Investors Finding a Sweet Spot in Wholesaling Real Estate Contracts
Why are savvy investors turning to wholesaling real estate contracts? How does it really work and how does it stack up against other investment strategies today?
Real estate investing has become incredibly popular again and the whole globe has their eyes on profiting from the U.S. housing rebound. A lack of other viable investments and a horrific outlook for traditional stock and bond investment yields has spurred incredible demand for mortgage REITs; acquiring rental homes and of course reality TV has made rehabbing and flipping houses very fashionable.
Unfortunately, while there is immense appetite for these types of investments and they have proven profitable for some, that doesn’t necessarily mean they will always be more profitable than, or as safe as, wholesaling real estate contracts.
How Does Flipping Contracts Work?
‘Flipping’ or wholesaling real estate contracts is actually incredibly simple. In fact, it is likely one of the easiest and most straightforward ways to profit from the current market.
It simply relies on investors finding properties and putting them under contract to be purchased and then turning those contracts over to an end buyer who is interested in the home and collecting a fee for their efforts.
This can be done in a couple of ways but is often accomplished via assigning the contract to a new buyer and being paid an ‘assignment fee.’
This is completely negotiable and can range widely depending on how much an investor wants to make per deal.
What are the Advantages of This Strategy?
Building an empire of rental properties may be noble, and rehabbing and flipping homes may sound like a fun adventure, but when it comes down to it many find that it is a whole lot more work than they ever imagined. Unfortunately, instead of finding them a freeing and highly profitable venture, many discover it is just another job; one that comes with a lot more hours and stress than their old 9-5 grind.
In contrast, wholesaling real estate contracts offers incredible freedom and flexibility. It doesn’t require any property management or involve any nightmare rehabbing projects or having to roll up your sleeves and lay tile on the weekend or run out at 2 am to fix a leak.
With the right strategy, this form of real estate investing can mean maximum speed, minimal risk and exposure to liability, maximum capacity for volume and an incredible ROI.
Is This Only a Strategy for New Investors?
Wholesaling real estate contracts is often the top choice of new investors because it requires little or no cash, no credit and is easy to get started in. That doesn’t mean it is only for newbies though.
Some get this confused because it is so easy, but the truth is that many investors select this as a long term main strategy and have used it to produce multi-million dollar incomes. Then when you are at that level, you can certainly go out and develop your own condo projects or rehab homes for fun.
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