In general, wholesalers in all industries buy products and resell them below retail. Wholesalers work for their customers by researching, finding, and purchasing the products, which they resell to their customers for a small profit.
Real estate wholesaling is similar to wholesaling in any other industry. A good real estate wholesaler finds outstanding real estate investments that he sells to investors for a small profit.
Real Estate Wholesalers Provide Investors with Opportunities
Unlike conventional real estate investors who buy properties with the intent of rehabbing and flipping them, or holding them as income generating rentals, real estate wholesalers work exclusively to secure deals for real estate investors.
Just as grocery stores and restaurants need a great wholesaler to find and supply the products they need to succeed, many real estate investors use wholesalers to find and supply profitable investment properties to help ensure their success.
As a result, real estate wholesalers provide investors with investment opportunities they would not have otherwise.
Real Estate Wholesalers Dig for Diamonds in the Rough
The best real estate wholesalers find investment properties that others overlook, perhaps because of the extensive repairs that will be needed, or perhaps because the wholesaler knows where to look for “diamonds in the rough”.
The wholesaler is able to find these properties because of his research team that’s trained to find high cash flow properties, and put together outstanding investment deals.
And perhaps most importantly, a good wholesaler has an extensive network to find off-market “diamonds in the rough” that he snatches up before they hit the market, in order to get the best deals.
Real Estate Wholesalers Often Assign Contracts
In some cases, real estate wholesalers buy properties before selling them to an investor, but often times they assign contracts to avoid the expense of buying and reselling the property.
In very general terms, a wholesaler will find a good investment property, and put a contract on it at a price below what he will sell it to an investor. The difference between the price he contracts to buy the house, and the price he sells the house to an investor, is the wholesaler’s profit.
In the assignment contract and other documents, the wholesaler’s profit (assignment fee) is disclosed. Then at closing, the wholesaler is paid for the profit he makes on the deal, As a result, the investor gets a great investment property, and the wholesaler is paid for the work he did on the deal.
What do Real Estate Wholesalers Do?
In brief, good real estate wholesalers are experts at finding exceptional investment properties, which they sell to investors for a small profit.
Many of the best wholesalers also provide services to investors that can include connecting them with private financing, and coordinating with rehab and management companies. So when using a wholesaler to purchase investment properties, check to see if they provide other service that could be helpful to you.
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