3 Reason Why Wholesale Real Estate Has Started to Build Steam as a Useful Method for Commercial Real Estate Brokerages
Wholesale real estate has gained a lot of popularity by commercial real estate brokerages in recent times. According to Investopedia Wholesale real estate is defined as a “a wholesaler contracts a home with a seller, then finds an interested party to buy it. The wholesaler contracts the home with a buyer at a higher price than with the seller and keeps the difference as profit. Real estate wholesalers generally find and contract distressed properties.” As the definition notes, wholesale real estate is lucrative, quick, and relatively low risk. Which is why this method of commercial real estate is becoming so popular within commercial real estate brokerages in the United States.
Wholesale real estate is incredibly lucrative. According to rethority.com the average wholesale deal brings in $5,000 dollars. Unlike residential and commercial real estate these deals do not require as much leg work and ultimately time. Stacking multiple deals together in a short amount of time adds up. Through doing this one can begin to see how lucrative this method of real estate can be.
Wholesale real estate is used by commercial real estate brokers as a way to turn profits quickly. What most brokers do is develop a list of investors that are looking for properties to purchase. From there, these brokers begin to identify properties and negotiate with the owners. Once they seal the deal with the owners and get a contract signed, they contact their investors and get one of them to agree to a deal. After this is complete, they close the deal and walk away with the offset profit. These deals can move even quicker once you establish great relationships with large amounts of investors. Like everything in this industry, networking is key.
Another benefit of wholesale real estate is how risk free this process is. Brokers who have never done wholesale real estate get hesitant about doing it because they think they could get trapped in having to purchase a home if they can’t find an investor. With that being an understandable concern there are two ways around this. The first is to always make sure that you have a wide array of investor contacts before you sign anything with the seller. Secondly, never negotiate a deal without an inspection period. After all, you are negotiating to purchase run down homes. These homes are in poor shape and they are destined to have issues, so the inspection period gives you a way out if you can’t seem to find an investor to purchase the home.
Ultimately, wholesale real estate has increased in popularity for its positives in monetary return, time, and risk levels. If this article has piqued your interest, give us a call at (615) 794-1411. Hinge Development and Realty is a Full Service Commercial and Residential Real Estate brokerage firm, and our experienced professionals would love to answer any questions you have about wholesale real estate, commercial real estate, and residential real estate.