James Thornton of Arizona is a seasoned expert in the real estate landscape, as an investor, coach, and mentor. Wholesale real estate is an art, a dance of sorts, where investors can uncover hidden gems in the market. In the following article, James Thornton delves into various strategies for the wholesale market, providing a roadmap for those seeking to master the art of finding diamonds in the rough. Whether you're a seasoned investor or a newcomer to the world of real estate, this guide is poised to offer invaluable wisdom for navigating this niche market.
Ever wanted to flip houses but felt discouraged because of the capital needed?
For many budding real estate investors, the allure of house flipping is undeniable the promise of buying a distressed property, breathing new life into it, and reaping the rewards.
But what if there was a way to tap into the market without the physical renovation work?
Enter wholesale real estate, a strategy that involves securing a property contract and passing it on to a potential homeowner. Below, James Thornton Arizona sheds light on the inner workings of the wholesale market and explains why it's a strategic avenue worth exploring.
James Thornton Discusses the Strategy of Finding Houses to Sell
Wholesale real estate begins with finding distressed houses because homeowners are typically willing to sell them for a lower price since they don't want to, or can't afford to improve them before selling. Their reasons could be due to:
- The homeowners are planning to live in a different town, state, country, etc.
- Them experiencing financial distress.
- The homeowners are facing foreclosure.
- They are not willing to pay for house repairs and renovations.
James Thornton of Arizona says that when wholesalers find such homeowners listed above, they acquire a contract for the house and look for potential cash buyers of the property.
But where do they find the buyers?
Marketing the House for Future Homeowners
These days, many look for homes at a bargain. And when they a house cheaper than the average, they'll most likely be interested in buying it despite its find condition.
After all, many homeowners are excited to DIY their homes to them, repairing the house themselves is still much cheaper than hiring professionals, adding their own personal touch to the space.
Furthermore, real estate investors are always on the lookout for decrepit homes because they can repair them easily and sell them for a higher price once the house is more livable; James Thornton of Arizona also notes that they also sometimes market the place as a homestay by posting it on Airbnb or Booking.com.
But as a wholesaler, how can they find these individuals?
Try joining, advertising, and looking for clients on the following:
- Social media platforms
- Email
- Real estate marketplaces (Zillow, Auction.com, Realtor.com, etc.)
To grab potential interest, list the details and features of the house. Furthermore, pictures can make or break the performance of the marketing opportunity. Allowing virtual walkthrough videos can also help investors visualize the home.
James Thornton of Arizona remarks that if there is a supposed buyer, how do all parties close the deal?
Closing the Deal: Earning Profits for Simply Selling a Contract
Remember the contract that the wholesale real estate agent obtained? They then transfer the contract from the homeowner to the buyer which then makes the buyer the new owner of the house.
But how do real estate agents earn from it?
James Thornton of Arizona says that profit is earned through "assignment fees."
But what is that?
Let's say the original owner of the house sells their property for $200,000, and the wholesale real estate agent sells it for $220,000. The $20,000 is the assignment fee which will go to the wholesaler.
Sounds like a great business strategy, right?
Well, it's not for everybody.
Pros and Cons of Wholesale Real Estate
For the most part, wholesale real estate is an excellent way to make money as it involves short-term transactions with minimal effort.
Does it have other benefits?
Pros of Wholesale Real Estate
- James Thornton of Arizona explains that there is no need to be an experienced real estate agent as agents are licensed contractors who represent their clients, whereas wholesalers deal with selling contracts instead.
*However, being a licensed real estate agent is still recommended, especially if this is the industry a person wants to be in in the long run.
- Becoming a wholesaler requires minimal capital.
- There's a huge potential for career growth and profits.
- Wholesale real estate agents aren't restricted to a niche they're not limited to selling properties to investors, homeowners, or people with a homestay business.
However, there are also disadvantages to being a wholesaler.
Cons of Wholesale Real Estate
- Wholesale real estate has a relatively low-profit margin they typically only earn from their assignment fees.
- It takes time to find homeowners willing to sell their properties, especially at a lower price point. Moreover, wholesalers must exert extensive efforts to negotiate an agreeable price for the house.
- It also goes the same when looking for investors they can be difficult to find and negotiate with.
Nonetheless, wholesalers can navigate or overcome these minor challenges these disadvantages are only typically evident when starting as a wholesale real estate agent.
Conclusion
James Thornton of Arizona says that obtaining a real estate license, flipping houses, and navigating a specific real estate market can overwhelm a person starting a career in real estate. Fortunately, wholesale real estate is a less complicated alternative. It also requires less capital and isn't limited to a real estate niche.
As long as they find a homeowner willing to sell their home for a lower price and a buyer is willing to own the house, the wholesaler can earn from assignment fees they serve as a bridge for both parties to connect and agree on a deal. It's a niche market that requires a lot of effort and hustle from the wholesaler, but it can be a great alternative to making a name in the real estate industry.
