How to Make Money Wholesaling Real Estate in 2024

Last Updated on February 28, 2024

Wholesaling real estate has emerged as a potentially high-return strategy for those looking to make money in the real estate market without the need for a license or substantial upfront capital. Our short guide on “How to Make Money Wholesaling Real Estate in 2024” will delve into the intricacies of real estate wholesaling, offering a comprehensive guide to beginners and seasoned investors alike. We’ll explore the profitability, learning curve, and potential earnings while addressing some common questions about the practice. 

What is Real Estate Wholesaling?

Real estate wholesaling involves entering into a contract to buy a property and then assigning that contract to another buyer for a higher price before closing. Wholesalers profit from the difference between the contract price with the seller and the amount the end buyer pays. It’s a strategy that requires insight into property valuation, negotiation skills, and the ability to quickly connect sellers and buyers.

Wholesalers earn potential profits from the difference between what they paid for the property minus what they sold it for. Real estate wholesalers typically keep anywhere from 10%-25% of the gross profit after reselling a property.

Why Wholesale Properties?

There are many reasons why real estate wholesaling continues to be a hot topic in the real estate industry.

Low Barrier to Entry

One of the most significant advantages of wholesaling real estate is the relatively low barrier to entry compared to other real estate investment strategies, such as fix and flip or condotel investing.

It requires minimal initial capital since you’re not purchasing the property outright — that means you’re getting more leverage on your money. Instead, you’re securing a contract to purchase a property that you intend to assign to another buyer for a fee. This aspect makes wholesaling an accessible option for those with limited funds but a strong desire to break into real estate investing.

No Need for a Real Estate License

Wholesaling doesn’t require a real estate license, removing the need for formal education or certification that other real estate activities might necessitate. This saves time and money, allowing you to focus on building your wholesaling business without the added burden of licensing requirements.

Potentially Quick Returns on Investment

Wholesaling can offer faster returns on investment compared to traditional real estate investments like rentals or fix-and-flips. Since the wholesaler’s goal is to sell the contract to another buyer quickly, it’s possible to see profits in a matter of weeks or months, rather than the years it might take to realize gains from appreciation or rental income.

Reduced Risk

Because wholesalers are not purchasing the property outright, they inherently take on less financial risk. If a wholesaler cannot find an end buyer for the contract, the most they stand to lose is the earnest money deposit or any marketing costs incurred, rather than the full value of a property. This reduced risk makes wholesaling an attractive option for new investors or those looking to mitigate their exposure to market fluctuations.

Flexibility

Wholesaling offers a high degree of flexibility, both in terms of the investment strategy and lifestyle it can afford. Wholesalers can operate in various markets, choose which deals to pursue, and decide how much time and resources to dedicate to their wholesaling business. Additionally, much of the work can be done remotely, allowing for a more flexible schedule and the possibility of working from anywhere with internet access.

Opportunity for Market Learning and Expansion

Wholesaling serves as an excellent entry point into the real estate market, offering a practical learning experience. It provides insights into property valuation, market dynamics, and investment strategies without the commitment of a long-term investment. This knowledge and experience can pave the way for expansion into other areas of real estate investing, such as fix-and-flips, rentals, or development projects.

How to Get Started in Real Estate Wholesaling

To get started in wholesaling, start researching properties that are currently up for sale. If you know someone interested in buying a home, try convincing them to pay the asking price. Make sure that you always have enough cash on hand, as your buyer might decide to move forward with the transaction at any given moment!

Find A Good Deal

The first step is to find good deals. There are many ways of doing this, but you will need to be diligent and persistent in your efforts. Once you find a property worth purchasing, try to negotiate with the seller while you’re still at the initial offer stage. Then, if the seller doesn’t have any other offers and needs to sell the property fast, you can offer a good price and get the deal done. Don’t be afraid to make your first offers low! You can always negotiate for better terms later on in the process if you haven’t signed an agreement yet.

Get The Property Under Contract

Once you’ve agreed on the price, get the property under contract. Create a simple agreement with basic terms and conditions for both parties to sign. You can use an attorney, but this will cost you money. However, you can find free sample real estate contracts online, and most states require only very basic terms to be written into the agreement. If everything is agreed upon, sign the contract and transfer funds to the seller immediately!

Get It Ready for Closing 

Now that you have a property under contract get it ready for reselling. You need to get the property in move-in condition, and you also need to run it through a title search (make sure there are no liens or other issues with the property).  The good news is that this process will be much easier than fixing up a home that needs work. You won’t have to spend money on contractors or repairs, etc.

Once you’ve got the title clear and the property rented out (if necessary), it’s time to get it ready for sale. Again, if the property is in good condition, this might take less than a week!

Get It Sold Quickly/ Find A Buyer

Now it’s time to get the property sold quickly. Of course, the easiest way to do this is to list it with a real estate agent, but you might have better success with for-sale-by-owner properties. If your property is in move-in condition and priced appropriately, it will probably sell quickly if you avoid listing it during peak times (like the summer). Make sure to market the home well—use social media sites like Facebook and Instagram and advertise the property in your neighborhood.

Sell It or Assign the Contract

Once you’ve got a wholesale deal on board for your property, you have two options: you can either sell it or assign the contract to another investor. Whichever way you choose, make sure that everything is officially transferred before collecting any money from the buyer.

Pro Tips for Success in Wholesaling

• Network extensively to find motivated sellers and connect with potential buyers.
• Understand your market to identify underpriced properties and determine their after-repair value.
• Develop negotiation skills to secure contracts at prices that leave room for profit.
• Use digital marketing strategies to find deals and attract buyers, enhancing your online presence through SEO.

Final Thoughts on Real Estate Wholesaling

Wholesaling real estate offers a unique opportunity for enterprising individuals to make money in the real estate market without the need for extensive capital or a license. With the right approach, dedication, and willingness to learn, anyone can succeed in wholesaling. Whether you’re looking for a lucrative side hustle or aiming to build a substantial business, wholesaling provides a pathway to financial freedom and success in the real estate industry.

FAQs for Wholesaling Real Estate

Do people make money wholesaling real estate?

Yes, many individuals have found financial success through wholesaling real estate. It’s not just a theoretical possibility but a practical reality for those who approach it with diligence and strategic planning. 

Numerous investors have transitioned from traditional employment to full-time wholesaling, citing substantial income that surpasses their previous jobs. The key lies in understanding market dynamics, mastering negotiation skills, and consistently finding underpriced properties to facilitate profitable transactions.

Is wholesaling real estate hard to learn?

Like any business venture, wholesaling real estate comes with its learning curve. However, it is far from inaccessible. Individuals who are committed to understanding the ins and outs of the real estate market, who are willing to learn about legal contracts, negotiation, and property valuation, can find success in wholesaling. 

It requires a combination of education—formal or self-taught—and hands-on experience. The journey from novice to proficient wholesaler is paved with persistence, continuous learning, and adaptability to market changes. With numerous resources available, from online courses to real estate networking events, those dedicated to mastering wholesaling can certainly do so.

Is wholesaling real estate worth it?

Wholesaling can be an exceptionally rewarding venture, both financially and professionally. It offers a unique blend of low entry barriers and high potential returns, making it an attractive option for individuals looking to enter the real estate market without the substantial capital typically required for other investment strategies. 

Moreover, wholesaling provides invaluable experience in real estate transactions, market analysis, and networking—all skills that are transferable to other real estate endeavors. The worth of wholesaling, therefore, extends beyond immediate profits, contributing to long-term career growth and opportunities in the real estate sector.

How much can you make wholesaling houses?

The financial outcomes of wholesaling houses can vary significantly, influenced by factors such as market conditions, the wholesaler’s expertise, and the specifics of each deal. Profits can range from a few thousand dollars on straightforward transactions to tens of thousands or more on larger deals. 

Some wholesalers manage to earn six-figure incomes annually through consistent effort and scaling their operations. The variability in earnings underscores the importance of market knowledge, negotiation skills, and a robust network of buyers and sellers.

Can you make millions wholesaling real estate?

Achieving million-dollar earnings through wholesaling is ambitious but entirely feasible. Reaching this level of success typically necessitates scaling the wholesaling business, which may involve building a team, automating processes, and expanding into multiple markets or higher-value properties. 

The scalability of wholesaling allows for the accumulation of wealth over time, especially for those who reinvest their profits into growing their business and leveraging their successes into more significant, more lucrative deals.

Can I get in trouble for wholesaling?

Wholesaling, when conducted ethically and in compliance with local real estate laws, is a legitimate and legal business practice. However, it’s crucial for wholesalers to operate transparently, particularly regarding their intentions with the property and their role in the transaction. 

Misrepresentation or failure to adhere to contractual obligations can lead to legal complications. Therefore, maintaining transparency with all parties involved and ensuring a thorough understanding of real estate regulations in your area is essential to wholesaling responsibly and legally.

How can I know the market value of a property?

Determining the market value of a property is a critical skill for wholesalers, involving a combination of research and analysis. Tools such as online real estate platforms, comparative market analysis (CMA), and consultations with real estate professionals can provide insights into a property’s worth. 

Additionally, understanding local market trends, property condition, and comparable sales in the area can help estimate value accurately. Successful wholesalers often develop a keen sense for valuing properties through experience and continuous market study.

Is wholesaling real estate dead?

Contrary to any misconceptions, wholesaling real estate remains a vibrant and viable strategy. The constant demand for affordable housing, coupled with investors’ ongoing search for profitable opportunities, ensures that wholesaling continues to be a relevant and dynamic aspect of the real estate market. 

As long as there are undervalued properties and a gap between sellers and end buyers, wholesaling will remain an effective method for facilitating real estate transactions and generating income.

What does a wholesaler do in real estate?

A real estate wholesaler acts as a middleman between property sellers and buyers. They specialize in identifying properties that are typically underpriced or need to be sold quickly, securing them under contract at a lower price, and then assigning or selling this contract to an end buyer for a higher price. 

The wholesaler’s profit is the difference between the contract price with the seller and the price paid by the buyer. That means it’ll require a deep understanding of market values, negotiation skills, and the ability to quickly connect sellers with potential buyers.

How much can beginner wholesalers make?

Beginners in wholesaling can expect to make between $5,000 to $10,000 per deal, with variations depending on the specifics of each transaction and local market conditions. As they gain experience, refine their strategies, and expand their networks, their potential earnings can increase significantly. Success in wholesaling is cumulative, with each deal contributing to a wholesaler’s reputation, skill set, and understanding of the market.

Is wholesaling real estate a good side hustle?

Absolutely. Wholesaling real estate can serve as an excellent side hustle for those interested in the real estate market but not ready or able to commit full-time. Its flexibility allows individuals to work around their existing schedules, and the potential for significant earnings makes it a lucrative option. Moreover, wholesaling can provide valuable experience and insights into the real estate industry, serving as a stepping stone to other investment opportunities or a full-time career in real estate.