Wholesaling Can Be A Lucrative Real Estate Investment

by David Gerlitz on June 28, 2011

Wholesaling real estate, or “flipping” as it is more commonly known, can be profitable, even in a soft real estate investment market.

Whether you are looking at real estate in Colorado or elsewhere, wholesaling takes smarts and good buyer contacts; but done right, you can make a lot of money. Here are the basics.

Wholesaling Real Estate Can be LucrativeFirst thing, you need to find motivated sellers that want to sell at a bargain basement price. This is key. In traditional “flipping” (think TV shows like Flip This House), the property may need updates done to it in order to get a higher price when it is flipped. However, these days with so many homes in foreclosure, that may not be the case.

Sometimes very nice homes are sold at a low-ball price because the seller needs to get out from under it. So you can find many different types of deals: regular sales, pre-foreclosure, short sales, bank owned properties or auction properties.

In real estate investment, there are three types of wholesaling: Assignment closing, simultaneous closing and traditional closing:

Assignment Closing

Assignment is just that: You assign, or line up, your buyer prior to actually closing on the property. Your profit, better known as an assignment fee, is part of the contract and closing. The profit on this type of flip is usually less than $5,000.

Simultaneous Closing

A double or simultaneous closing is a bit more complex. In this scenario, the end purchaser settles on the property with the flipper first. This allows the flipper to use the proceeds from that sale to actually purchase the property from the original seller. In today’s real estate climate, it can be difficult to find a title company that will do this kind of transaction, but it can be accomplished.

Traditional Closing

In this type of close, a typical seller sells to a flipper who either has cash in hand or secures short term funding to pay for the property and any updates before they resell it to the final buyer. Once you have flipped several properties, cash sales tend to be the most lucrative, since there are no mortgage fees and interest involved in the time between acquiring the property and reselling it. Done with some common sense and a good eye for what will resell, you can make a tidy sum.

Call it wholesaling real estate or “flipping,” it can be a profitable real estate investment strategy, even in a soft real estate investing market.

For the most up to the minute Colorado real estate investing tips, call Dave Gerlitz at Investment Property Colorado at 720-306-8017, or contact Investment Property Colorado.

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  4. Multi Family Properties As An Investment

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