Are you interested in investing in California real estate but lack the necessary education, skills, experience, and resources to get started? Perhaps you understand the basics of real estate, but your credit is less-than-stellar, and funds are limited. While these factors are essential to real estate investing, wholesaling is a potentially lucrative way to get your foot in the door. Continue reading to learn more.
What is Real Estate Wholesaling?
Wholesaling is a contract-based concept in which the wholesaler finds sellers struggling to sell their properties. The contract stipulates that the wholesaler will serve as an intermediary and find a buyer for their property.
How Does The Wholesaler Make Money?
The wholesaler makes their profit by selling the property to a buyer willing to pay more than the selling price. For example, the original seller or owner contracts with the wholesaler to sell the property at $500,000. The wholesaler then finds a buyer willing to pay $515,000. The $15,000 belongs to the wholesaler.
Is Wholesaling Legal?
Is wholesaling real estate in California legal? The simple answer is yes. However, there are real estate rules and regulations that vary by state. For example, in California, the wholesaler cannot market the property for sale. You can only advertise the contract to potential buyers or real estate investors. To ensure you comply, familiarize yourself with the wholesaling laws in California (or the state you wish to wholesale) before getting started.
Advantages Of Wholesaling California Real Estate
Why would someone want to become a wholesaler in California? Below are a few advantages.
California Has Great Market Potential
One of the first reasons to consider wholesaling in California is the earnings potential. It’s ranked as one of the best states to wholesale real estate. The large state has an increasingly growing population and excellent job opportunities and is an ideal location for people of varying lifestyles. The median property value is $505,000, and rental rates average $1,614 monthly for a 2-bedroom apartment. Ultimately, it’s a hot spot for real estate investors, meaning wholesalers can profit significantly.
Get Started Easily
While other professions in the real estate industry require you to have education, skills, experience, licenses, and certifications, that’s not the case for wholesaling. As a wholesaler, you can begin without any prior education, training, licensures, or experience so that you can get started sooner.
No Money? Poor Credit? No Problem
Raising the capital to purchase and renovate a property is tedious, especially when you don’t have decent credit. Fortunately, as a wholesaler, you don’t need any money or credit to start earning. Since you serve as an intermediary, your finances and credit aren’t necessary to close a deal and get paid.
Less Work For Excellent Pay
As the saying goes, you should “work smarter, not harder.” Real estate investors must scout for properties, make an offer, complete repairs and renovations, market the property, and close the deal. If they’re landlords, they must also keep up with maintenance and repairs. Wholesalers don’t have to work nearly as hard to turn a profit. You find sellers with distressed properties, negotiate a contract, determine sales rate, find a buyer, and close the deal.
Quick Payouts. Less Hassle
Real estate investors may not see a profit from a property for several months or even years. They must acquire the property, find and hire contractors, and advertise the property once renovations are finished. Waiting for the right offer or tenant could take a while. As a wholesaler, once you’ve found a buyer that will agree to your rate, you can receive funds in less time (sometimes within a few hours).
High Demand
There are always sellers, banks, government agencies, and investors looking to buy or sell a distressed property. Wholesalers help streamline the process by matching sellers to buyers quickly for faster real estate transactions.
There is no doubt that investing in real estate can generate significant returns. However, starting a real estate investment business isn’t easy. It requires education, skills, experience, the appropriate licenses, and various resources. Real estate investing is also expensive, requiring access to cash or good credit. Wholesaling offers individuals a chance to enter the real estate industry with little to no experience, money, or credit, making it an excellent opportunity to earn thousands without the hassle.
