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You can make a lot of money fairly quickly with wholesaling. It offers you the opportunity to learn a lot about the industry, and it's accessible even if you don’t have a lot of cash.
On the other hand, your income with wholesaling is unpredictable. You have to always be looking for buyers.
It’s not necessarily going to lead to financial freedom.
This week’s podcast guest Adrian Salazar had a vision for his future. He wanted to be financially free and travel the world. He knew he wanted to build his wealth through real estate.
He started in single family, but one day a friend came to him with a lead. It was a 24-unit that had gone under contract. He was going to wholesale it and make a tremendous amount of money. That’s when Adrian realized how many houses he would have to flip in order to make that kind of money.
Real estate wholesaling is when a wholesaler sells a property on behalf of the owner for a profit.
As a wholesaler, you don’t purchase the property. Instead, you and the seller enter into a temporary contract.The owner gives you the right to sell the property and keep the profit for yourself.
These are often distressed or off-market properties. The current owner no longer wants the property and is unwilling or unable to invest the time and effort required to prepare it for a typical sale, so they pay you, a wholesaler, to find end buyers for them.
These buyers are typically real estate rehabbers.
I got involved in wholesaling early in my real estate career and I did some lease options. It was great for a while, but it turned out not to be the best course of action for me.
My ultimate goal was financial freedom, and my immediate goal was to work for myself and be a real estate investor. The apartment building I owned kept sending me mailbox money (passive income,) while house flips, which made great money, required constant attention.
There are wholesalers with huge businesses. They architected their business to be a passive lifestyle, but to do this with wholesaling, it has to be an intentional act. You have to achieve fairly large-scale in order to do it.
Adrian sold his single family properties and went all in with multifamily wholesaling.
He holds over 1000 units now, and 95% of them have been off market.
He and his partner find off market deals through mailers and cold calling. They’ve even found deals on Facebook.
He attributes his success to combination of a lot different things – a mixture of showing up, knocking on doors, and being unafraid to go up against brokers that have been in the business for 20 years. He takes his own unique approach and takes action.
As with everything, there are pros and cons to wholesaling, but if you’re willing to put in the work, it’s definitely an investment avenue to consider.
Be sure to download this week's episode here.