What Is Wholesaling in Real Estate Investment?
Wholesaling is a very popular creative strategy that works across Canada. Relatively simple in concept and requiring little or no money, many investors get started with wholesaling and then move on to other strategies. Now, note I said “relatively simple in concept.”
The concept is that as an investor, you look for undervalued properties. You get that property under contract to purchase and, while the contract is still conditional, you search for someone who sees the value in the property. They want the property for themselves. Maybe they’re going to move in as a personal residence, or maybe they’re an investor. It doesn’t matter; they are willing to pay you some money and close on the property themselves.
Now, finding undervalued properties is the trick. There aren’t too many listed for sale by realtors. Most of those properties are listed at what realtors feel is the market price. Most undervalued properties are found where the sellers have some sort of problem to solve or are selling on their own. And, when you find someone to buy your contract, the ‘assignment’ fee that you earn is often in the $5000–$10,000 range, not bad.
Assigning a Real Estate Purchase Contract for Quick Money
This scenario is pretty common but earning much more than the usual $5000–$10,000 is achievable and does come up. Recently, one of my students who purchased our Wholesaling/Assignments Home-study Kit got in touch to say he had a possible wholesaling deal. Now, this student had absolutely no investing experience. He owns his own home, but that was the limit of his real estate knowledge. Like anyone doing something for the first time, there were lots of stops and starts and explaining and coaching and revising. But, he got to the point where he had a property under contract with a three-month closing date, meaning he had lots of time to find someone to take the property off his hands .
This strategy works very well in a busy real estate market, which is what we are experiencing here in Alberta in April 2022 as well as across Canada more generally. It actually only took one month for our student to find a buyer and negotiate the assignment (sale) of his purchase contract for, are you ready?
$30,000!!! That’s right, his assignment fee was $30,000 earned right now. In other words Rapid Cash!
Lessons learned:
- Don’t pre-judge seller motivation. Sellers sell for their own reasons.
- Creative strategies are alive and well; there are deals to be done.
- If you are brand-new to real estate investing, solid education is the key to success