What is real estate wholesaling?
Real estate wholesaling is the process of putting buyers and sellers together for profit. Just like many businesses have a middleman that they buy their products from, real estate wholesalers find the products (houses) for the end user (buyers) and make a profit for doing so.
To keep it easy, I am going to compare real estate wholesaling to selling a bike when you have no money to buy it.
In order to make money on any product you need to find the product for less money than what you intend to sell it for. For conversation sake, let’s say you found a bicycle that you knew you could sell for $200 if you put the pedals back on. Without the pedals you could sell the bike for $150. If you had the money you could buy the bike for $100. The problem is you have no money to buy the bike or the pedals. You are flat broke.
In the old days you would have had to walk away from this deal.
Not with wholesaling, with wholesaling you don’t need money or credit. Instead you talk to the owner of the bike and make him an offer to buy the bike for $100. Then you tell the owner that you don’t need to take the bike. You would just like him to hold the bike for 3 days, and you will work on finding the money to buy it. If after 3 days you don’t have the money, he can go ahead and sell it to someone else.
Once the owner agrees you call up Fred who you know is looking for a great deal on a bike. You tell Fred, “Hey Fred, I found a great deal on a bike, this bike will sell for $200 when you put the pedals on, you could buy some pedals for $10 at the hardware”. You go on to say “You are not going to believe this Fred but I am selling this bike for $130″. Fred says “Awesome, when can I pick it up”.
You call the owner of the bike and let him know that you will be buying the bike as long as your friend says it has no problems. Then you ask him if you could pick up the bike and have a friend look it over. Then you pick up the bike from the owner and call Fred. Fred gives you $130 for the bike. You go and pay the bike owner $100. The bikes owner is happy. Fred got a great deal on a bike. You made $30 for not spending a penny, all you had to do was make a couple of phone calls.
