It’s as Easy as 1-2-3

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It’s As Easy As 1-2-3

On regular occasion you may see an advertorial on TV or watch a video online about how you can make thousands of dollars in your part time buying and selling real estate with no money down. While that may be a stretch there really is a way for individuals to buy and sell real estate and make some money along the way. With no money down. How? In the real estate biz it’s called wholesaling.

Wholesaling in real estate is like any other wholesale process. Buy something below market and sell the product at the full retail value. The first part of real estate wholesaling is finding the property for sale. Typically properties that are listed below market are distressed properties. Perhaps the seller is trying to avoid foreclosure or there’s a divorce situation requiring a property to be sold quickly.

The second part of wholesaling is understanding what the true market value of the property really is compared to the asking price. If the property is selling for $100,000 and you think you can sell the property for $150,000 then you have a possible deal. If you can find a buyer to buy the property for an amount near the $150,000 then you’re getting closer.

Write up an offer to the seller for $100,000. Next, write up still another contract with a buyer for $150,000. So far, so good. The final piece of the puzzle is the “no money down” part. There are private lenders that help finance such short term transactions, for a fee.

By providing the private investor the two contracts, the lender will provide the $100,000 to the original seller allowing you to sell the property to the new buyer. The buyer brings $150,000 to the closing table and you pocket the difference, less the private lender’s fees. These fees can vary but the private lenders’ charges will be deducted from the proceeds of the second sale. That means no money out of pocket from you.

This is a general description of how wholesaling works and in no way describes the entire process but when you hear those ads on TV, the process of wholesaling is what’s being described. But wholesaling is alive and well, and for those that practice wholesaling actively, it really can be a way to make thousands of dollars in their spare time.

DISCLAIMER: We provide real estate education and training. We do not sell a business opportunity. We make no earnings or return on investment claims. Additionally, we do not offer any tax, accounting, financial, or legal advice. Marketing services for Property Education, LLC, provided by EvTech Media. Education support and fulfillment services provided by Real Estate Education Group. Prior to undertaking any real estate transaction, you should consult your own accounting, legal and tax advisors evaluate the risks consequences and suitability of that transaction.