Why Wholesaling With Options Contracts Make Great First Deals
Wholesaling is a straightforward way for someone to get into the real estate investment business.
You find a property that you believe to be a great bargain. Then sign an agreement with the seller that gives you the option to buy the property in the future. The deal also included verbiage that allows you to pass or assign that contract to another buyer. Now you can focus on locating a buyer for the property. Once you have the buyer, you pass along the property at a higher price to make a profit on the deal.
The Benefits Of Option Contracts
- Low Cost – Unlike many real estate investment deals, you don’t need a lot of money to get started. You are signing an agreement, but you are not putting down any money. So until you find a buyer, no money changes hands.
- Time – With an options contract, you have a specific amount of time to locate a buyer. But you are not stressing about making a loan payment or losing earnest money if you don’t find a buyer in the first week or two.
- Flexibility – There is a great deal of flexibility in wholesale investing. You have the option to purchase a property for yourself, or you can pass it along to another investor or even the end-user. To be the most successful, you will want to diversify and work with individual investors, flippers, contractors, and even consumers who are looking for a home. This wide range of buyers gives you the most options possible for success.
- Low Risk And High Reward – Because you have none of your own cash wrapped up in a property, there is a minimal financial risk for you. But with a little time and hard work, you can turn a very nice profit by finding the right buyer for the deal.
- No Holding Cost – Because you are not buying the property upfront, you have no worries about repairs, fees, upgrades, commissions, or other fees associated with holding a property until it is sold.
- Quick Cash – Wholesaling is a process that can move as quickly or slowly as you like. In most cases, the faster, the better to get your deal done and some cash in your hands.
Once you have decided that real estate wholesaling is for you, there is only so much tie and energy that you can invest in learning. You need to take that massive, and sometimes terrifying, first step and get your first deal started. Not every transaction will go as planned or provide an enormous financial reward. But as you progress into more sophisticated markets and contracts, you will continue to learn and improve your skills.
Never forget that your basic evaluation skills and knowledge of the market will make or break your deals and your business. So take the first step and then move forward with caution but also excitement for all that you can achieve in the future.