Wholesaling
A real estate investment strategy where an investor contracts to purchase a property and then assigns or sells that contract to another buyer before closing, typically for a fee. The wholesaler never actually owns the property but profits from the difference between the contracted purchase price and the price paid by the end buyer.
Example
“Sarah made $15,000 in profit through wholesaling by finding a distressed property for $80,000 and assigning the contract to a rehabber for $95,000.”
Memory Tip
Think 'wholesale prices' at Costco - you're the middleman getting bulk discounts and passing deals to the next buyer.
Why It Matters
Wholesaling allows investors to generate income without significant capital investment or credit requirements, making it an accessible entry point into real estate investing. It also provides a valuable service by connecting motivated sellers with cash buyers quickly.
Common Misconception
Many believe wholesaling requires a real estate license, but in most states, investors can wholesale properties without a license as long as they're acting as principals in the transaction, not as agents.
In Practice
An investor finds a distressed property owner willing to sell for $80,000, puts it under contract, then assigns that contract to a cash buyer for $85,000, keeping the $5,000 difference as profit. The original seller gets a quick sale, and the end buyer gets a below-market property.
Etymology
Derived from the commercial practice of buying goods in bulk at lower prices to resell to retailers, adapted to real estate in the mid-20th century.
Common Misspellings
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