Not many people realize that real estate (especially houses) can be bought and sold successfully without using your own cash or credit and a nice profit can be made out of the deal as well!
As hard as it is to believe, it is really true. In this article, “How To Make Money Wholesale Houses Without Cash Or Credit” I will explain how this can be done.
All real estate transactions start with a contract
It doesn’t matter whether it’s a $ 100 million hotel, a $ 10 million apartment complex, or even a small mobile home, a contract is mandatory.
Well, to make money on wholesale houses without money or credit, you must be able to control the property with a contract for at least 30 to 60 days. You certainly don’t need any cash of your own, other than a small amount for marketing, to attract motivated salespeople.
As an example, assume the home is worth $ 100,000 in very good condition. Depending on the part of the country you’re in, this could mean either a decent apartment or a fairly simple one, especially if you happen to be in New York or California, where property prices are known to be particularly steep. Nonetheless, we take the base price at $ 100,000.
If the house is in excellent condition, this is called ARV or After Repair Value. In this example with the $ 100,000 ARV, let’s assume that the seller agrees to sell the property for $ 30,000, for whatever reason. Well, that’s where “The Flip Man” comes in the picture ready to buy the property for $ 30,000.
This leadership will usually come from my marketing like bandit characters
In general, I mostly deal directly with owners, not brokers, the main reason is that the owner is the decision-maker and I don’t need an additional middleman. Of course, this is only a question of preference and certainly not a must.
Now I’m going to start marketing the property to sell to an investor. There are two schools of thought – either build a buyer list from which to find a suitable buyer/investor first or let the deal build your buyer’s list that I made and train my students to do the same.
So I’m starting to market the property at $ 45,000 and I can have 10 investors to call the property purchase. Even if I can only sell the property to one investor, I will build a list of buyers from the other 9 investors who called.
The deal is finally settled at $ 38,000
Let’s close – now I have a contract with the seller for $ 30,000 and the buyer for $ 38,000. From there, I will hand over both contracts to the title company or final agent, whichever is used.
Now, most offers have a closed 30-day timeframe with the seller and I only give my buyer 10 days to close … most serious buyers, in fact, only take three days, which is why you only want to deal with serious buyers
OK, the deal is set and you have everything with the final attorney, the seller, and the buyer, all together at the final table. In most cases, this would be the first time they met, so I have to make sure that everything runs smoothly.
Once the deal is closed, the closing lawyer cuts the seller a check for $ 30,000 and” checks for $ 8,000, which is the difference between the two contracts.
So the check I received is an $ 8,000 assignment fee, where I basically assigned my $ 30,000 buyer contract for $ 8,000. When I started marketing the property, I actually did it at $ 45,000 and eventually sold it at $ 38,000. So I made $ 8,000 on the deal.