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Real Estate Investing Archives - Entrust Capital Funding

Real Estate Wholesaling Explained: What It Is and How It Works 

By | El Paso, Real Estate Wholesaling | No Comments

Smiling woman holding hundred dollar bills in front of a simple home designThere are many ways to invest in real estate in El Paso, including buying your own home or purchasing a share of a property. What many people do not know is that you can get invest in real estate or become involved in the business through the process of real estate wholesaling. 

Wholesale real estate is an especially good opportunity for investors who are starting out with investments. As long as you have the time, effort, and dedication, you could reap plenty in the end. Usually, wholesaling requires a real estate license in most states, but this is definitely a process to look into.

Interested? Well, you’ve come to just the right place.

As your El Paso real estate wholesaling team, we will explain more about how the process is done, step by step!

Call Entrust Capital Funding today —  (915) 320-6633

How El Paso Real Estate Wholesalers Make Money 

Before we dive into the process, it is important to know how exactly one can make money through wholesaling. The key is to find a distressed home that way you can make a contract for a small, earnest money deposit, done under 1% of the total purchase price. 

The wholesale fee (when a contract is assigned to another investor) depends on the wholesaler and the property but usually ranges between $5,000 and $10,000. There is a level of risk to wholesaling if you can’t find someone to close the contract, but there is also the possibility of making plenty of money. 

How to Real Estate Wholesale in 6 Simple Steps 

1) Find a Distressed Property and Find an Eager Seller 

As we mentioned already, the first step is to look for a distressed property in El Paso, which is one that is on the brink of foreclosure or may already be owned by the bank. Like this, you can purchase it at a low cost. Once you found a property, you have to confirm if the owner of the property is interested in selling. 

2) Determine the Best Potential Opportunities 

After finding a property and a seller, a wholesaler needs to confirm that the deal works out financially. There are two ways to identify the best potential opportunities, including ARV (after repair value) and MAO (maximum allowable offer). ARV is the fair market value of the home after all repairs have been done. MAO is the highest offer a wholesaler can make to a distressed seller, while still earning a profit. 

3) Negotiate on a Price, Start a Contract 

Because selling a home for less than what it’s actually worth can be hard, this is where wholesaling helps. You can put a property under contract at a price below market value by waiving as many purchase contract contingencies, focusing on the benefits, or offering to purchase the appliances and furniture as well. Once an agreement is made, you can assign a contract to another party. 

4) Find an Investor You Can Assign the Contract 

This is where you have to find another investor to assign the contract to, close escrow, and make repairs estimated by the wholesaler. A contract usually has no more than thirty days to assign to an investor. Wholesalers can reach out through networking events, listing the property on El Paso real estate websites, talking to real estate agents in El Paso to get in touch with interested clients, and more. 

5) Agree to Terms and Conditions 

Once you have been able to assign the contract to a buyer or an investor, you have to agree to terms and conditions. One of the best ways to negotiate an agreement is to split the difference or the wholesale could ask for a fixed wholesale fee of 10% of the ARV. An El Paso real estate wholesaler who does not exceed MAO usually has plenty of room to negotiate a win-win deal with the investor.

6) Close on the Property 

The last step works the same as traditional real estate closing does. Closing costs are paid by the buyer and seller as agreed in the contract and then the title is transferred to the buyer. Depending on the market, the closing could take place at the office of a real estate attorney, a title company, or through an escrow agent. 

Where to Find Real Estate for You to Wholesale 

Finding the best real estate to wholesale is usually done through networking with local real estate investors, connecting with investor-friendly real estate agents, or contracting attorneys or county clerks to check for estates that have homes or other kinds of properties. 

Learn More About How to Get Involved in El Paso Real Estate

It is evident that real estate wholesaling in El Paso is a great way to make healthy profits, especially for those who are willing to put the time and effort in when learning about the business. If you are ready to take the next step, we want to help. Contact Entrust Capital Funding today, to learn more.