What is Wholesaling?
One of the best ways to do a deal is by purchasing a property wholesale and selling retail. The idea of flipping is not very popular these days but in essence that is what wholesaling is. All you’re doing is buying at a discounted price and than reselling it in a short period of time. There are different types of people involved in wholesaling such as scouts, dealers and retailers. If you need cash to fund your project you might consider refinancing your mortgage.
A scout or bird dog if you will is someone who gathers information, locates potential deals and then sells the information to other investors. When you become a scout, very little knowledge or money will be required. The scout will locate distressed properties, gather the information and then present it to another investor for a fee. A scout gets paid $500 to $2000 on each lead he provides to an investor depending on the price of the property and the potential profit.
A dealer will locate a distressed property and enter into a contract with the owner. Dealers sometime buy properties wholesale and then sell it retail or sell the contract to another investor. Being a dealer is more risky then being a scout because dealers put down their own money to secure the deal. A dealer doesn’t have to deal with tenants and can make a larger income with out having to fix up the property.
What a retailer does is buy properties from dealers. Retailers fix properties up using their own money, therefore assuming the greatest risk but also receiving the greatest profit.