How to Do a Real Estate Wholesale Deal

Real estate investments most often require cash out of pocket. This is a hurdle for many investors, but there is a way to accumulate investing money in real estate while you learn the ropes. That way is through wholesaling.

Find properties with motivated sellers. Motivated sellers often don't have their houses up for sale. You need to find an extreme deal (around 50% of after-repair value or below). Owners of properties that are in good shape are usually not motivated enough to sell. You need to find the ugly properties.

Get the property under contract, with proper contingencies. Work with your Woodbridgereal estate attorney to draft the contract language. You want to be protected with contingencies that allow you an "out" in case things go wrong.

Find a buyer. These will usually be rehabbers. Since the subject property is most likely in poor shape, it will need to be repaired in order to get maximum value. Since you have no cash and you may not have the construction expertise required to rehab a house, you will sell your interest in the property to your rehabber buyer.

Assign the contract. Again, using an Assignment of Contract form approved by your attorney, you will assign the contract (between you and the original owner) to the rehabber buyer. You will do this for a fee. Depending on the price of the property, you can assign the contract for a few thousand dollars for a small house in a depressed market, up to several tens of thousands of dollars for a larger house in an expensive market.

Get paid. The end buyer pays you the assignment fee and closes the deal. You will usually be paid at closing, not at the time of assignment. This is done to protect the end buyer. S/he is only willing to pay your assignment fee if the deal actually goes through.

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