Wholesaling Real Estate to Make Extra Money

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Have you ever thought about starting a side hustle? Need to earn some extra money but not sure how to get started?

One of the best ways to start is to make a list of all the things you love to do. And then get creative – brainstorm ways to earn extra income doing something you love.

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enjoy the outdoors? Start a Landscaping Business. an animal lover? Watch the dog walk or pet sit. Aspiring Writer? Try selling short stories online through Amazon.

Have an eye for fashion? Check out consignment shops to start flipping designer clothing or even start a fashion blog. Almost any topic you can think of can be turned into a way to make money.

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All you need is a little knowledge, imagination and a desire to succeed. And of course, some efforts may be less successful than others. But that’s the beauty of learning something new – it’s all a process, trial and error.

While you will never be massively successful in whatever you try to do, you will always be better off than when you started, be it financially, academically or personally. (That’s my mantra, anyway!!)

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But moving on to this week’s post – you’ll hear about a side hustle that Andrew and his wife turned into a super-successful side business.

Introduction And now, here’s more about Andrew:

My name is Andrew. I am married, and we have two young children at home. I am a financial analyst by day and a real estate investor by day.

I recently started blogging about our family’s journey to financial freedom through real estate and enjoy helping others on their way to financial freedom through the blog.

RELATED: The Best Way to Teach Financial Literacy

Interview questions tell us about a fun, unique, or interesting side jam you’ve tried:

We have done all kinds of things in real estate (rental property, flipping, real estate agent, etc.). But one of the more unique and profitable things we do is wholesaling.

A wholesaler will find distressed homes and put them under contract for those who are not familiar with the term. They will then sell the contract to another real estate investor who wants to rehab the home and flip or rent it out.

So, for example, if I’ve got a house under contract for $100,000, I’ll assign the contract to another investor for a $5,000 fee. They would then buy the home for a total of $105,000, and I would get the $5,000 assignment fee.

Why did you decide to learn more about wholesaling?

When my wife and I started thinking about having kids, we knew we wanted her to be at home with him. But we could not understand how to manage our household budget with only one income.

We decided to use some of our savings to make a down payment on a rental property and create passive income through real estate. However, once we got started, we caught the real estate bug and decided to make the jump to more active forms of investing.

We wanted to buy additional rental properties but didn’t have the cash. So to generate more cash, we started looking for other deals that we could either flip or wholesale to invest in real estate with no money out of pocket.

After learning the ropes, we decided to focus exclusively on wholesaling to find good deals and sell them to other investors who had the capital and time to fix them up.

Average Description How much time do you think you spend wholesaling per month?

Now that we have kids, we no longer do many wholesale deals because it can be time consuming. It doesn’t require a lot of hours, but you must be available to answer the phone at any time. And if it sounds like a great deal—you should be ready to look at homes right away, before someone else puts it under contract.

When we were growing it, between my wife and I, we spent about 20 hours a week wholesaling. That time was divided between sending marketing, answering phone calls, tracking leads, going out to view homes and networking with other investors to add to our buyer’s lists.

In general, how profitable has wholesaling been for you?

Wholesaling business can be very profitable, but it requires a lot of hard work and consistency. Starting with little or no money is not an easy side jam either.

At the peak of our wholesale business, we spent $3,000 – $5,000 per month in marketing (direct mail, Google ads, etc.) to find good deals.

We probably average about $10,000 net profit per deal and can pick and keep some of the best deals for ourselves as rentals or flips.

What type of research or learning curve is required for learning real estate wholesaling?

Many real estate “gurus” will tell you that wholesaling is the best way to start real estate investing with no money. But we found the learning curve quite steep.

To be a successful wholesaler, you have to find exceptional deals. Your customers are other real estate investors who need a good deal in advance to make a profit. It takes some practice to learn what a potentially profitable deal looks like. First, you need to know the ARV (after repair value – what it will sell for once it’s fixed).

You also have to estimate the cost of repairs, often with a walkthrough of only 5 – 10 minutes. And you need to know how other investors run their numbers to know what they’d be willing to pay for it.

For example, if I have a homeowner on my buyer’s list who wants to buy a rental property that meets the one percent rule, I need to find out what the home’s rent will be after renovations.

So I would run Compass for both the home value and the monthly rent. If it would rent for $1,000 per month after $20,000 in repairs, the investor would be looking to buy it for $80,000.

This means I would need to be able to make a decent profit on it under contract for $70,000 or less.

While the learning curve was initially steep, I learned a lot of information about real estate that has helped us move forward.

For example, after moving hundreds of homes, I can now know ballpark repair costs, spot hidden repairs, and am an expert at operating a computer.

What tips would you have for someone who wants to start wholesaling?

Wholesaling is a great way to make a significant amount of money if you’re willing to put in the work. If you are looking to get started as a wholesaler, I would start by networking with other wholesalers and real estate investors to find out what they do day to day.

I found local meetups, Facebook groups, and online communities like Big Pockets to learn and build my skills.

In addition, it is important to have the right mindset. Wholesaling is definitely not a “get rich quick” scheme. There’s a lot of ups and downs and trial and error to figure things out.

If you’re willing to commit and stick with it for the long haul, this can be a rewarding side jam. Ultimately, as a wholesaler, you are a problem solver. It requires the mindset that your job is to help people in stressful situations (i.e. selling a deceased family member’s home, finding a creative way to help them avoid foreclosure, etc.)

Often wholesalers get a bad name because of some bad apples who use these situations to take advantage of people. But you can be one of those good guys who can really help people in difficult situations to reach financial solutions.

Reflection Overall, what have you learned from the wholesaling process?

To become a successful wholesaler, we need to learn the nuances of investing in real estate. As we continue to build our real estate portfolio, the skills we’ve learned in marketing, evaluating a deal, and estimating repair costs are now invaluable to us.

I also learned a lot of sales skills. Since I am an introvert by nature, talking and conversing over the phone or in person doesn’t come naturally to me. It’s still not something I love doing, but learning sales and networking skills is something that will serve me well in any future entrepreneurial ventures.

While I love real estate and the rush of finding a great deal, I also learned a few things about myself and what I really don’t like about wholesaling. As I mentioned, I’m an introvert, so the constant conversations with buyers and sellers were exhausting.

I also learned that I don’t enjoy being constantly “on-call” — ready to drop everything to answer the phone or watch the house at a moment’s notice.

Is this something you would ever do again? why or why not?

We still do some wholesaling today but have stopped most of our marketing. The leads we get now come from relationships we’ve built in the past.

Once the kids are a bit older and we have more time to devote to the process, we may decide to get more involved. I think this is a great way to earn extra money on the side. Or even as a full time job if you make the effort.

RELATED: 5 Reasons You Shouldn’t Invest in Real Estate

wrap up

Real estate wholesaling is not for the faint of heart and seems to require quick thinking and rapid turnaround. But they could make good money and were successful together as a family. #teamwork makes the dream work

Here are some takeaways I took from Andrew’s interview:

Completing the most challenging projects will often add to your sense of accomplishment and help you grow as a person. Sometimes you need to spend money to make money. (But only if you have the money to spend and won’t have dire consequences if the trade deal goes south). Stepping outside your comfort zone can benefit you in the long term and teach you valuable skills to advance your career. But also remember to be honest with yourself – if you’re constantly on the go, you may want to hit the pause button once in a while to rest and re-energize.

Thanks again to Andrew for participating in this series and providing such valuable information on real estate investing! Be sure to check out her blog to read more about her family’s journey into financial freedom.

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