Your exit strategy is an extremely important part of your real estate investing business. Many investors get excited when they learn how to buy properties. But when they get them, they have no idea what to do next.
You must know your exit strategy when you buy real estate. What do you plan to do with the property? Answering these questions allows you to make all types of decisions, from how much to offer, to what kind of financing to us, and more.
What is Wholesaling?
Wholesaling means finding a bargain property and passing it on to a bargain hunter. That bargain hunter will be an investor who will either purchase the property to resell it or purchase it to hold it for rental income. Your profit as a wholesaler should be between $5000 and $15,000 on each house. In some cases it will be higher than $15,000 and on some deals your profit may be a little lower than $5,000.
Why wholesale?
Real estate investors choose to wholesale properties for a few reasons. They could be:
- Quick cash – it is possible to turn a property around anywhere from 7 to 45 days and get cash in your pocket. If you need to get your hands on some cash quickly, this would be a reason to wholesale. Or, you may not need the cash immediately. You might just want to build your cash reserves. Wholesaling is a good way to do this quickly.
- Too many houses – maybe you’re good at finding houses, but you find more than you need or can use at any given time. If this is the case, wholesaling is a smart move for you. You can still profit from your locating skills, even if you aren’t going to keep the property for your personal portfolio. Flexibility – at any given time, you can determine whether you want to keep a property or sell it. This gives you flexibility as you locate and purchase properties.
An important fact to remember: Your buyer should get the majority of the profit! Why? Your buyer should get the majority of the profit because your buyer will be the one to purchase and rehab the property. There has to be enough room in the deal for your buyer to do this and still retain a nice amount of money for cash out and equity.
This doesn’t mean that you find properties and give them away for $1,000. If you did that, you would be a bird dog, not a wholesaler.
Your profit will vary depending on the house, but the better you are at locating properties and putting together offers, the greater your profit will be – while still maintaining an excellent profit for your buyer.
Kim and Charles Petty, J.D., MBA, are the creators of the Ultimate Turn Key Real Estate Investing Systems.? To learn how to make $10,000 in 30 days and Six Figures in Six Months buying and selling houses visit http://www.RealEstateInvestingProfits.com.