors and inquiries of the deal.

Areii's AI platform can help you analyze any wholesale real estate investment, from purchase price to profit. It also offers a customizable and scalable rehab cost estimator to help you understand the potential rehab costs for any project.

With Areii's unique bookkeeping software, you can keep track of both your personal and your business liability in any investment property, including your wholesale deals. Our network of vetted and tracked lenders can also help you secure Transactional Lending. 

Ready to get started with your real estate wholesaling journey? Sign up for Areii's real estate investment software and start investing today! For more information, visit the Areii Website.