While highly lucrative, investing in real estate can be expensive. There are down payments and closing costs, as well as the ongoing expense of owning and maintaining a property. But you also hear stories of investors getting into real estate with no money. How are they doing it?
Many real estate investors are tapping into wholesaling to invest with very little (if any) money. Anyone can become a real estate wholesaler. You just need to know how it’s done.
We’ll show you how to use wholesaling to become a real estate investor with no money.
What Is Wholesaling?
Wholesaling is the process of getting a property under contract, then selling the contract to a new buyer. It’s almost like flipping, but instead of fixing and flipping the tangible real estate, you’re flipping the purchase contract.
Here are the basic steps in the wholesaling process:
- Find a property you can purchase at a price below market value.
- Get your offer accepted by the seller.
- Find a buyer willing to pay closer to market value for the property.
- Sell the purchase contract to the new buyer.
- Pocket the difference.
Pros and Cons of Real Estate Wholesaling
Wholesaling comes with several advantages:
- You can get started for little (or no) money.
- There is potential to make a good amount of money in a short timeframe.
- You’ll have the opportunity to learn a lot about real estate investing in general and your local market in particular.
- You can use wholesaling as the jumping-off point to fund larger real estate investments like fix-and-flips or buy-and-holds.
Wholesaling also comes with a few potential pitfalls, including:
- If you can’t find a buyer, you are financially responsible for either purchasing the property or canceling the contract.
- You’ll need to educate yourself on laws pertaining to wholesaling. In Illinois, for example, you must have a real estate license to be a wholesaler.
What Does It Take to Be a Wholesaler?
Given those real risks, wholesaling isn't something to dive into unprepared. Being a successful real estate wholesaler requires a few resources and skills.
First, you need a way to find real estate deals. With PropStream’s smart property search tools, you can find distressed properties and pre-foreclosure properties with motivated sellers. Motivated sellers are more likely to accept less than market value for their properties. Furthermore, you can use PropStream’s built-in skip-tracing to find owner contact information so you can reach out to them directly. As experienced real estate wholesaler Chris Piper notes, “PropStream is by FAR the best software you can utilize for real estate investing and wholesaling.”
You also need connections to potential buyers. The success of your wholesaling business depends on finding qualified buyers quickly. If you have an extensive network of potential buyers, you’ll have a substantial head start.
Finally, you can't wholesale effectively without local market knowledge. To know if you’re getting a good deal, you need to know your local real estate market. With PropStream’s current data, you can learn to recognize local market trends and stay ahead of them.
The Bottom Line
Wholesaling requires diligent real estate research, careful analysis, and a solid network of potential buyers. But when you invest the time in learning the ropes — and put your money into the right tools — wholesaling is the best way to become a real estate investor with no money.
With PropStream we can show you the steps to becoming a wholesaler with our free PropStream Academy Course - Introduction to Wholesaling.
