The Internet is a technology driven platform connecting businesses beyond geographical constraints, promoting new business ideas. Starting a wholesale business in real estate is the new face of this progress-driven force. Just like in traditional business, new business investors in the real estate segment may struggle to hold their feet firmly in the trade.

It will be difficult to strike deals, and facing situations like not being able to work through a deal owing to shortage of money are common. These are ordinary problems investors and newcomers initially face. It may be possible to strike a no-money-down deal, but in practice it may actually require investors to put down money to strike the deal. Due to the financial liability involved, investors turn toward wholesaling to generate cash for use in future deals. In the wholesale business, you can find a motivated buyer, get the deal under contract, then find a buyer and either allot the contract or ensure a double closing.

It is not difficult to start a business with wholesale deals. This article aims to guide you on practical steps to start up your own wholesale business setup in real estate.

Practical Guidelines On Starting A Wholesale Business In Real Estate


Step 1: Get a list of wholesale buyers: Research and homework should be in place before starting your setup. You may wonder at this reverse strategy, but as funny as it may sound, you need to find your buyers and customers first. Rehabbers will be the best customers. Some of the best places to find them are at real estate investor association meetings and foreclosure auctions. Procure their business cards, and inquire in detail as to the types of properties they buy. Assemble a database of such buyers.

Step 2: Legal setup: Have your business structure in place. Work on the legal formalities. Get in touch with an attorney and learn about forming a business entity and the type of establishment you should look for. Common business entities include LLC, a limited partnership, or a corporation. Based on limiting your liability, go for a business entity that will provide tax benefits.

Step 3: Find agents: These are people who will hunt properties for your business. Try to locate agents who can help you find vacant or distressed properties. The association with agents works on a commission basis. Offer to pay a small fee for each lead they give you. Depending on the outcome, you can also pay a larger commission when they refer you to a property that you end up buying. Such agents will keep your business leads flowing, and building a good network of such agents will help you locate properties with ease.

Step 4: Legal assistance: You may want to be sure about the legal formalities before buying or selling a property. It is advised to find a real estate attorney for the first couple of deals. It is important to fully understand your state’s laws regarding assignment of contract and double closings. Ask your attorney to assist you through the necessary contracts while bearing these transactions. It will help you in learning the legal complexity involved in getting the paperwork straight.

Step 5: Market your business: Print cards with URLs and bandit signs for buyers and sellers. Attend association meetings and foreclosure auctions. Create a business identity and contacts over the web. Do it all, and build business popularity by assured means.

Step 6: Independent business phone: You need a new phone line with an answering service. As a business entity, you need to build credibility for agents and property owners. This phone number should be published on all your offline and online marketing material. You need an informative recorded message outlining your business and requesting contact numbers for returning calls.

Like any traditional business, starting a wholesale business has its pros and cons. Keep tabs on property rates and the economy, for factors like inflation and economic turmoil are known to affect prices. Keep working consistently with fixed goals, and start with a network of reliable agents and rehabbers.