What Are The Risks Associated With Real Estate Wholesaling?
I love to answer this question when someone new who is contemplating a career as a wholesaler asks me! Here’s what tell them: “Real Estate Wholesaling is hand’s down the Safest way to get into real estate investing”! There is NO other style, no other method of real estate investing that offers such a LOW LEVEL of RISK!
Let me explain why! First, a risk is a possibility that something may go wrong with what ever it is that you about to undertake, that whatever you are about to undertake may have adverse consequences in this case a real estate deal that may harm you in some way. And when we are talking risks associated with real estate deals, we are usually talking about our MONEY being put at risk!
So lets tear down a typical real estate wholesale deal and examine the components. A wholesale deal is really a middleman transaction between a seller of real estate and a buyer of real estate, whereby the wholesaler make the connection between the two parties (buyers and sellers) and gets paid very well to make that connection.
Since all of the wholesalers interest in a wholesale deal is in just making the connections between these two parties, and NOT ever in ownership of the real estate he’s working with, the wholesaler NEVER has any of the risks associated with Real Estate OWNERSHIP! And that’s where all of the REAL risks in any real estate deal are concentrated.
Let’s talk about the real risks that the wholesaler avoids. These are risks that only the “end user” (the one who ultimately goes home after closing owning the property) has to deal with.
* No Money in the DEAL!
* No Holding Costs (taxes, utility bills, maintenance bills, etc.)
* No rehab or contractor repairs to worry about
* No resell worries
* No tenant hassles
* Your credit rating is never in jeopardy of being tarnished because of a deal gone bad!
The only risk that a wholesaler has to deal with, and this is the only one that exists, is a small earnest money deposit given to the buyer to secure the sales contract that legally binds the seller to the wholesaler, usually ONLY $ 1.00 to $ 100.00! THAT’S IT FOR RISKS!
The Average profit margin on a typical wholesale deal is between $5,000.00 to $ 7,500.00! I know of NO other method of investing, be it real estate, or some other form of investing all together different from real estate that offers NO risk in return for such an awesome profit potential! I mean WHAT A RETURN ON OUR INVESTMENT!
So now you know why real estate wholesaling is the absolute SAFEST WAY for any new or seasoned investor to invest in real estate!
I Buy Houses and Other Property
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