Why do savvy investors turn to wholesale real estate contracts? How does it really work and how does it compare to other investing strategies today?
Investing in real estate has become incredibly popular again and everyone has their eyes on profiting from the US housing rally. The lack of other viable investments and a dire outlook for investment returns in stocks and traditional bonds have stimulated incredible demand for mortgage REITs; The acquisition of rental houses and, of course, reality shows have made rehabbing and remodeling fashionable.
Unfortunately, while there is a huge appetite for these types of investments and they have proven profitable for some, that doesn’t necessarily mean they will always be more profitable or as safe as wholesale real estate contracts.
How does contract reversal work?
‘Flipping’ or wholesale real estate contracts is actually incredibly simple. In fact, it’s probably one of the easiest and most direct ways to profit from today’s market.
It simply relies on investors finding properties and contracting to buy them and then turning those contracts over to an end-buyer who is interested in the home and collects a fee for their efforts.
This can be done in two ways, but is often accomplished by assigning the contract to a new buyer and paying an “assignment fee.”
This is completely negotiable and can vary widely depending on how much an investor wants to earn per trade.
What are the advantages of this strategy?
Building a rental property empire may be noble, and rehabbing and remodeling homes may seem like a fun adventure, but when it comes down to it, many find it’s a lot more work than they ever imagined. Unfortunately, instead of finding in them a liberating and highly profitable enterprise, many discover that it is just another job; one that comes with many more hours and stress than your old 9-5 routine.
On the contrary, the wholesale of real estate contracts offers incredible freedom and flexibility. It doesn’t require any property management or involve any nightmare rehab project or having to roll up your sleeves and lay tile on the weekend or rush out at 2am to fix a leak.
With the right strategy, this form of real estate investing can mean maximum velocity, minimum risk and liability exposure, maximum volume capacity, and incredible ROI.
Is this just a strategy for new investors?
Wholesale real estate contracts are often the best option for new investors because it requires little to no cash, has no credit, and is easy to get started. However, that doesn’t mean it’s just for newbies.
Some get confused because it’s so easy, but the truth is that many investors select this as a primary long-term strategy and have used it to produce multi-million dollar income. Then when you’re at that level, you can certainly go out and develop your own condo or rehab projects for fun.
