Understanding Wholesaling in Real Estate Investment
Wholesaling is a popular and creative strategy used in real estate investment across Canada. It is a relatively simple concept that requires minimal investment, making it a good starting point for many investors before moving on to other strategies. However, it is important to note that while the concept is simple, the execution may be more complex.
The main idea behind wholesaling is to look for undervalued properties and secure them under contract for purchase. While the contract is still conditional, the investor searches for a buyer who sees the value in the property and is willing to pay a certain amount for the property. This buyer could be an individual looking for a personal residence or another investor. The key is to find someone willing to pay for the property and close the deal.
The challenge lies in finding undervalued properties, which are often not listed by realtors. These properties are usually found where the sellers have specific problems to solve or are selling on their own. When a buyer is found for the contract, the investor earns an ‘assignment’ fee, which can range from $5000–$10,000.
Earning Quick Money by Assigning a Real Estate Purchase Contract
This scenario is common, but it is possible to earn much more than the usual $5000–$10,000. A student who purchased a Wholesaling/Assignments Home-study Kit reached out to share a possible wholesaling deal. Despite having no prior investing experience, the student had a property under contract with a three-month closing date, giving him ample time to find a buyer for the property.
This strategy is particularly effective in a busy real estate market such as the one experienced in Alberta in April 2022, and across Canada in general. In just one month, the student was able to find a buyer and negotiate the assignment of his purchase contract for an impressive $30,000, earning rapid cash from the deal.
Key Takeaways
- Do not pre-judge seller motivation, as sellers have their own reasons for selling.
- Creative strategies remain effective, and there are still deals to be made in real estate.
- If you are new to real estate investing, comprehensive education is essential for success.