There are a lot of gurus, and in general less-scrupulous investors, who will tell you that if you are new to real estate investing and you really need some cash quickly, what you should do is wholesale a few houses. Even on the most reputable Real Estate Investing website, the BiggerPockets.com, this message is unfortunately all too common.
I have been a vocal critic of such advice; I think it’s not only foolish and disingenuous, but dangerous. Let me explain:
Wholesaling of real estate is likely one of the most involved activities in all of real estate investing, requiring all kinds of multidimensional knowledge. Think about this – to wholesale a house, an investor needs to:
- Find a house, which requires not only intimate understanding of the marketplace, but also serious marketing skills,
- Negotiate a wholesalable price, which requires specific knowledge of the rehabbing process and cost, and some negotiation skills,
- Find a retail buyer, which is also fraught with difficulties.
Each one of these bullet points can be broken down into 30 more, and each one requires more knowledge than you would think.
The gurus and others know this, or should know this, and therefore the advice they give is disingenuous.
Furthermore, as I mentioned earlier, this advice is also dangerous. Why – because to wholesale a house, one must sign a purchase contract. The last time I checked, these contracts clearly and in legal terms outline specific performance, which is to buy the subject property. Which means that if the wholesaler is unable to assign the contract, he/she may be forced to buy it themselves… Yes – you could load the contract with a ton of out clauses, but if reputation gets out that this is what you do, you’ll never get any deals.
I am telling you all of this for one reason – to make you realize that wholesaling as a business model is very, very difficult, and very few people succeed.
How to Make 20k in 2 Weeks
Having said all this, wholesaling definitely works, as I am about to showcase to you. Sure – it needs a little bit of luck, but so do a lot of things. I am about to tell you how to make 20k in 2 weeks. I am going to tell you about a transaction I did early in my career whereby I was able to leave escrow with a check for $20,000, and the whole thing took 2 weeks…
GOT YOUR ATTENTION?