Wholesaling in real estate is a strategy where an investor, known as a wholesaler, finds a property at a discounted price, and then assigns (or sells) the contract to purchase that property to another investor at a higher price. The wholesaler makes a profit from the difference between the purchase price and the sale price, without ever actually owning or taking possession of the property.
For example, a wholesaler finds a property that is in need of repairs and is currently being sold for $100,000. After negotiating with the seller, the wholesaler is able to purchase the property for $80,000. The wholesaler then finds an investor willing to purchase the property for $90,000 and assigns the contract to purchase the property to that investor. The wholesaler makes a profit of $10,000 ($90,000 – $80,000) without ever having to fix up or manage the property.
Wholesaling is a popular strategy among real estate investors, particularly for those who are just starting out, as it requires minimal capital and experience. It can also be a way for investors to build relationships with other investors and learn the market. However, it’s worth noting that some states have specific laws and regulations regarding real estate wholesaling, so it’s important to familiarize yourself with these laws before getting started.