Real estate is one of the best investment vehicles in the world to make money. The versatility of real estate truly provides an opportunity to invest in a variety of different ways. No matter your background, experience, or financial situation, there is a way for anybody to get started in real estate today.
Why invest in real estate? Did you know in the last two centuries, over 90% of the world’s millionaires have been created by real estate? When it comes to investing in real estate, there are multiple different ways for investors to make money in real estate. Examples include passive income through rentals, appreciation from property prices increasing, flipping, and so many more creative ways. No matter your style or risk tolerance, real estate will present a way to make money to match your goals.
Fix and Flip
One of the most common ways investors make money in real estate is through fix and flips. In a nutshell, the goal is to purchase a home in disrepair below market price, remodel and fix up the home, and then put it back on the market to sell for a hefty profit.
Savvy investors can scale their business to accommodate over 100 flips per year. The average gross profit from a flip is about $62,700. Multiply that by any number of flips and you can see why so many investors are interested in fix and flips. A best practice is to buy in appreciating markets where the forced appreciation from fixing the home can also ride the demand within the market.
When analyzing deals, you’ll want to use comparable homes to understand what the potential price can be of your fix and flip. Consider factors based on your market. In certain markets, the value of the home may judge more on the square footage of the home. In others, it depends on the renovations more than the square footage. Look for opportunities for improvement. Can you add a bathroom or bedroom?
Also, remodeling kitchens are more important than the actual bedrooms. Many different strategies go into a fix and flip. Just understand that ultimately, your knowledge of the market and your ability to secure a deal under the market will help increase your chances of completing a successful flip.
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Buy and Hold
Another popular way to invest in real estate is through buying and hold rentals. This involves purchasing a property to rent out either for the short run or long term. Through buy and hold real estate, an investor can generate passive income by collecting rent each month. The way you make money is when buying the property, your expenses should be lower than what you are renting for.
Anything in between your expenses and the rental rate is your profit. Let’s say you buy a house for $150,000 and your monthly expenses that include mortgage, taxes, and insurance equal to about $1,000. You rent the house for $1,300. The net cash flow that you collect is $300 a month after everything. That’s $3,600 a year just from one investment. Again, multiply that number by the number of properties you’d like to own, and that number grows rapidly. At the same time, if you have a mortgage on the home, your home, each money you are gaining equity as you pay down the principal. Another includes appreciation. Real estate typically grows at a rate of 3.0% or higher depending on the market.
Over time your initial investment will be worth more. For those investors interested in passive income, Buy and Hold is a fantastic strategy to make money in real estate.
REIT
If buying real estate directly is not your interest, another possible way to still take advantage of earning an income from real estate without owning is buying into a REIT. A REIT is a real estate Investment Trust. You can buy a REIT the same way you would buy a stock which makes it more appealing to some investors. Usually, publicly-traded real estate investment companies that buy different real estate assets are what makeup REITs.
The advantage of buying a REIT is that they offer a high rate of return in the form of dividends. Some REITs even payout monthly. It is not uncommon to find a REIT that pays out over 5% return in the form of a dividend. The cash flow these companies generate from their rentals is passed onto their investors.
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However, unlike stocks, REITs typically don’t appreciate the way that stocks like Apple and Tesla do. Be wary that if you are looking to double or triple your money, a REIT probably is not the solution for you. That said, if you are looking to park your money and generate some form of passive income, a REIT may be a type of real estate investing that you may want to take a look at.
One other benefit behind a REIT is the barrier of entry. The fact is, as long as you have an account to buy stocks and REITs on, you can buy individual shares of a REIT and slowly grow your account. This is great for beginners that are looking for some form of cash flow.
Where To Start?
If you want to make money in real estate, consider investing in yourself and doing what it takes to learn about real estate. Additionally, you’ll want to get your finances in order as that is critical when it comes to buying real estate. Look into the different ways to invest in real estate and see which approach aligns best with your lifestyle and risk tolerance. Not everybody has the time to invest in flips and manage a rehab. Understanding which style of investing matches your goals is important before getting started. Speak to a few experts and gain some additional insight. Before long, you too can be making money through real estate.
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”
From a young latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to
register for our next virtual and in-person events. For all the details,
please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
https://www.realestateinvestormagazines.com/wp-content/uploads/2024/06/real-estate-money.jpg4001000dulcehttp://www.realestateinvestormagazines.com/wp-content/uploads/2013/04/logo.pngdulce2024-06-24 06:09:172024-06-24 06:09:18HOW TO MAKE MONEY IN REAL ESTATE
Wholesale real estate is a great way to get some real estate investor experience without spending tons of money. Like any other real estate investing method, you should make sure this aligns with your goals and personal interests before getting started. In this article, we’ll help you better understand wholesale real estate for beginners so you can identify if it’s the right choice for you as you get started in real estate investing.
What is Real Estate Wholesaling?
Essentially, you would act as the “wholesaler.” Your job is to acquire a contract to sell from someone looking to sell a property. You would then find someone interested in buying the property – usually a real estate investor – and you will sell them the contract. Never at any point do you buy or sell the property. Instead, you find properties selling from slightly less than market value and connecting them to buyers for a fee. Many people like wholesaling real estate as beginners in investing because it doesn’t require you to invest any money in the properties. It’s relatively low risk and can have a low turnaround time.
Real estate wholesaling is completely legal, despite the debate around it. This is because the wholesaler is never actually selling the property, just the ownership of the contract to buy the property.
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How do You Make Money Through Real Estate Wholesaling?
As a wholesaler, your job will be to find properties that are being sold under market value. Once you get into contact with the property seller, you will work with them to get a purchase contract. You will have to do your research and provide your seller with information on the value of their home and why they should work with you. Once you get the contract, you will find a real estate investor interested in the property. You will then sell the purchase contract to the buyer. You earn your revenue through a wholesaling fee attached to connecting the buyer and the seller. This is typically a percentage of the overall cost. To reiterate, you are only selling the contract to purchase the property, not the property itself.
Many buyers like working with wholesalers because they do all of the work of finding the properties, assessing the value, and negotiating with sellers. Despite having to pay the wholesaling fee, it’s often still worth the extra cost.
The Pros of Wholesaling Real Estate for Beginners
Valuable Real Estate Knowledge and Experience
If you want to gain connections and knowledge about real estate without the financial risk, wholesaling real estate is excellent for beginners. You still learn the basics of real estate through negotiation, organizing, finances, and legal aspects. Through wholesaling, you’ll deal with many different properties and investors, and you can start to identify what you like and what you don’t. When you switch investment styles, you’ll know what to look for.
Quick Turnaround
After you learn what you need to know to get started, the best way to learn how to wholesale is to get the experience. You can get this experience quickly, as wholesale real estate can be a relatively quick turnaround. This is great for beginners because it means you get your money faster and build your connections faster. Things like house flipping can take months, and when you don’t have a lot of revenue coming in, that can hurt your potential to succeed in real estate. Wholesaling, however, has about a month turnaround for each business dealing. If you think you can handle more than one, you can time them out to make sure you’re getting paid more than once a month.
No Capital Required
The best part of real estate wholesaling is that you, as the wholesaler are not obligate to dish out any money. When you start off in real estate, money is often the most significant barrier to becoming successful. Choosing beginners who opt to start with wholesale real estate set themselves up for success because they make all of the valuable connections and gain experience and knowledge without investing all of their money. If you are worried about getting started because you do not have a lot of capital, wholesaling may be your best method.
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Cons of Wholesale Real Estate
No Guaranteed Income
Unlike other real estate investing methods, wholesale real estate has no guarantee of working out and ending in a paycheck. Beginners who decide to invest in property management can usually guarantee a steady income through tenants paying rent. The only time you will get paid is if you can successfully match a seller and a buyer and complete a deal. Even then, you’ll have to wait to get paid until everything goes through. As you get better, you’ll have more confidence in your income, but it’s never something you can count on.
Networking Heavy
Your paycheck is entirely dependent on your ability to find a buyer who wants to invest in the property you’ve found. Suppose you do not have the type of personality that does well with networking or negotiating. In that case, that is something you want to really consider before choosing wholesale real estate as your career. If you are unable to find a buyer, you may be financially obligated to purchase your property. As you build your references, this risk may be avoided. It’s still something you want to heavily consider if reaching out to a lot of people makes you uncomfortable.
Is Wholesale Real Estate Hard?
The short answer- yes. Wholesale real estate can be complicated when you’re first starting off and don’t have many connections. After you make your first couple of deals, things will start to get easier. You will begin forming a buyers list and have connections to pull from when you find properties under market value. The hardest part is having all three components in sync. If you are missing any of these three components, you will not have a successful wholesale real estate business. First, you must be able to identify properties being sold for well under market value. Second, you must have good negotiation skills to make deals with the seller. Lastly, you need to find and partner with cash buyers who are willing to purchase these properties. To be a successful real estate wholesaler, you have to build strong connections with buyers, create robust lead lists, and network with others in real estate.
Real Estate Wholesaling Explained
Wholesale real estate is a relatively simple concept once you lay it out in a scenario. Let’s start at the beginning of the process with finding a home for under market value. You find a homeowner looking to sell their home. The house isn’t in great shape and will not be able to sell for market value. The seller of the home has two options. They can spend the money to rehab their home and fix it up, hoping to sell for market price. Or, they could enter into a wholesale contract with a real estate wholesaler. Essentially, the contract between the wholesaler and the homeowner would give the wholesaler the right to buy the property at an agreed-upon price under market value. The real estate wholesaler will then look for an end buyer willing to pay slightly more than what they agreed upon with the seller. The end buyer is usually another real estate investor. The wholesaler will sell the rights to buy the house to this new investor. Essentially, they are selling the contract. They are not selling the home because they never bought the home. The wholesaler negotiates a contract, then sells that contract, which gives the buyer the right to buy the property.
Essential Skills to Become a Successful Real Estate Wholesaler as a Beginner
Real estate wholesaling comes down to a few key concepts. Once you capture these concepts, you’ll be able to succeed and start making a profit.
Negotiation Skills: Real estate wholesaling revolves around negotiating with both the seller and the buyer. For the seller, you have to convince them to sign a contract with you to sell the right to buy their home for under market value. Then, you have to convince an investor why they should be interested in buying your property. Having to convince one person is difficult, but convincing two takes some serious skills.
Technical Skills: If you are tech-savvy, you can quickly get ahead of your competition. Not everyone in the industry fully utilizes technology. If you take full advantage, you will become successful. Ensure you have a fast, modern website that makes it easy to get in touch with you. Develop a presence on social media and connect with real estate investors in your area. Utilize software to handle your finances, help you find properties under market value, and keep you organized. All of this will make a massive difference in your business.
Time Management Skills: You need to understand the value of your time and your own personal limits. If you take on everything all of the time, you’re going to get burnt out. This will not only affect your mental health, but it could also lead to errors in your business. Understand what you can personally manage, then outsource or delegate the rest.
Create Your Business Plan for Real Estate Wholesaling
If you’ve decided that wholesale real estate is the right next step for you, it’s time to develop a business plan.
Identify Good Places to Find Leads
This applies to both your real estate investors looking to buy and your homeowners looking to sell. If you can’t get leads, you’re not going to make any money in real estate wholesale. To find leads on homeowners looking to sell, utilize websites like Craiglist.com, Loopnet.com, Propertyshark.com, Realtor.com, etc. These websites provide tons of data that can help you find leads for your business. For leads on real estate investors, use your networking skills. Put yourself in real estate groups and places where investors will be and start making valuable connections. Establishing an excellent social media presence can also help you build rapport with other real estate professionals.
Build Connections with Buyers
Every time you complete a sale to a buyer, have a conversation with them about how you can be mutually beneficial to each other. Take the time to understand what they are looking for in properties they invest in. Keep a spreadsheet of all buyers you work with and what types of properties they buy. Reference this sheet every time you find a property that you can wholesale and pair it up with the buyer who it matches. This could take time but will build an invaluable relationship.
Do Your Research
Both your seller and your buyer expect you to offer them a well-researched and honest price for the property. For your seller, you need to give them a price along with information on comparable sales in the area, estimated cost of repairs, and the after repair value of the property. All of these numbers should be included in your offer to both the seller and the buyer. Do not try to edit the numbers to profit more. Sellers who see through this will be offended and cancel the deal. Buyers will have done their research and will know what you did. You’ll get a bad reputation, and the buyer will never want to work with you again.
How to Find Buyers for Real Estate Wholesale Deals
You can find sellers who have great properties under market value, but you will never make a profit if you can’t find any buyers. The more deals you make, the more buyers you’ll form connections with, and the easier it will get. Until then, you need to learn some strategies on how to find buyers when you are a wholesale real estate beginner. These are a few creative ways to find buyers when you are first starting out in wholesale real estate.
Craigslist
Craigslist is a great place to start when looking buyers. The site allows you to place ads and start collecting leads on interest buyers. Aside from that, you can use Craigslist’s “housing” section to identify property owners in the area who may not be ready to buy right now but could be valuable connections later on.
Social Media
Social media is a great way to find real estate investors in your area and connect with them. Sites like LinkedIn, Instagram, Facebook, and even NextDoor could be good places to start. Many investors have Instagram accounts where they post about their house flips or deals. Start building a connection with local accounts that could turn into buyers. LinkedIn is a great place to make business connections and post about potential deals. Facebook has lots of local real estate groups you can join; they also have Marketplace features that include real estate options. You can either post in those or look for leads later on.
Networking
Networking will be one of the most valuable things you do in your real estate career. If you are not already a member, join your local real estate group, either online or in person. Go to every networking event and meet as many people as possible. Mention what you do and ask around to see if anyone knows of real estate investors who utilize wholesale real estate in their businesses. You may also want to build connections with real estate agents, as they have access to lists of recent cash sales.
Website
Establish your presence online as a real estate wholesaler and optimize your SEO so that you rank well on Google if anyone searches in your area for wholesale real estate. Create a lead capture form on your website where potential sellers and buyers can submit their information.
Courthouse Auctions
Buyers must have all cash at courthouse auctions, so this is a great place to go if you are looking for buyers for your deals. Visit these auctions regularly and start to build connections with the people who attend. Get to know these buyers and the types of properties they look for so you can reach out if you find one that fits their needs. Ask for their information and follow up.
Important Things to Remember for Real Estate Wholesaling
Utilize Buyer Preferences
Every buyer has their preference of properties they like to buy. Once you know what your buyers are interested in, you can start prioritizing deals based on that. Keep a spreadsheet of all of their preferences and reach out to them when one of your properties align with their interest. Do not reach out to buyers with every single deal if you don’t to. If one of your buyers is not a house flipper, don’t have them a house that needs a ton of work. Utilizing your knowledge of your buyers will help you guarantee a sale.
Understand Your Seller
Although you want to get your properties contracted for a low price, you need to be fair to your sellers. While you may understand why you are offering them a specific price, if you do not communicate all of those reasons to them, they will not. When speaking, you will want to show them your reasoning without making them feel bad about the state of their property or the value it’s at. While this all comes down to numbers in real estate, it may be a much more emotional process for them. There could be other buyers communicating with them for all you know, so make sure you form a good connection during this process.
Another important aspect of your wholesaling real estate business should be transparency. Sellers need to know that they can trust you. If they know that, they’ll be much more likely to work with you. Be honest about them with pricing, risk, and updates.
Keep Everyone Up-to-Date
Your buyer and your seller will feel more at ease if you are transparent with them every step of the way. Make sure to communicate with both of them any time something new happens. Even if you did your part and got the contract handed over, stay involved until the end. These are relationships you may need to use in the future for more deals, so you want to make sure everyone feels comfortable and happy. Do what you can to ensure open communication and complete transparency throughout the entire process.
Maintain Connections
Your business with your buyers should not end when you get your cut. Always follow up with them to make sure they are happy with how things went. Discuss with them in further detail how you can be an asset to each other and continue to build your working relationship long after the deal is closed.
The Last Step: Closing the Deal
Once you have done all of the work to find the property, work with the seller, and identify an interested buyer, you are finally at the last step: closing the deal. To do this, you will assign the contract you made with the seller at the beginning of this process. Once you assign the contract to the buyer, they will then be able to purchase the property. Once the buyer purchases the property, you will send the deposit to the title agency or attorney handling the closing. After everything is complete, you will get your wholesaler fee for connecting the buyer and seller.
This can all sound like a lot of information and may appear to be very overwhelming. Although a lot goes into this, there’s a reason people recommend wholesaling real estate for beginners. It is the most affordable way to get invaluable real estate experience when starting off in real estate. You will build skills, knowledge, and connection so quickly through wholesaling. To get started on your real estate investing journey, check out our website.
Joe Arias
Joe Arias and his partners have flipped hundreds of properties in the Southern California Region. He has developed cutting-edge systems to simplify and scale the entire remodel process that can easily be applied to flipping, rentals, wholesaling, and other passive income strategies. More recently, Joe founded a real estate investing education company called RealSuccess Investments, allowing him to share his tools and systems with hundreds of up-and-coming investors.
RealSuccess is focused on education on flipping, rentals, passive income, and wholesaling.
Joe is also a best-selling author. He has written 4 books: Finding your RealSuccess, First Steps to Flipping, R stands for Rentals and Retirement, and Wholesaling Real Estate.
“I came from Argentina when I was 20, I am 40 years old now. I didn’t know anyone, I am CERO generation, usually people say, I am first or second generation but I was the one that crossed the border, no language, no friends, no family, no money, nothing, nada… If I can do it, anyone can.”
From a young latino immigrant to a celebrated real estate investor, Joe is a true testament to hard work and discipline. As an investor, he has made it his mission to help others achieve financial freedom while enjoying living a life of passion, fulfillment, and empowerment.
Learn live and in real-time with Realty411. Be sure to
register for our next virtual and in-person events. For all the details,
please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.
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Don’t miss the opportunity to connect in Philadelphia, Pennsylvania once again for an educational boot camp. At this event, guests will have the opportunity to learn directly with top business and real estate leaders. Experienced educators will share their knowledge and strategies for guests to have a better understanding of the current real estate market. Join us and gain the insight to implement a game plan for success. This boot camp will include top-level industry information and fantastic networking.
Date: October 7th, 2023 Time: 10am-3pm Location: Philadelphia School of Massage & Bodywork, 263 N Lawrence St, Philadelphia, PA 19106 Mindset: ‘Education, Networking & Creating Opportunities a Workshop Setting’ Registration Cost: $99.00 Person – Includes Breakfast, Snacks & Lunch
Mike Lautensack
Owner at Del Val Property Management LLC
TOPIC: The 10 Reasons Why Real Estate Investors Should BRRRR with Professional Property Management for Maximum Wealth
Stephen Chatto & Roland Jefferson
TOPIC: Wholesaling Real Estate as the foundation to success in all areas of real estate investing.
Overview: A dive into the nuts and bolts of what real estate wholesaling is and is not. This presentation will be real, diving into what is involved, good and bad, in running a successful wholesale business from two full-time real estate investors with hundreds of transactions closed. Not only will you understand and learn the real ins and outs of real estate wholesaling, but you will also learn how the lessons learned operating a wholesaling business translate into effectively running real estate businesses across many niches.
Bob Chessick
Chesspin Corporation
TOPIC:Business Strategy Without The B.S.
Incorporating for Real Estate 101 with Bob Chessick
👉 The Corporate Transparency Act is coming, and it impacts your LLC – Is your LLC ready for 2022?
🔷 Topics will include:
✔ Types of companies
✔ Tax implications
✔ Use of multi-company structures
✔ The new Corporate Transparency Act
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Eric Mauz
Owner, MB Capital Solutions
TOPIC: Expand Your Real Estate Business with Unsecured Business Lines of Credit
3 types of Unsecured Business Lines of Credit
Credit Guidelines to Qualify
R.E. Investor Client Case Study – How clients have used their credit lines for BRRRR Method and Fix & Flip Project
Joseph V. Scorese
National Sales Director, BRRRR Loans
TOPIC: Leveraging Direct Private Lending
Leveraging Direct Private Lending can be a great way to create passive income from real estate and understand Lending Options owning rental properties. But there is a lot to learn before diving in! This Presentation has everything you need to know to provide better knowledge to Real Estate Professionals, Agents & Services in the Investment Space on Direct Private Lending!
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We will cover:
• Rentals Loans
• Fix & Flip Loans
• Portfolio Rental Loans
• Multi-Family Bridge Loans
• New Construction Loans
• Fix to Rent Loans
• Blanket Loan Programs
• 5+ Multi Family & Mixed-Use
• DSCR & Bank Statement Loans
• Non-Recourse & Recourse Options
• Unsecured Business Lines of Credit
• Foreign National Loans
YOUR HOST: This educational boot camp is hosted by Joseph V. Scorese. Mr. Scorese is a mortgage industry professional who is committed to helping his clients. He has more than 20+ years of successful experience in loan origination. Joseph continues to work in the mortgage lending industry and has built a career as a talented and reliable Mortgage Banker.
