Key Takeaways
- Wholesaling real estate can be very lucrative with up to six figures in just one deal
- There are two ways to assign (AKA Wholesale) via an assignment of contract or a double close
- Building a business around finding deals and wholesaling takes special skills and a plan to be effective.
How to “Flip a House With Just $100”
Diving headfirst into house flipping can be a thrilling idea, but it’s not for the faint of heart. While the potential rewards are high, the risks are just as substantial. Flipping requires significant upfront capital to buy, renovate, and sell the property, and unexpected issues during renovations can quickly derail your budget. The entire process can also be time-consuming, demanding both sweat equity and constant management.
On the other hand, finding good deals in real estate is a challenge in itself. Investors spend countless hours searching for undervalued properties, competing with others who are after the same gems. This is where wholesaling comes in. Wholesalers act as connectors, finding motivated sellers with undervalued properties and then swiftly pairing them up with eager rehab investors. By eliminating the renovation legwork and upfront costs, wholesaling offers a unique entry point into the real estate market, capitalizing on the deal-finding difficulty that plagues many investors. The Wholesaling process in Texas is called assignment of contract.
How Does Assignment of Contract Work In Texas?
In Texas real estate wholesaling, an assignment of contract allows you to transfer your rights and obligations under a purchase agreement with a seller to another investor, the assignee. This essentially sells your “place in line” to buy the property. The seller, the original owner, and the assignee, the new buyer, then finalize the purchase. In order to assign rights of a contract it is important that you write the words “or assignee” next to the buyer’s name on the contract. There’s another option, however, called a double closing. This involves two separate transactions: you closing on the property with the seller first, and then immediately selling it to your end buyer in a second closing. While both methods achieve the wholesaling goal, an assignment is often preferred for its simplicity and lower closing costs. The advantage of a double closing is that neither the buyer nor the seller have to know how much you made on that deal.
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Why Would A Buyer Assign Their Right In A Contract?
Wholesalers often opt to assign their contracts rather than flip the properties themselves for several reasons. First and foremost, wholesaling requires significantly less capital. By assigning the contract, the wholesaler avoids the upfront costs of buying the property, including renovations and repairs. This frees up their cash flow to pursue other deals. Additionally, wholesaling carries less risk. Flipping a property hinges on the renovation process going smoothly and the market value increasing as expected. Unexpected issues or a sluggish market can erode profits or even lead to losses. Wholesaling, on the other hand, focuses on the initial deal-finding and contract negotiation. By mastering these skills, a wholesaler can build a successful business centered on marketing and sales, which requires a different skillset than renovation and project management. This allows them to focus on their core strengths and potentially hire specialists for tasks outside their expertise, further streamlining their operation.
What Skills and Processes Do You Need to Build Out To Build a Successful Wholesaling Business?
Building a successful wholesaling business requires a multi-pronged approach. You will need to consider several things to become effective in your craft. Join us on our journey over the next few weeks as we seek to answer:
- Build Your Winning Team:Finding Cash buyers and a Title company
- Finding consistent sources for leads
- How will you reach the leads and engage them?
- Tools you will need to find leads, get in contact, follow up and track progress of your lead engagement
- How to determine what a property is worth?
- How to estimate repair costs?
- How to structure a deal?
- How to make your deal analysis fast and easy?
- How to follow up and manage your lead funnel?
- What should your seller appointment look like?
- How to present your offer and negotiate like a boss?
- How to write a contract in Texas?
- How to market your assignment of contract?
- How to bring your deal to close?
Conclusion
There are a number of reasons why wholesalers can make big profits on just one deal. It’s not an easy job of building a business with consistently profitable deal flow. That being said the main thing you will need is the grit to work hard and continue fine tuning your sales and marketing skills to progress. We will be following a series of blogs as we tackle each of these skills you will need to master. Be sure to subscribe to our YouTube channel or sign up to get emails on our weekly blog posts.